TFS-ICAP senior managers respond to CFTC allegations - FinanceFeeds

TFS-ICAP senior managers respond to CFTC allegations

Maria Nikolova

Ian Dibb and Jeremy Woolfenden argue that the CFTC fails to allege that the practice called “flying’” violates the CEA.

Several months after TFS-ICAP LLC and TFS-ICAP Ltd. opposed the Commodity Futures Trading Commission (CFTC) allegations of fraud and supervision failures, Jeremy Woolfenden and Ian Dibb who are also defendants in this case, sought to respond to the CFTC claims.

Jeremy Woolfenden was the Global Head of Emerging Markets broking at TFS-ICAP, whereas Ian Dibb was the CEO of TFS-ICAP from approximately 2011 to 2017.

Mr Woolfenden and Mr Dibb have earlier this week submitted Letters which seek to highlight alleged deficiencies in the CFTC complaint in this case.

Jeremy Woolfenden, who is a United Kingdom citizen, argues that the CFTC claims against him have to be dismissed as he has never lived in the United States and never engaged in any alleged conduct in New York. The CFTC also fails to allege sufficient “minimum contacts” of Mr Woolfenden with the forum to satisfy the due process requirements, he says.

Both Mr Woolfenden and Mr Dibb argue that the practice called “flying” does not violate the Commodity Exchange Act.

According to the Complaint, “flying” is when a broker posts a bid or offer that is not backed by a specific trading institution. The Complaint alleges that this practice is fraudulent because the Volbroker User Agreement and User Guide indicate that bids and offers posted by brokers are binding bids and offers backed by trading institutions. These documents say no such thing.

The defendants insist that “flown” levels posted by brokers were merely good faith estimates of where the market would likely trade – a permissible and non-fraudulent practice – as opposed to a false factual representation that a specific institution was making an offer at a specific level. Therefore, according to Mr Woolfenden and Mr Dibb, the CFTC cannot allege that these levels were fraudulent.

Additionally, as detailed in TFS’s letter, the Complaint fails to allege materiality. Contrary to the CFTC’s assertions in response to TFS’s letter, there is nothing in the Complaint that “gives rise to a strong inference of materiality,” and, even if there were, that is neither a particular allegation nor the relevant legal standard. Rather, to survive a motion to dismiss, the CFTC must show that a “there is a substantial likelihood that a reasonable investor would consider the alleged misstatements important in making an investment decision.”

Mr Dibb notes that, although the Complaint refers to the incorporation of certain bids and trades into proprietary trading models, the Complaint is silent on whether flown prices and printed trades were actually important to investor decisions.

Let’s recall that the CFTC downplayed the arguments raised by TFS-ICAP LLC and TFS-ICAP Ltd. and insisted no amendment to its complaint is necessary. It remains to be seen what the CFTC’s reaction to Dibb’s and Woolfenden’s argumentation would be.

Read this next

Industry News

BlackRock opens up to Bitcoin investment

The two eligible funds are no lightweights and they contain more than $40.0 billion of assets between them

Industry News

Citi launches a new suite of futures trading algos

Implementation shortfall algorithms are designed to keep or reduce that cost differential (slippage) to a minimum

Inside View

FX brokers are beginning to not just talk about becoming their own ECN or exchange, they are doing it!

FX brokers who do capitalize on the importance of offering a full range of venue-listed products via genuine live market liquidity will be left behind. The b-book OTC world has limited future, and the companies at the top are already working on its replacement. Here is our full analysis

Industry News

China spent a year purging itself of global FX brokers. Now it is about to unleash its own monster

Saxo Bank and eToro knew what they were doing when they sold out to Chinese firms. We look at how the government purged the FX businesses for its own greed and own ends. Now may be the time to consider how to structure a Chinese FX company.

Industry News

The journey towards a consolidated European tape

The chair of ESMA, Steven Maijoor, has bemoaned the lack of such resources., famously saying in the past that: “After nearly 2 years of operating under MiFID II, we’re still lacking a reliable view of liquidity across the EU”

Industry News

Fund managers push back over the FCA clampdown on cryptocurrencies

Assets under management in these types of investments have risen 5 fold over the last 12 months to stand at around €2.30 billion today

Industry News

IG Group impresses with bumper interim figures and plans for a tastytrade in the USA

Not only did turnover increase substantially at IG Group, profitability did as well, and the business made £231.30 million in the first 6 months of the financial year

Industry News

Genesis launches FX Prime Trade Capture application in partnership with Brazilian broker-dealer XP Investimentos

FX Prime also acts as a productivity tool that captures FX & Rates voice business and streams trade activity directly into the Prime Broker while simultaneously serving as placeholder for books and records.

Inside View

Want to get your electronic brokerage business right in Australia? This is how

Now is the time to take heed of the brokers that are doing things the right way in Australia. Here is a full and open discussion with a company that is leading the way.