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FCA fines brokers £3.5m for market misconduct

The Financial Conduct Authority (FCA) has fined TFS-ICAP Ltd, an FX options broker, almost £3.5m for communicating “misleading” information to clients.

The watchdog fined the firm £3.44m for carrying out the practice of “printing” trades, which involved brokers communicating to clients that a trade had occurred at a particular price or quantity when no such trade had actually taken place. 

The FCA alleges that TFS-ICAP brokers did this “openly” across multiple broking desks over a prolonged period, adding that the practice coerced clients to trade when they might otherwise not have done.

The regulator added that TFS-ICAP “did not react to warning signs that printing might be taking place or address the risk of it, and failed to act with due skill, care and diligence”.

In addition, there were no records to be used as evidence of the practice which meant the investigation had to “establish the existence of a practice that was opaque and unrecorded in any of TFS-ICAP’s records”.

The FCA also reported that TFS-ICAP 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.

Mark Steward, executive director of enforcement and market oversight, FCA said:”This market should take notice that printing, or providing information to clients where the basis for the information is not true, is not in keeping with appropriate standards of market conduct. 

“The market should also take notice that the opacity of such practices, while forensically challenging, is no bar to action either.”

TFS-ICAP agreed to resolve this case with the FCA, qualifying for a 30% discount to the overall financial penalty imposed. Without this discount, it would have received a fine of £4.92m.

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