NatWest Markets: Futures Orders With a Cash-Market Target

The NatWest Markets Treasury spoofing guilty plea covered schemes to mislead other traders with orders the bank’s traders intended to cancel. On December 21, 2021, NatWest Markets Plc pleaded guilty to wire fraud and securities fraud in a federal criminal case involving Treasury futures and cash securities. The company’s admissions also describe a connection an insider could recognize across trading screens: a trader placed false orders in futures to profit from trades in the cash market.

The Justice Department’s account of the criminal admissions identifies separate trading episodes in London, Stamford and Singapore. For someone who knows the orders, positions or surveillance records, the story is how an apparent change in buying or selling interest served the bank’s trading.

Two Treasury Markets, Separate Trading Episodes

The earlier Treasury-futures conduct ran from approximately January 2008 through May 2014. According to the Justice Department’s account of the criminal information filed with the plea, traders in London and Stamford, Connecticut, independently engaged in schemes involving Treasury futures on the Chicago Board of Trade, an exchange operated by CME Group.

The later episode concerned the secondary cash market for Treasury notes and bonds. For approximately three months in 2018, two traders at NatWest’s Singapore branch engaged in that scheme. The earlier conduct concerned futures contracts, while the Singapore episode involved buying and selling the securities themselves.

NatWest Markets Plc, formerly The Royal Bank of Scotland plc, was the company that entered the guilty plea. Its U.S. broker-dealer subsidiary, NatWest Markets Securities Inc., was formerly RBS Securities Inc. The subsidiary entered a non-prosecution agreement with the U.S. Attorney’s Office for the District of Connecticut in 2017.

The Justice Department said the later Singapore securities-fraud scheme breached that agreement. For an employee, those company names locate the commitments and the trading inside the business: the agreement belonged to the U.S. subsidiary, while the cash-market traders worked at the Singapore branch.

The Order Book Was the False Story

In its guilty plea, NatWest admitted that its traders placed orders with the intention of canceling them before execution. Their spoofing was meant to make other participants believe the visible order book reflected genuine supply and demand. The Justice Department said the orders were designed to push the prevailing price up or down so the bank’s traders could trade more profitably.

The deception worked through the information the market displayed. An order appeared to offer a real opportunity to buy or sell, and other participants could react to the apparent change in market interest. According to the criminal case account, that misleading information sometimes caused participants to trade at quantities, prices and times they otherwise likely would not have chosen.

We see a basic abuse of the market’s bargain here: other traders were expected to take displayed interest seriously while the bank’s traders intended that interest to disappear. The resulting trades were real. The supposed willingness to trade was the fiction.

A Treasury trader can recognize that picture from the other side of the trade. The question is what the displayed orders were meant to induce, and which trading position stood to benefit when someone reacted. Those connections give an order sequence its meaning.

False Futures Orders, Cash-Market Profit

The cross-market connection appears explicitly in the Justice Department’s account of NatWest’s criminal admissions. One trader exploited the close relationship between Treasury-securities prices and Treasury-futures prices, using spoof orders in one market to seek a benefit in the other:

The false signal appeared in the futures book, while the trader sought the payoff through cash trading. Someone who understands both sides can explain why an order that was intended to disappear mattered to a transaction somewhere else.

A 2024 working paper from a World Federation of Exchanges research project, An Analysis of Market Manipulation Definitions Around the World, describes how cross-market manipulation can span instruments, counterparties and desks, with profits taken elsewhere. The paper cites NatWest’s Treasury case as an example. Its broader analysis helps explain why examining an isolated order book can leave the economic purpose of the trading out of view.

For a Treasury-desk insider, the connection is between a position, the timing of an order and the cash transaction that benefited. We work with the person who understands that connection to make the trading story intelligible across the records. A surveillance alert and a profitable cash trade look like separate events until someone explains how they fit.

What Evidence Is Required to Prove Fraud?

For Treasury spoofing, the evidence connects the purpose of the displayed orders with the trades they were meant to influence. We work through that connection with you, examining the order sequence and the position the trader wanted to improve.

The industry’s transaction records and communications make that reconstruction possible. Those records preserve different parts of the sequence: what was offered to the market, what actually traded and what people said about the transaction.

A 2016 analysis in Futures and Derivatives Law Report, The Exercise of Anti-Spoofing Authority in U.S. Futures Markets: Policy and Compliance Consequences, explains the importance of the trader’s intention before execution. It describes an assessment that considers market context, trading patterns and how orders filled. Applied to this Treasury case, the evidence connects the intention to cancel with the price response and the trading that response was meant to help.

The same paper explains a practical limit of public order data: it can reveal suspicious trading while leaving the firms behind the orders unidentified. Exchange data supplies that identity connection. An outside participant who saw the market react and an employee who knows the account or desk understand different parts of the same event.

An operations employee can explain which trades belong together, while a surveillance employee can explain what an alert showed and how the firm responded. We build the case around that knowledge, connecting the records to the decisions they describe.

The Pattern Beyond NatWest

JPMorgan’s Commodity Futures Trading Commission spoofing resolution imposed a $436,431,811 civil penalty for conduct involving Treasury futures and precious metals. The Commission alleged supervision failures despite alerts, inquiries and internal allegations. That gives a surveillance employee a pattern in other market-fraud enforcement outcomes: the response inside the firm can matter alongside the trading sequence.

Deutsche Bank likewise faced separate Commission proceedings over benchmark submissions and spoofing. Its benchmark case concerned alleged LIBOR and Euribor manipulation, while the trading case addressed spoofing and supervision.

The NatWest case came from the criminal side. The FBI and U.S. Postal Inspection Service investigated it, and the Justice Department’s Fraud Section and the U.S. Attorney’s Office for the District of Connecticut prosecuted it. The Commodity Futures Trading Commission brings civil and administrative actions.

The Trading Knowledge a Whistleblower Brings

A trader, operations employee or surveillance analyst can explain why a seemingly isolated order served a broader position. Outside market participants can also bring information about trading they observed. In a separate anonymized award decision, the Commission described how a whistleblower’s explanation of a trading position helped investigators obtain admissions from a company witness.

The Commodity Futures Trading Commission’s whistleblower program provides awards totaling 10% to 30% of qualifying monetary sanctions collected for eligible whistleblowers. A whistleblower case under the False Claims Act can pay 15% to 30% of what the government recovers. These are separate programs, and we assess the trading evidence and the award opportunity with you.

You Know Where the Trade Paid

If you understand why a futures order helped a cash-market trade, talk with our whistleblower experts about what you saw. We develop the case with you and bring in CFTC whistleblower lawyers who understand Treasury trading and the evidence across desks. From the first call through the pursuit of your case, we stay beside you to build your strongest CFTC whistleblower case.