Currency spoofing probe could spell trouble for forex options

Enforcement action may hamper regulatory efforts and result in dark pool practices, an industry lawyer says

dark pools
Dark side: enforcement action may increase systemic risk

A widely reported move by the New York attorney general to investigate possible spoofing in forex options for emerging market (EM) currencies could put regulatory and enforcement efforts at odds, making it difficult for this segment of the market to develop and even pushing such trades into dark pool territory.

Spoofing is a form of manipulation that involves placing fake orders in the market with no intention of executing them. These orders create the illusion of demand, leading traders to

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