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FIA releases training course on spoofing regulations

30 June 2021

WASHINGTON, DC—FIA today announced the release of a new training module focused on recent developments in the enforcement of spoofing regulations globally. In consultation with Faegre Drinker Biddle & Reath LLP, FIA has developed the training course Understanding & Avoiding Spoofing Behavior as part of its online training program to help market participants avoid trading activity that has received intense regulatory scrutiny. Spoofing is a form of market manipulation that involves the submission of electronic orders that the trader never intends to execute, which was banned as a trade practice in the U.S. in the 2010 Dodd-Frank Act.

Preventing manipulation of derivatives markets and spoofing or spoofing-like behavior are priorities for exchanges and global regulatory authorities. Global demand for a course to assist in compliance with the emerging rules has increased as the legal consequences for spoofing can be severe and can include fines, loss of trading privileges and imprisonment. U.S. authorities alone have issued penalties exceeding $1 billion in recent years for alleged spoofing.

“The enforcement of spoofing regulations is still developing,” said Allison Lurton, FIA’s Chief Legal Officer and General Counsel. “Our goal with this course is to give market participants more tools to differentiate between legitimate trading activity and trading activity that may draw scrutiny from regulators.”

The course draws on guidance from recent cases to help market participants understand the steps they can take to avoid the types of activity regulators consider spoofing and differentiate it from legitimate trading that involves order cancellations. The course also provides guidance on designing a supervision and compliance program, which regulators consider when assessing penalties.

The course covers:

  • The definition of spoofing in the U.S., Asia, and Europe
  • Differentiating spoofing from legitimate trading behavior
  • Most common spoofing patterns
  • Detecting spoofing activity
  • Compliance considerations for traders, supervisors, and firms

FIA Training delivers high quality online learning opportunities, developed by industry professionals for industry professionals. Our courses help educate traders, senior managers, analysts, and programmers, as well as sales, client services, operations and other team members on important topics like market conduct and exchange rules. Our enhanced learning platform allows training supervisors to deploy online courses globally. Platform features allow training supervisors to customize and assign courses and closely monitor the training activity of customers and staff.

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