UK Regulator Considers $1.32 Million Crisis Fund from Day Traders in Probe
Day Traders Offer Crisis Fund Amid FCA Competition Law Investigation
Background of the Investigation
June 24 (Reuters) - Eleven commodity day traders have offered to donate £1 million ($1.32 million) to a crisis fund as part of a deal to end a three-year investigation by Britain's markets regulator into a possible breach of competition law.
The Financial Conduct Authority said on Wednesday it provisionally considered the traders' commitments appropriate, which included changing the way they handle sensitive information and annual training alongside a payment that is likely to exceed any penalty the FCA could impose.
Details of the Proposed Crisis Fund
Purpose and Beneficiaries
The traders, who traded mainly energy futures, have proposed arranging a contribution to the Crisis and Resilience Fund, a government scheme that provides support to low-income families and individuals in financial hardship.
Traders Involved and Their Activities
The traders, who focused on commodities such as natural gas and crude oil futures, were part of a group called Futures Trading Facilities, which was run and owned by one of the traders along with another individual.
Regulator's Concerns and Next Steps
Alleged Information Sharing
The FCA said it was concerned that they frequently exchanged information about their future trading intentions, their current trading positions and recent orders or trades and that they might have coordinated trading strategies between November 2019 and May 2020.
Consultation and Potential Outcomes
The FCA, which has to consult on its intention to accept the commitments, has asked for feedback from interested parties by the end of July 14. It could then close the investigation without deciding whether the law had been broken.
"The FCA has reached no view on whether competition law has been breached," it said in a statement. "Offering commitments does not amount to an admission of competition law infringement and the traders have made no such admission in this case."
Context on Day Trading and Legal Framework
Day Trading Practices
Day traders tend to trade their own funds and seek to profit from short-term price movements by dipping into markets but avoid holding open positions overnight.
Legal Provisions
Under the Competition Act, the FCA can accept commitments from individuals under investigation before it reaches a decision on any infringement.
Exchange Rate and Reporting Credits
($1 = 0.7594 pounds)
(Reporting by Kirstin Ridley in London and Ankita Bora in Bengaluru; Editing by Tasim Zahid and Louise Heavens)
