No admission, no infringement, £1 million paid: why the FCA's commodities competition case matters
The FCA's proposed resolution of its commodity futures trading investigation is notable – not because of the competition concerns themselves, but because of the way the regulator has chosen to address them.
Eleven individual day traders have offered “commitments” to address the FCA's concerns that they may have exchanged competitively sensitive information and/or coordinated aspects of their trading activity. The proposed commitments include restrictions on information sharing, annual competition law training, and a £1 million ex gratia payment to the Crisis and Resilience Fund.
Crucially, the FCA has made clear that it has reached no view on whether competition law was infringed and that the traders have made no admission of liability.
The decision not to pursue a formal infringement finding, is consistent with the FCA’s current approach, focusing on outcomes over traditional enforcement routes. The novel form of resolution in this case resonates with a recent speech by Therese Chambers (joint executive director of enforcement and market oversight at the FCA), in which she stressed the FCA’s desire to make, “fuller use of the tools available to us”.1
“The Suspect Conduct”: familiar competition concerns
The underlying allegations reflect well-established competition law principles.
According to the FCA, in the period 1 November 2019 to 30 May 2020 (the “Relevant Period”) the traders may have exchanged information relating to matters such as trading positions, future trading intentions, recent orders and trading strategy. The concern was that these exchanges may have reduced independent decision-making and hindered competition in commodity futures markets.
Competition authorities have long taken the view that exchanges of competitively sensitive information can infringe competition law where they reduce strategic uncertainty between competitors. From a legal perspective, therefore, the FCA's theory of harm is not itself novel.
Nevertheless, the case serves as a useful reminder that competition law risks can arise not only from explicit agreements but also from communications that reveal strategically valuable information about future market behaviour.
The FCA Notice states that, “The Parties focussed their trading on energy futures contracts on exchange. This included gas oil, natural gas and crude oil futures. Some of the Parties also traded other types of commodity futures contracts, including agricultural commodities.”2 No more detail is provided about the futures, trading, or markets in question. Media reporting has linked this outcome to the oil market crash of April 2020, and reporting at that time that a group of UK-based traders allegedly made almost $700 million as oil prices went negative, falling to an unprecedented -$38 a barrel.3
It is noteworthy that the Notice has been issued six years after the end of the Relevant Period, particularly at a time when the FCA has emphasised “pace and focus” in its enforcement work.4
Before resolving the matter in this way, the FCA must consult on its intention to accept commitments. Interested parties have until 5pm on 14 July 2026 to respond to this consultation.
What does this mean for trading firms and traders?
For firms and traders alike, this resolution re-emphasises the fact that competition compliance remains highly relevant in markets where information flows quickly and professional relationships are close.
Not every exchange of information between market participants is problematic. Traders routinely discuss market developments, liquidity conditions and publicly available information. However, greater care is required where communications move beyond market colour and into discussions of:
- future trading intentions;
- current or planned positions;
- order flow;
- trading strategy; or
- other information that could allow competitors to anticipate future market conduct.
Communication is not inherently suspect. However, firms should ensure that traders understand the distinction between legitimate market dialogue and exchanges that may reduce uncertainty about competitors' future actions.
The more interesting development: commitments over infringement
The more significant feature of the case is the FCA's proposed use of commitments.
If accepted, the commitments would resolve the investigation without an infringement decision. The package includes information-sharing restrictions, competition law training, annual compliance statements and reporting obligations.
That approach reflects a broader regulatory question: when is it preferable to secure behavioural change rather than pursue a contested infringement decision? In the recent past, the FCA’s answer to that question has been to place emphasis securing outcomes and reducing harm, emphasising the “pragmatism” in its approach5, and making “fuller use of the tools available to us” to achieve these ends.6
For the regulator, commitments can deliver a number of advantages. They allow concerns to be addressed more quickly, avoid lengthy litigation and ensure that specific compliance measures are implemented. For investigated parties, they can provide certainty, and avoid the consequences that often follow a formal infringement finding.
The FCA's proposed approach suggests a willingness to focus on future conduct and market outcomes rather than solely on establishing past liability.
A £1 million payment without a finding of infringement
The most distinctive feature of the case is undoubtedly the proposed £1 million ex gratia payment to the Crisis and Resilience Fund.
The payment is not described as a fine, nor is it compensation for market participants who may have been affected by the conduct under investigation. In this regard, the outcome proposed in the Notice sits distinct from other recent cases in which the FCA has sought compensation for those who have suffered harm.7 At the same time, the FCA has stated that the amount is likely to exceed the penalty that could have been imposed on the individuals following an infringement finding because competition law penalties are capped at 10% of turnover in the year preceding any infringement decision.
This is what makes the case particularly interesting.
The proposed outcome combines:
- no infringement finding;
- no admission of liability;
- behavioural commitments;
- compliance obligations; and
- a substantial financial payment.
Whether this approach to resolving competition concerns is a pragmatic resolution in a particular case or serves as a precedent for future cases remains to be seen. However, as noted above, it demonstrates the FCA's willingness to explore more flexible remedies where it considers they can address regulatory and/or competition concerns effectively.
The Notice in this matter comes at a time when oil markets are in focus for regulators. Amid high-trading volumes and volatility, in the context of the US / Iran conflict and reduced traffic through the Strait of Hormuz, regulators (including the Commodities and Futures Trading Commission) are reported to be investigating suspicious trading patterns in oil futures, including significant trading volumes in the minutes before announcements and social medial posts by the President of the United States.8
Looking ahead
The FCA's competition concerns in this case are grounded in established principles governing information exchange and independent decision-making. What distinguishes the matter is the proposed resolution. The combination of commitments, compliance measures and a significant ex gratia payment suggest a regulator increasingly focused on practical outcomes and behavioural change. In view of the FCA’s current, publicly stated enforcement posture, outcomes that seek to achieve these objectives, outside of traditional enforcement, may become more common.
For firms operating in financial markets, the case is a reminder that, although the outcome in this matter is novel, competition compliance, trader communications, and global commodity markets remain a focus for regulators and will be the subject of investigation where communications or trading patterns are suggestive of competition law or market abuse concerns.
Authors: Marta Isabel Garcia and Alan Ward
1 Beyond the headlines: the unseen fight against financial crime | FCA
2 Notice of Intention to Accept Commitments: CA98.2023.01
3 UK regulator drops probe into ‘Essex Boys’ traders after they offer to pay £1mn to charity and ‘Essex Boys’ Oil Traders Make Charity Offer to End UK Regulatory Probe - Bloomberg
4 Change for the better: the FCA’s evolving approach to enforcement | FCA
5 Do the right thing: Part II | FCA
6 Beyond the headlines: the unseen fight against financial crime | FCA
7 See for example: CACEIS UK censured and to pay £31.7m to WealthTek clients for weak financial crime controls | FCA
8 Exclusive | Flurry of Suspicious Oil Trades Worth $800 Million Triggers Regulatory Probe - WSJ
