The Financial Markets Authority of France (AMF) imposed a fine of approximately $ 20 million on a subsidiary of Morgan Stanley for “manipulating” the price and futures of sovereign bonds, as detailed in a statement.
The AMF argued that Morgan Stanley manipulated, on June 16, 2015, the price of 14 Assimilable Obligations of the Treasury of France (OAT) and eight Linear Bonds of Belgium (OLO), as well as the price of a futures contract on OAT.
Specifically, the investment bank bought “aggressively” futures on French and German sovereign bonds through Eurex, the German financial derivatives market. Minutes later, Morgan Stanley operators sold, through MTS France and BrokerTec platforms, 17 OATs for 815 million euros, as well as eight OLOs for 340 million dollars.
The French regulator concluded that Morgan Stanley set the futures price on French bonds at an “unnatural and artificial” level, as well as 14 of the 17 Assimilable Obligations of France and the eight Belgian Linear Bonds.
In this way, the US firm sought to influence the price of sovereign bonds through the acquisition of futures contracts, with the aim of causing an “abnormal and artificial increase” of French and Belgian bonds, due to “existing correlations” between these instruments.
Likewise, the Financial Markets Authority also considers that Morgan Stanley’s shares constituted price manipulation because the acquisition of futures on French bonds was “incompatible” with the strategy of the entity’s European bond trading table.
“We are very disappointed with these conclusions and we intend to appeal the fine. Morgan Stanley will continue to vigorously defend his integrity and his high standards in professional behavior”, the firm argued in a statement.