FCA’s Mark Steward: “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” © Financial Times

A foreign exchange derivatives broker has been fined £3.4m by the UK financial regulator for giving clients misleading information over a period of seven years to encourage them to trade.

On Monday, the Financial Conduct Authority imposed the penalty on TFS-ICAP — a brokerage formed in 2000 through the merger of the over-the-counter forex options divisions of TFS Group and ICAP plc — for a practice known as “printing trades”.

Printing involves a broker telling clients that a trade has been executed at a particular price or order size when no such trade has in fact taken place — to encourage clients to place their own trades, generating income for the broker.

According to the FCA, TFS-ICAP’s brokers saw printing as being “part of the role” and something that “everyone was doing”. Its investigation — carried out with the US Commodity Futures Trading Commission — found that communicating fake trades took place openly on desks, with the aim of generating business for the group between 2008 and 2015.

Desk heads were aware that brokers were engaged in “printing”, the regulator found, and some even carried out the practice themselves. One senior manager admitted that two TFS ICAP brokers “broke every rule in the book”.

Mark Steward, executive director of enforcement and market oversight at the FCA, warned forex derivates traders that the difficulty of detecting “printing” would not prevent future investigations.

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

In addition to breaching regulations on market conduct, TFS-ICAP was also found to have failed to act on warning signs of misconduct, or address the risk, the FCA said.

TFS-ICAP also had shortcomings in its oversight and compliance procedures over the provision of trade information to clients. As a result, the FCA and CFTC investigation had to “establish the existence of a practice that was opaque and unrecorded in any of TFS-ICAP’s records”.

TFS-ICAP did not immediately respond to requests for comment.

A regulation lawyer not involved in the case suggested the financial penalty for “printing” should have been higher.

“The fine is remarkably low for such serious misconduct,” said Simon Morris, a financial services partner with law firm CMS. “The FCA initially set it at £18m but thought this was ‘disproportionately high’ but without saying why and cut it to £3.4m for quick settlement. Quite a snip.”

In its notice of the fine, the FCA said the amount was calculated as 15 per cent of TFS-ICAP’s “relevant revenue”, discounted first for proportionality and then for agreeing to resolve the matter.

Former clients of TFS-ICAP may now have a claims for redress, said Ravi Nayer, a partner at law firm Brown Rudnick.

“Given the underlying conduct of ‘printing’ involved misrepresentations to customers in order to induce trades, a valid question arises as to whether those trades would have occurred at a different price, if at all,” he said.

“The primary question now for customers is whether they were affected by these issues and what redress they might be entitled to.” 


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