- Funds linked to the Vix index of stock market volatility are being tampered with
- Traders can change the Vix level by posting prices based on S&P 500 stocks
- CBOE Global Markets, which owns the Vix, insists that the claims are wrong
Rogue traders are manipulating indexes linked to Wall Street’s fear gauge, a whistleblower has said, causing multi-billion pound losses to investors every year.
An anonymous letter sent to the US authorities claims that funds linked to the Vix index of stock market volatility are being artificially pushed up and down by vulture firms seeking a quick profit.
If true, it could send a shockwave through American trading firms on a scale not seen since the Libor rate-rigging scandal erupted after the financial crisis.
A whistleblower has claimed that rogue traders are manipulating indexes linked to Wall Street’s fear gauge
The letter was provided by Washington firm Zuckerman Law, which represents a whistleblower claiming to have held senior roles in the investment business.
It was sent to the US Securities and Exchange Commission and the Commodity Futures Trading Commission, and explains in detail how the Vix index was said to have been manipulated.
Traders are able to change the level of the Vix by posting prices for options based on S&P 500 stocks, then cancelling them without executing a trade, the letter claims.
CBOE Global Markets, which owns the Vix, insisted that the claims are wrong.
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