FCA imposes £3.44M fine on TFS-ICAP for market misconduct
The UK Financial Conduct Authority (FCA) today announces the imposition of a £3.44 million fine on FX options broker TFS-ICAP for market misconduct.
The regulator has found that, between 2008 and 2015, brokers at TFS-ICAP carried out the practice of ‘printing’ trades. This involved brokers communicating to their clients that a trade had occurred at a particular price and/or quantity when no such trade had actually taken place. TFS-ICAP brokers, across multiple broking desks, did this openly and over a prolonged period.
Printing trades sought to encourage clients to trade when they might not have done, to generate business for TFS-ICAP. As such, TFS-ICAP did not observe proper standards of market conduct.
Furthermore, TFS-ICAP did not react to warning signs that printing might be taking place or act to address the risk of it, and so failed to act with due skill, care and diligence. Also, there weren’t any records to evidence the practice which, in turn, meant the investigation had to establish the existence of a practice that was opaque and unrecorded in any of TFS-ICAP’s records.
TFS-ICAP also had shortcomings in its oversight and compliance arrangements to detect and counter the risk of brokers providing price or quantity information on the basis that it was based on actual trades when these had not taken place.
The FCA thanked for the assistance provided by the Commodity Futures Trading Commission (CFTC) in the United States in its investigation.
Let’s recall that, in September 2018, the CFTC charged TFS-ICAP LLC and TFS-ICAP Ltd. (TFS-ICAP) with fraud and supervision failures. The regulator alleged that, from approximately 2008 through 2015, brokers at TFS-ICAP offices in the United States and the United Kingdom routinely attempted to deceive — and deceived — their clients by engaging in the practices of communicating to them fake bids and offers and fake trades in the FX options market.
In addition, the Complaint charged the Chief Executive Officer, Ian Dibb, and the Head of Emerging Markets broking, Jeremy Woolfenden, with supervisory failures due to their alleged knowledge and/or encouragement of the fraudulent practices.
In October 2020, the Division of Enforcement of the CFTC and all defendants in this case said they reached an agreement in principle to resolve the case. More specifically, the Division and the Defendants have agreed on the language of a proposed consent order.