Release Date: 23rd November 2020
To access the original FCA document, click here.
Summary
The Financial Conduct Authority (FCA) has fined TFS-ICAP Ltd, an FX options broker, £3.44 million for market misconduct related to misleading information provided to clients.
Between 2008 and 2015, brokers at TFS-ICAP engaged in ‘printing’ trades, a practice involving the communication of false information about trades that had not actually occurred. This was done to encourage clients to trade, thereby generating business for TFS-ICAP. This practice, carried out openly across multiple broking desks, did not meet proper standards of market conduct.
Despite warning signs, TFS-ICAP failed to address the risk of ‘printing’ trades, demonstrating a lack of due skill, care, and diligence. The absence of records documenting these practices further complicated the investigation, highlighting significant shortcomings in TFS-ICAP’s oversight and compliance arrangements.
Mark Steward, FCA Executive Director of Enforcement and Market Oversight, emphasised that the market should understand that providing false information to clients is unacceptable and that the lack of transparency in such practices does not prevent regulatory action.
TFS-ICAP cooperated with the FCA, qualifying for a 30% discount on the penalty, reducing it from £4.92 million to £3.44 million.
Key Takeaways:
- Proper Market Conduct: Firms must ensure accurate communication with clients and avoid practices like ‘printing’ trades.
- Effective Risk Management: Warning signs should prompt immediate action to address potential misconduct risks.
- Thorough Record-Keeping: Maintaining detailed records of all transactions and communications is crucial for compliance and transparency.
- Regulatory Cooperation: Cooperation with regulatory authorities can result in reduced penalties and demonstrate a commitment to resolving issues.
In conclusion, the FCA’s action against TFS-ICAP highlights the importance of maintaining high standards of market conduct, effective risk management, and thorough record-keeping to ensure the integrity of financial markets.
Back to the Dear CEO letter archives.