PERIOD OF INCREASED DEMAND FOR PETROLEUM PRODUCTS MAY LEAD TO DISCRIMINATION OF MARKET PARTICIPANTS

Regulators* note that this practice is unfair

At the Exchange Committee of the FAS Russia, regulators drew the attention of bidders to the unfair practice of using special automated trading systems - robots when submitting applications for the purchase/sale of petroleum products on the exchange spot market.

Regulators found that there were actions of individual participants with signs of using robots during the period of increased demand.

Such robots allow bidders to act systematically according to the similar algorithm with predefined criteria and behavioral mechanism: applications for the purchase of exchange-traded goods are submitted to the Exchange with an increase in price and in a short time period, in relation to the application previously submitted by another bidder. Thus, the trading behavior model used allows applications submitted using robots to remain always the best in the queue of purchase orders, which gives a preferential position for the purpose of purchasing goods on the exchange market of petroleum products.

Regulators note that robots application does not contradict the Russian legislation. However, one of the principles of work is to ensure non-discriminatory and equal access of legal entities and individual entrepreneurs to the possibility of making transactions with goods on the stock exchange. The revealed circumstances of the use of robots create discriminatory conditions for conscientious participants in the process.

The FAS Russia and the Bank of Russia recommend that the organizers of trade in the petroleum products market provide procedures in internal documents that will allow to identify the use of robots, as well as develop a list of measures aimed at discouraging the use of unfair practices. Regulators note that such measures may include warnings, fines, suspension of access and disconnection from trading with disclosure of information about unfair behavior.

As a result of consideration of this issue, SPBMTSB JSC issued a warning to a number of bidders **.

For reference:

*The FAS Russia, Bank of Russia.

** At the meeting of the Board of the Petroleum Products Section of SPBMTSB JSC, the issue of applying disciplinary measures against bidders who used robots to submit applications to the trading system was discussed. The members of the Board of the Section "Petroleum Products" made a unanimous decision on the recommendation of SPBMTSB JSC regarding the application of disciplinary measures. Such participants at the initial stage included Investneftetrade LLC, KD-Oil LLC, ATI LLC, TC Yugnefteprodukt LLC, Alfatek LLC.