FCA plans to end Essex Boys probe after traders offer £1mn charity payment

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FCA ends Essex Boys probe

Highlights

The FCA plans to end its probe into the 'Essex Boys' traders after they offered a £1mn donation to the Crisis and Resilience Fund and committed to competition law training.
The proposed settlement, exceeding any likely FCA penalty, includes commitments on information sharing but does not constitute an admission of wrongdoing or a determination of competition law violations.
Group members, having reportedly earned over $700mn during the April 2020 oil market collapse, have faced lawsuits and CME fines of $35,000 to $100,000 and trading bans in the past year.

Proposed settlement and regulator concerns

As reported by Financial Times, the Financial Conduct Authority said on Wednesday that it plans to end its probe after receiving a number of commitments from the traders known as the "Essex Boys". The FCA said it is concerned the group may have co-ordinated trading strategies and exchanged potentially sensitive information in commodity futures markets, potentially breaching competition law.

The regulator said the traders' proposed £1mn donation to the Crisis and Resilience Fund, a government fund supporting people facing financial hardship, is sufficient to ensure deterrence is not undermined. It also said the arrangement includes annual training on competition law and commitments not to share sensitive information.

The FCA said its investigation raised concerns that the traders may have hindered competition by disclosing current or future trading actions and receiving confirmation from others that they would follow the same course. It is now inviting comments on the proposed agreement, which it said is likely to exceed any penalty it could impose on the individuals after any infringement finding.

The watchdog added that the agreement does not amount to an admission of wrongdoing and does not indicate that the traders accept its concerns. It said it has made no determination that any competition law infringement exists.

Market fallout and wider legal exposure

The traders were members of Futures Trading Facilities, a trading group that was dissolved in 2022. Operating through a trading arcade, they used separate brokerage accounts to place speculative bets on oil and other commodities in energy futures markets.

The group drew scrutiny after reportedly making very large profits within a few hours as oil prices collapsed during the pandemic in 2020. That episode has triggered lawsuits and regulatory penalties in both the U.S. and UK-linked markets.

Several of the traders have been sued in the U.S. over allegations that they were part of a broader group that earned more than $700mn by colluding to push crude oil futures briefly into negative territory in April 2020. In the past year, seven traders also agreed to pay fines ranging from $35,000 to $100,000 and accept bans in settlements with CME Group, owner of the New York Mercantile Exchange.

Graeme Reynolds, the FCA's director of competition, said competition law exists to ensure markets work well and that the regulator investigates and acts where appropriate. Dechert, which represents the traders, said it welcomes the FCA's decision and said the voluntary contribution is not a fine or penalty.

Our earlier analysis of CME Group (CME) focused on the stock’s bearish technical setup, with the price trading below key moving averages and momentum indicators pointing to persistent selling pressure. We outlined a near-term trading range and flagged the $246.49 level as a key resistance that would need to break to signal any meaningful reversal, with the outlook otherwise remaining soft and range-bound.

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