Financial Conduct Authority  

FCA fines broker £3.5m for 'printing trades'

FCA fines broker £3.5m for 'printing trades'

The City watchdog has fined an FX options broker nearly £3.5m for communicating misleading information to clients.

In a final notice published today (November 23), the Financial Conduct Authority fined TFS-ICAP £3.44m for “printing” trades between 2008 and 2015.

Printing involves brokers communicating to their clients that a trade has occurred at a particular price or quantity when no such trade has actually taken place.

According to the watchdog, TFS-ICAP brokers did this openly and over a prolonged period of time across multiple broking desks.

By printing trades, the broker firm sought to encourage clients to trade when they might not have done in order to generate business for TFS-ICAP. In doing so, the FCA ruled TFS-ICAP did not observe proper standards of market conduct.

Mark Steward, executive director of enforcement and market oversight, 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.”

The FCA also found that TFS-ICAP did not react to warning signs that printing might be taking place or act to address the risk of it.

Therefore, the broker firm also failed to act with “due skill, care and diligence”.

There were no 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, the FCA said.

According to the City watchdog, the firm also had shortcomings in its oversight and compliance arrangements to detect and counter the risk of brokers providing information on trades that had not taken place.

As TFS-ICAP agreed to resolve this case with the FCA, the firm qualified for a 30 per cent discount to the overall financial penalty imposed. Without the discount, the FCA would have imposed a penalty of £4.92m.

Simon Morris, a financial services partner at law firm CMS, said: “This is a serious case of dealing desks for over eight years openly giving clients misleading information intended to deceive them and which management failed to note or control.

“The fine is remarkably low for such serious misconduct.” 

imogen.tew@ft.com

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