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FMA focus analysis on “leverage certificates”: No indication of market manipulation

Release Date: |

Austria’s Financial Market Authority FMA has carried out a focus analysis to examine 54 selected leverage certificates issued on securities that are listed on Wiener Börse. This included all certificates that market participants and observers have assessed in the media as being critical in recent weeks and months. The thorough analysis has not revealed any indication of market manipulation in connection with these leverage certificates.

As part of the analysis, issuers’ behaviour as well as parallel developments in the cash market for the underlying securities, including order situation and actually effected transactions, were investigated.

Among the significant results yielded by the analysis were the following:

  • There was no indication of agreed action among issuers of leverage certificates (up to 24 independent national and international financial institutions were involved in each of the underlying securities).
  • Hedging of leverage certificate positions was accomplished by issuers in some cases through offsetting with derivative positions instead of via the cash market.
  • The transactions triggering a knock-out event were not related to leverage certificates but rather to high-volume orders placed by retail customers or institutional investors. As a rule, stop-market orders were the ones causing knock-out thresholds to be reached.

It can therefore be ruled out that, for the leverage certificates analysed, market manipulation occurred. There is thus no “leverage certificate scandal” in Austria in the judgement of the FMA.

For further information please contact
Klaus Grubelnik (FMA Media Spokesperson)
+43/(0676)/882 49 516

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