Quote stuffers caught by Red Kite
Surveillance solutions provider Redkite Financial Markets announced it issued the world’s first ESMA alert against quote stuffing today.
The ESMA (European Securities and Markets Authority) guidelines on such alerts took effect following the 1 May deadline for firms to comply with systems and controls rules for automated trading. Subsequently, the alert issued this morning by Red Kite related to so-called quote stuffing, a type of market manipulation involving the entry of large volumes of orders to hide strategy or create uncertainty for other market participants.
Robert Kay, CEO, Redkite Financial Markets, said the alert was generated for a European institutional client. Redkite has rolled out a suite of tools to clients in mind of the regulations now in place, including Momentum Ignition, Ping Orders, Quote Stuffing and Advanced Layering.
Quote stuffing has been identified as a potential threat stemming from high frequency trading strategies. Last year European Commissioner Michel Barnier even went so far as to propose unlimited phone and computer hacking powers for national regulators to combat market abuse stemming from activities such as quote stuffing.