Eleven commodity day traders have offered to donate £1 million ($1.32 million) to a government crisis program as part of a package of undertakings intended to bring to a close a three-year investigation by Britain’s Financial Conduct Authority into possible breaches of competition law.
The FCA said on Wednesday that it had provisionally assessed the traders' commitments as appropriate. The package includes a financial payment to the Crisis and Resilience Fund, along with measures aimed at changing how the traders handle sensitive information and instituting annual training. The regulator noted that the proposed payment would probably be larger than any penalty it could otherwise impose.
The traders under scrutiny primarily traded energy futures. In its statement, the FCA identified commodities such as natural gas and crude oil futures among the instruments they traded. The group of traders were members of an organization called Futures Trading Facilities, which, the FCA said, was run and owned by one of the traders together with another individual.
The regulator set out the concerns that prompted the inquiry: it found that the traders frequently exchanged details about their future trading intentions, their current trading positions, and recent orders or trades. The FCA also said it was concerned that trading strategies may have been coordinated over a specific period stretching from November 2019 to May 2020.
Before deciding whether to accept the commitments and close the case without reaching a formal finding on whether the law was breached, the FCA must consult on its intention to accept the undertakings. The regulator has invited feedback from interested parties, setting a deadline for responses of July 14. Following the consultation, the FCA could choose to close the investigation without issuing a definitive ruling on whether competition law was violated.
Context and next steps
The traders' proposal ties a monetary contribution to procedural and behavioural changes the FCA wants to see. The Crisis and Resilience Fund named as the recipient of the donation is a government program designed to support low-income families and individuals facing financial hardship. The regulator's consultation and the deadline for comments set a clear near-term window for interested parties to respond before a final decision is taken.