CFTC Charges Chicago Trader with "spoofing" Futures

U.S. derivatives regulators charged a Chicago-based trader and his firm on Monday with using a manipulative trading tactic known as "spoofing" in the futures market across four different exchanges.

The Commodity Futures Trading Commission, in a civil lawsuit against Igor Oystacher and his proprietary trading firm 3 Red Trading LLC, said the activity involved five futures products for at least 51 days from December 2011 to January 2014.

By spoofing, a trader tries to create a false appearance of market interest in a stock or commodity by placing orders and then immediately canceling them.

"Spoofing seriously threatens the integrity and stability of futures markets because it discourages legitimate market participants from trading," CFTC enforcement director Aitan Goelman said in a statement.

The products cited in the CFTC lawsuit include the E-mini S&P 500 as well as crude oil, natural gas, and copper, which are all traded on platforms operated by CME Group (CME).

The regulator said Oystacher also tried to spoof volatility index futures traded on a platform operated by the CBOE Futures Exchange.

The CFTC is seeking civil penalties as well as trading and registration bans.

An attorney for Oystacher could not be immediately reached for comment.

Earlier this year, the CFTC and the Justice Department filed civil and criminal charges against London-based trader Navinder Sarao, saying his spoofing activity helped contribute to the May 2010 "flash crash."

Sarao was indicted in September. He has denied any wrongdoing and is fighting efforts to have him extradited to the United States to stand trial.

Oystacher was previously disciplined by the CME in 2014 for spoofing activity and ordered to pay $150,000, according to CME's disciplinary records.

Reporting by Sarah N. Lynch