Following our report from February 10 that Estonia’s financial regulator Finantsinspektsioon (FSA) had issued a fine of €32,000 fine to Admiral Markets AS stemming from trading action in April 2020 when crude oil prices went negative, Admiral Markets has formally responded that they will challenge the fine – as we hinted at the time that they likely would.
The fine itself is a very small one, but we see the situation as Admiral Markets believing that it was right in how it dealt with customers through that episode. Also, Admiral Markets views this as a matter of principle – that they want it on record that they treat clients properly and fairly.
According to the regulator, Admiral Markets had not acted entirely in accordance with the country’s Securities Market Act, following the crash of crude oil futures prices in April 2020. Admiral Markets said it has decided to file an appeal to the court and challenge the decision. In their opinion, explanations provided by the regulator may not have been fully understood. It could be that the complexity of the matter has not been considered in its entirety and the unprecedented market-specific circumstances have been overlooked while making the decision.
Admiral Markets confirms that it has always acted in the best interests of its clients and is confident that regardless of the opinions in the FSA announcement, it operated in accordance with the regulatory framework even when faced with unusual circumstances.
As a reminder, in April 2020, for the first time, a unique event took place affecting the global financial markets. As a result of this, for the first time in history, the future crude oil price on global financial markets went negative and all market participants had to act instantly to this never-before-seen market phenomenon.
Admiral Markets confirms that the company acted in the best interests of its customers and ensured that they could continue to trade in global financial markets despite the unprecedented circumstances in the overall trading environment.
“Risk assessment is a core part of our industry. This is a proof of our utmost commitment to our clients that we took the hard path while others might have taken the easy way out and simply closed trading,” noted the CEO of Admiral Markets AS, Sergei Bogatenkov.
In other words, the liquidity partner of the company took unprecedented steps to prevent negative prices to trading platforms, as online systems would not be able to technologically cope with such a situation. There is no precedent for this. Admiral Markets said it had to act operatively to protect the interests of all their customers around the world and ensure that they could continue to transact in global markets. The company noted that it put the interests of their clients above its own while limiting their possible risks related to the resulting situation which the markets had never experienced before. Admiral Markets said it stood up and did all within its power to reduce the potential impact on its customers.
According to Admiral Markets, the FSA has not taken into consideration all market-specific circumstances when taking their decision. Other regulators in Europe have conducted supervision of the members of the Admiral Markets group companies and in no other entity were their actions considered to be non-compliant with relevant regulation or that their notifications were not sufficient. The company believes that this is an eloquent argument and the company hopes to address this also before the court. Admiral Markets has always been committed to ensuring that the interests of its customers around the world are protected.
Admiral Markets informed its customers as early as 2020.04.03 of possible anomalies in the financial markets and asked them to be vigilant in such unprecedented circumstances. Even more, they informed their clients seven times over the next 20 days about relevant changes as well as decisions taken that would affect their trading conditions with Admiral Markets. In the company’s opinion it is a very clear risk mitigation.
The company stated that it has carefully read the decision of the FSA and upon assessment the decision is based on conclusions that do not correspond to market practice neither does it seem that the methodology or explanations provided to the regulator have been considered prior to the issuing of the regulators’ decision. In the opinion of Admiral Markets, not all market-specific circumstances have been taken into account while making the decision nor have the numerous notifications been considered sent to the company’s clients throughout the turbulent time. The risk management processes are of utmost importance to Admiral Markets and the company constantly updates them. Large investments to mitigate risks and ensure quality client-centric service are regularly made. The company feels that it has helped customers to reduce potential impact in such unique circumstances and acted in the best interests of them. That’s why it has decided to file an appeal to the court to challenge the FSA’s decision.