The Commodity Futures Trading Commission (CFTC) has responded to Ian Dibb, CEO of TFS-ICAP, on the fraud case filed by the commission against the brokerage firm. The regulator disagrees with Ian Dibb, arguing that TFS-CAP is guilty of reporting non-bona fide and fake FX options transactions in their company’s electronic trading platform.
Earlier today, the NY Southern District Court where the case is held, released the response made by Dibbs against CFTC on the case.
In September last year, the CFTC filed a complaint against TFS-ICAP, accusing the brokers of deceiving their clients. The commission accused them of carrying out sharp practices in the form of offering fake trade bids in the FX options market. CFTC said both the brokers in the United Kingdom and the United States offices of the brokerage firm were liable for the gross misconduct. According to CFTC, the sharp practice usually referred to as “printing trades” or “flying practice” was part of the core practices of the TFS-ICAP broking business.
TFS-ICAP Counter’s CFTC’s claim
In reaction to the commission’s claims, Dibb requested the court to dismiss all the claims made against the brokerage because they were unfounded. According to him, the complaint is not a true representation of section 4 of the Commodity and Exchange Act. CFTC said the Act made provision for anti-competitive efforts to generate non-bona fide prices or generate fictitious sales. The brokerage firm said its brokers did not break any rule, pointing out that their practice is following the stipulated Act.
The Commission, while responding to Dibb’s comment, reiterated that its complaint is directly about the type of sharp practice. According to the commission, the brokers of TFS-ICAP have regularly reported non-bona fide and fake forex options transactions on the brokerage trading platform.
It further pointed out that the brokers deceived the clients by using aliases to represent offers and bids on the trading platform. They used the fake aliases to make clients believe that trade had occurred at a certain price, but in essence, there was no such trade. Also, CFTC accuses TFS-ICAP of flashing fake trades even when there was no real counterparty.
But Dibb is still arguing that the company was not acting in accordance with any competitor, but acting on its own. He further stated that the complaint did not allege any anti-competitive, collusive, private, or pre-arrangement activity from TFS brokers. According to Dibbs, these are the areas where the brokerage would have been held liable. But the brokerage was not involved in any of these.
As CFTC has stated, Congress does not intend to prevent only collusive conduct between two parties. According to them, it would be a narrow interpretation of the law which will lead to an illogical result. It is highly inappropriate for two parties to cause clients to believe that a market had occurred when in essence, no trade occurred. On the other hand, it would be completely legal when a single party was acting on its own to deceive the market in the same way. According to the commission, both actions, whether as a single party or two parties, are highly inappropriate as it causes the clients to believe wrongly.