French regulator issues $22m fine to Morgan Stanley for bond manipulation

17 December 2019: The French market regulator, AMF, has fined Morgan Stanley $22m for manipulating sovereign bonds in 2015.

AMF has alleged that Morgan Stanley played a role in manipulating the price of 14 French government bonds, as well as eight Belgian bonds and a related futures contract. The allegations come after AMF observed that, on 16 June 2015, a large-scale sale of government bonds took place which subsequently disrupted the French MTS Global Market bond trading system. The sale caused market disruption, resulting in the suspension of transactions for four minutes and liquidity levels dropping for around an hour.

Following an investigation, AMF concluded that on the date in question, Morgan Stanley’s London branch “aggressively” purchased futures in French, German and Belgian debt on Eurex. On the same day, its European Governments Bonds and Agencies Desk sold 815m euros worth of 17 different government bonds on MTS France and Broker Tec platforms. AMF alleges that Morgan Stanley fixed prices on some of the bonds, and then said the price variations were “normal” given the volumes traded.

Morgan Stanley has disputed allegations of any wrongdoing and commented that “the activities in question were undertaken in accordance with market practice”. It intends to lodge an appeal.