“On 4 December 2015, the Enforcement Committee handed down a penalty of €5 million to Virtu Financial Europe (formerly named Madison Tyler Europe), for market manipulation and ignoring Euronext market rules. It also handed down a penalty in the same amount to Euronext Paris for failing to meet its obligation to operate with neutrality and impartiality, in accordance with market integrity.
As regards Euronext Paris, the Enforcement Committee noted that the market undertaking had granted Madison Tyler Europe exemption from the penalties applicable for exceeding the ratio of the number of orders placed to the number of trades executed in a given security on a given day, at that time set by Euronext at 100 to 1.
The Enforcement Committee ruled that, in granting this exemption to allow Madison Tyler Europe to improve its algorithms “in the absence of any predefined programme and non-publicly, while it had announced to its members that no Liquidity Provider would be able to trade in the securities in which Madison Tyler Europe was trading, with no compensation, no limit as to duration and, ultimately, for a period of 16 months”, Euronext had not operated “with neutrality and impartiality, in accordance with market integrity”, and had thus breached the provisions of Article 512-3 of the AMF General Regulation.
It judged that such an exemption, from which only Madison Tyler Europe benefited over the period in question, had enabled the latter to implement a trading strategy which, because of the very large volume of orders placed and cancelled, could give rise to a disorderly market, especially given that other market members were not in a position to understand that the intense activity thus generated in order books was caused by a single participant.”