It took two years before the UK regulator followed FCA after the U.S. CFTC’s Regulatory Enforcement Action and fined the FCA-licensed FX broker TFS-ICAP for fraudulent trading practices. FCA recently announced that it has imposed a £3.44 million financial penalty on TFS-ICAP Ltd for market misconduct. Between 2008 and 2015, TFS-ICAP brokers operated a scheme known as printing trades or flying prices. TFS-ICAP brokers did this openly with the goal to generate business. In 2018 the UK broker pleaded guilty to securities fraud in the U.S. and paid a $1.15 million fine.
TFS-ICAP is a financial institution regulated by the UK FCA with reference number 206018 doing business via www.traditionicap.com.
The TFS-ICAP practice is also known as “flying prices” and allegedly was a core part of TFS-ICAP’s broking business. Brokers flew prices and printed trades to clients over the phone, in instant message chats, and on TFS-ICAP’s proprietary electronic trading platform. The purpose of “flying” fake bids and offers and “printing” fictitious trades was to give clients the impression that there was more liquidity on TFS-ICAP’s platform than there actually was and to induce traders to transact at times and at prices that they would not otherwise have transacted.
The U.S. Fraud Case
TFS-ICAP has already been penalized by the U.S. Commodity Futures Trading Commission (CFTC) for an FX options printing trades fraud scheme in 2018. The British broker and its U.S. affiliate TFS-ICAP LLC pleaded guilty to securities fraud and agreed to pay a $1.15 million fine related to fake trades in FX options. Hence, the FCA has conducted its investigation with the assistance of the CFTC.
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 UK regulator would have imposed a financial penalty of £4.92 million.