From: RegTech Analyst
A UK City watchdog has fined TFS-ICAP, a foreign exchange options broker, £3.44m for communicating misleading information to clients.
After collaborating with the US Commodity Futures Trading Commission for the investigation, the Financial Conduct Authority (FCA) alleged that brokers at company carried out the practice of printing trades between 2008 and 2015.
That means that the involved brokers told clients that a trade had occurred at a particular price and/or quantity even though no such trade had actually taken place. TFS-ICAP brokers, across multiple broking desks, did this openly and over a prolonged period, the FCA stated.
The brokers allegedly used this practice to push clients to trade when they might not have done, to generate business for TFS-ICAP. As such, the FCA has stated that TFS-ICAP did not observe proper standards of market conduct.
The regulator also said that the company failed to react to warning signs that printing might be taking place or act to address the risk of it, meaning it may have failed to act with proper due diligence and care.
The City watchdog also said that was guilty of having 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.
“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,” said Mark Steward, executive director of enforcement and market oversight at the FCA. “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, thereby qualifying for a 30% discount to the overall financial penalty imposed. Without this discount, the FCA would have imposed a financial penalty of £4.92m.
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