The US Commodity Futures Trading Commission has filed and settled enforcement actions against Hard Eight Futures, and Igor Chernomzav for spoofing – bidding or offering with the intent to cancel the bid or offer before execution – and for engaging in a manipulative and deceptive trading scheme.
Hard Eight is a proprietary trading firm located in Chicago, Illinois. Chernomzav is a founder, partner of, and trader for, Hard Eight, and resides in Monsey, New York.
“This case is about maintaining fair markets,” says CFTC Director of Enforcement James McDonald. “Market integrity in today’s electronically traded markets starts with making sure bids and offers represent real buying and selling interest, not fake order flow intended to manipulate other market participants.”
The orders require Hard Eight and Chernomzav to pay civil monetary penalties of USD1.75 million and USD750,000, respectively, for total penalties of USD2.5 million. In addition, Chernomzav is barred from trading in any market regulated by the CFTC for a period of nine months.
The orders state that from March 2014 through March 2015, Chernomzav placed bids and offers for E-mini futures contracts on Globex, the CME’s electronic trading platform, with the intent to cancel those orders before execution. At the time Chernomzav placed and cancelled the orders, they constituted a substantial percentage of the best bid or offer.
The CFTC orders find that Chernomzav placed the orders to create a false impression of significant buying or selling interest. Chernomzav used this false impression of buying or selling interest, or the sudden and dramatic removal thereof, to induce other market participants to transact with orders that he wanted to be executed at prices or in quantities favourable to him.
Chernomzav engaged in this conduct on more than a thousand occasions between March 2014 and March 2015.
The CME Group’s Market Regulation Department independently conducted a parallel investigation, and today also announced disciplinary actions against Hard Eight and Chernomzav.
