How the traders operated
The FCA launched its antitrust investigation in July 2023 and opened a consultation on its intention to accept commitments in June 2026.
The investigation focused on conduct in energy futures markets during a period of substantial market volatility.
The parties under investigation were day traders, principally in energy futures, who generally used their own proprietary funds. They traded through a trading arcade and were members of a trading group called Futures Trading Facilities Ltd (FTF), with each trader allocated sub-accounts under a master clearing account and funds pooled for risk purposes. Two of the traders were trainees supervised by another party.
In commodity futures trading, the competitive dynamic operates through anonymous order books, where traders do not ordinarily know one another’s identity or trading strategy. Independent decision-making on pricing and quantities is fundamental to the proper functioning of these markets.
The FCA’s decision omits much of the underlying allegations. Media reporting and US court filings shed further light. Allegedly, the traders engaged in ‘banging the close’ – principally in NYMEX WTI crude oil futures – by purchasing large volumes of ‘trade at settlement’ (TAS) contracts, which settle at the official NYMEX closing price, then selling aggressively in the closing window to drive down the settlement price – during an historic April 2020 session in which WTI crude prices turned negative for the first time.
The FCA’s concerns: information exchange and coordination
The FCA’s antitrust concerns centred on two categories of suspected cartel conduct.
- Information exchange: Traders may have unilaterally disclosed, and bilaterally and multilaterally exchanged, competitively sensitive information, such as current trading positions, recent orders and trades, and future trading intentions.
- Coordination of trading strategies: This ranged from explicit planning to more spontaneous coordination where one trader disclosed a course of action and others confirmed they would follow it.
The FCA’s preliminary view was that this conduct may have had the “object and/or effect” of restricting competition.
The FCA characterised the suspected information exchanges as capable of reducing uncertainty about each trader’s likely future conduct. This enabled recipients to better assess risks and rewards. It also gave disclosing parties reassurance in formulating their strategies as well as an opportunity to change their actions following comment on their positions and intentions.
Commitments accepted
The traders made various commitments, legally binding for five years, including:
- Not to disclose or accept specified categories of competitively sensitive information about commodity futures contracts – covering trading positions, pricing, volumes, and timing – subject to narrow exceptions for trainee supervision, clearing firm risk management, and genuine bilateral settlement order trades.
- To pay ex gratia GBP1 million to the UK’s Crisis and Resilience Fund, without claiming this as a tax liability deduction.
- To attend annual antitrust training.
- To provide the FCA with an annual compliance statement.
The FCA applied the criteria in the Competition and Markets Authority (CMA)’s procedural guidance for accepting commitments. In doing so, the FCA declined to reach a view on whether the suspected conduct constituted cartel conduct.
Comment
The penalty cap gap
For individual day traders whose ‘turnover’ for penalty purposes is modest, the 10% statutory cap may produce maximum fines well below, e.g., trading volumes or profits. Here, the FCA explicitly acknowledged that the commitments route extracted a larger financial consequence than formal enforcement could have delivered.
This penalty gap was likely a significant factor in the FCA’s decision to accept commitments – despite the CMA’s procedural guidance stating that commitments are a “very unlikely” outcome in “secret cartel” cases. Expect the FCA to reach for commitments in future similar cases.
For context: media reporting linked these traders to the April 2020 oil crash, during which they allegedly made between approximately USD630m and USD700m as prices went negative – making the GBP1m payment look modest relative to trading profits, and underscoring the structural gap in the enforcement framework.
Ongoing ambiguity in the FCA’s favour
The FCA avoided testing two potentially complex and fraught points of fact and law, preserving flexibility for future cases involving trading arcades and similar businesses:
- The single economic unit question remains unanswered. The FCA treated each trader as a separate undertaking for antitrust purposes. Yet the factual matrix – a single trading group, a shared master account, pooled funds, trainees supervised by other traders – may have made a single economic unit defence genuinely arguable.
- No infringement finding was made. By agreeing commitments, the FCA closed its investigation without making any antitrust infringement finding. Thus, while the FCA described the suspected conduct as potentially having the “object and/or effect” of restricting competition, it did not commit to either characterisation or reach a view as to whether the suspected conduct constituted a cartel. This avoids creating a precedent that informal information exchange between traders in anonymous markets falls short of an object restriction.
Until these points are more squarely addressed, the mere fact that the FCA has obtained commitments in this case will incentivise businesses to take a more conservative approach to mitigating the risk of antitrust breaches, including by treating information barriers between traders as a compliance priority.
The FCA’s choice of grounds – and related U.S. developments
In this case the FCA proceeded under its competition remit, addressing matters of information flow. The FCA did not pursue, for example, an allegation that the traders infringed the disclosure limb of the market abuse regime as regards their trade and order activity, or engaged in market manipulation by ‘banging the close’. This may reflect the FCA’s drive to conclude enforcement actions more efficiently – perhaps by preferring grounds that may be more readily established.
U.S. regulators and courts may examine the alleged behavioural aspects of this case more closely. A US class action (Mish International Monetary Inc. v. Vega Capital London, Ltd. et al., Case No. 1:20-cv-04577) remains ongoing in the Northern District of Illinois, Eastern Division, alleging antitrust conspiracy under Section 1 of the Sherman Act, violations of the Commodity Exchange Act, and unjust enrichment. The CFTC published an interim staff report on trading in NYMEX WTI crude oil futures on and around April 20, 2020. It has not announced any enforcement action. The US Attorney’s Office reportedly has scrutinised the trading activity. NYMEX has investigated the event, in the course of which it has taken disciplinary action against two of the traders for failing to produce some requested records or appear for an interview.
Read across for larger firms
The case involved small-scale proprietary traders. However, the categories of information the FCA identified as potentially competitively sensitive – future trading intentions, current positions, recent orders, and trading strategy – are similar to those subject to compliance and control arrangements at larger firms.
This case will prompt firms to revisit whether their antitrust compliance frameworks for trading communications are as robust as their market abuse surveillance.
The immediate practical takeaway: the threshold for FCA intervention may sit below what would robustly support a contested infringement finding. The credible threat of enforcement, backed by the FCA’s willingness to investigate and publicise outcomes, is itself a material regulatory risk to address.
Immediate steps firms should consider
- Review information barrier arrangements between traders operating within shared infrastructure.
- Assess whether antitrust compliance frameworks for trading communications match the rigour applied to market abuse surveillance.
- Consider whether a conservative risk appetite is being applied consistently where proprietary funds are traded within a common group structure.
