Regulator Scrutinizes Alleged Manipulation of VIX

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from The Wall Street Journal,

Financial Industry Regulatory Authority looking into whether bets were placed on S&P 500 options to influence VIX futures.

A U.S. regulator is looking into whether prices linked to the widely watched Cboe Volatility Index have been manipulated, according to people with knowledge of the matter.

The volatility gauge known as VIX is derived from S&P 500 options prices. The Financial Industry Regulatory Authority is scrutinizing whether traders placed bets on S&P 500 options in order to influence prices for VIX futures, the people said.

On Monday, a whistleblower separately urged U.S. regulators to investigate VIX manipulation, claiming it has cost investors hundreds of millions of dollars in losses each month, according to a letter from a law firm representing the whistleblower.

It is unclear whether Finra’s activities on the VIX amount to a formal investigation by the organization. Finra could also reach the conclusion that prices for VIX futures haven’t been manipulated.

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