The derivatives broker said the regulator had found managers at its global broking division and compliance department had “failed to act with due skill, care and diligence” as well as having “inadequate” controls in place to deal with improper conduct by its brokers.
The FCA added in its own report that “lavish entertainment and a lack of effective controls” had allowed inappropriate conduct including ‘wash’ trading to take place.
A ‘wash’ trade is a form of illegal market manipulation where an investor simultaneously sells and buys the same stock or financial instrument, creating misleading activity in the market.
The regulator said the conduct had created “unwarranted and unusually high amounts of brokerage” at the firm, resulting in “serious failings”.
“Obvious red flags of broker misconduct and opportunities to probe were missed. For example, when the firm made inquiries of one broker about the basis for inordinately high brokerage on one trade the broker responsible said 'you don’t want to know' and no steps were taken to identify the reasons, let alone whether they were appropriate”, said Mark Steward, the FCA’s director of enforcement and market oversight.
TP ICAP had also been penalised for failing to cooperate with the FCA after it failed to produce requested broker audio tapes in a timely manner in 2011, an act that Steward said had reflected a "high degree of culpable incompetence".
The company added that the fine would be listed as an exceptional item in its 2019 full-year results.
Nicolas Breteau, TP ICAP’s chief executive, said none of the individuals involved in the investigated activities remained at the firm and that it had “significantly” enhanced its systems to comply with regulatory expectations following the incident.