Important Reminder: Trader Compliance Responsibility

compliance responsability
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December 27, 2019

Dear Managers and Traders,

We would like to remind all managers and traders of their responsibility to be aware of, and abide by, all applicable rules and regulations on the market(s) which they trade, as well as all internal policies and procedures.

This responsibility is covered at length in the Trader Go Live Training Module which all traders are required to complete before accessing Live markets through our systems, and must be retaken at least annually to confirm traders’ continued understanding, and adherence to, applicable rules, regulations, and internal policies.

In particular, we would like to take this opportunity to highlight concerns surrounding potential layering/spoofing, a specific form of potentially manipulative behavior which is prohibited globally, as well as the consequences should any trader, or trader location, be found to have engaged in such activity.

Prohibited Behaviors

As per the Trader Go Live Training Module, there are multiple forms of potentially manipulative/prohibited trading which a trader must avoid if he/she wishes to maintain Live market access.

These include, but are not limited to:

  • Layering
  • Spoofing
  • Quote Manipulation
  • Quote Stuffing
  •  Abusive Liquidity Detection
  • Insider Trading
  • Wash Trading
  • Team Trading
  • Auction Manipulation

While these forms of potentially manipulative/prohibited trading are all described in greater detail in the Trader Go Live Training Module, we would like to highlight particular patterns of behavior which are of concern relating to layering/spoofing.


Generally defined as entering one or more orders on the market without the intention to trade, but rather intended to provide a misleading impression of supply/demand for a security which may result in the trader’s bona fide order on the opposite side receiving an execution at an artificial/favorable price.

Some potential indicators of such non-bona fide order entry are:

  • Orders being entered and cancelled after only being exposed to the market for a short period of time.
  • The size (both individually and cumulatively) of orders entered representing a material portion of the overall displayed liquidity in a market.
  • Inconsistency between the size of orders entered and the trader’s actual trading intention.

One example of how such a potentially manipulative/prohibited pattern may present itself would be where a trader:

  1. Enters a bid for 2000 shares that are intended to trade (the bona fide order).
  2. Enters two offers for 3500 and 5000 shares at, or just behind, the prevailing best offer (the non-bona fide orders).
  3. Receives executions on the original 2000 share bid.
  4. Cancels the two offers for 3500 and 5000 shares without them ever having traded and shortly after the 2000 shares executed.

It is important to note that the above pattern is not the only way in which layering/spoofing may present itself. In addition, the size and duration of orders which could be viewed as non-bona fide are not compared against a fixed threshold but rather will be compared against the market dynamics of the security being traded.

Internal Policies & Procedures

In addition to applicable market rules and regulations, we would also like to remind all traders and managers that they are also responsible for adhering to all internal policies and procedures as well.

Of particular relevance when it comes to proper supervision of trade activity, trader location managers should be ensuring they are confident in their traders’ understanding of applicable market rules and regulations before requesting to move those traders to Live market access.

Both managers and traders must be also prepared to respond, in a timely manner, to any questions sent to them by risk and surveillance personnel, regarding trade activity and be able to provide a detailed explanation of the economic rationale and trading strategy behind that activity.


Should any trader(s), or trader location, be found to have engaged in any form of potentially manipulative/prohibited activity, or to have violated internal policies and procedures, such trader(s), or trader location, will have their market access terminated with immediate effect.

The firm views a strong culture of compliance as central to its business model and will act quickly to cut the access of any individual(s) who do not operate in keeping with such a culture of compliance, in order to protect the market access of the firm as a whole.

If you have any questions or concerns relating to patterns of potentially manipulative/prohibited trading or internal policies and procedures, you can always email and the appropriate team will address such questions or concerns directly.

With thanks,

Communications Team

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