Nasim Salim, one of the alleged “spoofers” at the centre of legal action by United States market authorities, has spoken for the first time about claims that he and an acquaintance set out to disrupt precious metals futures markets.
"I am taking legal advice about this in the US to deal with this matter. I am also trying to contact the US authorities. I do not want to comment any further," Mr Salim told The National in a phone call from Dubai.
He declined to go into details on the allegations – contained in a court filing by the US Commodity Futures Trading Commission (CFTC) in New York last week – but is believed to be concerned that US regulators have overreacted in the case, which follows other high-proflie cases of alleged “spoofing”.
Heet Khara, the other UAE-based trader named in the CFTC filing, is believed to be travelling in India and could not be reached for comment.
The CFTC filing contained detailed allegations of “spoof” trades – in which a dealer makes large orders for transactions he has no intention of completing – in gold and silver futures markets beginning in February which amounted to “unlawful disruptive trading practices or conduct”.
The alleged trades were carried out via “futures commissions merchants” – brokers only identified in the filings as FCM A and FCM B.
The CFTC documents say that Mr Khara was introduced to FCM A via Zonyx DMCC, a company owned by Mr Salim.
There are several companies called Zonyx DMCC listed in Dubai business directories. One is registered at the Dubai Multi-Commodities Centre (DMCC) in the Jumeirah Lakes Towers free zone, with Mr Salim shown as owner. The DMCC declined to comment.
A spokesman for the federal markets regulator, the Securities and Commodities Authority (SCA), said that it had no contact with the CFTC about the matter and referred any enquiries to the DMCC.
The DMCC and the SCA in January signed an MoU aimed at “increasing mutual collaboration, attracting foreign investments, and promoting investor protection”.
The alleged offences by the two traders involve much smaller sums than other recent “spoofing” cases.
The court documents allege that Mr Khara made US$200,000 in one month’s trading. He allegedly deposited a total of $515,000 in trading accounts the courts have identified.
The CFTC has asked the court to ban Mr Salim and Mr Khara from trading on the markets it supervises, and has frozen the assets in their trading accounts. It is also seeking financial punishment for both men.
The CFTC action came after the Chicago Mercantile Exchange, which owns the Comex market where the alleged “spoofing” took place, took its own action against the two men, banning them from market activity for 60 days after it found evidence of “layering” – an illegal market technique in which orders of different sizes are placed but never seen through.
The CFTC claims it has evidence of both “spoofing” and “layering” against both men, and that they acted in concert.
It is believed that Mr Salim knows Mr Khara, but is likely to deny that any similar trading pattern between the two was anything more than coincidental.
The alleged offences are similar in nature to the ones it is claimed were perpetrated by Navinder Singh Sarao, the “flash crash” trader whose market transactions are claimed to have contributed to a multibillion dollar market collapse in 2010. Mr Sarao denies the charges, which have been brought by the US justice department.
The CFTC alleges that Mr Salim did not respond to emails or phone calls seeking details of his transactions, and that Mr Khara switched trading accounts to another broker once he became aware of the CFTC’s interest in the case.
fkane@thenational.ae
* With additional reporting by John Everington