TotalEnergies Trading hit with $48m fine for attempted market manipulation

The US market regulator charged the global energy and commodities trader with attempting to interfere with the market for EBOB-linked futures contracts.

The US Commodity Futures Trading Commission (CFTC) has issued charges against Swiss energy trader TOTSA TotalEnergies Trading, requiring it to pay a $48m (SFr40.47m) penalty for “attempting to manipulate the market”.

According to a CFTC statement issued on Tuesday, it has ordered charges against TOTSA for manipulating the market for EBOB-linked futures contracts – a legally binding promise to buy or sell something at a predetermined price for delivery at a specified time – in violation of the Commodity Exchange Act and CFTC regulations.

EBOB is a type of refined gasoline primarily used in European automobiles. Energy trading companies including TOTSA blend and sell EBOB gasoline.  

Futures contracts are linked to EBOB’s price trade on CFTC-regulated exchanges and are financially settled based on a benchmark price published by the London-based price-reporting service Argus (the so-called Argus EBOB Benchmark).

As per the CFTC complaint, in March 2018, TOTSA tried to influence the market for EBOB-linked futures by selling physical EBOB in the Argus brokered market at prices lower than what buyers indicated they were willing to pay.  

The CFTC reveals that TOTSA sold a greater volume of physical EBOB throughout that month than in any previous month. TOTSA’s sales comprised more than 60% of the total volume traded by all brokered market participants.  

Ian McGinley, Director of the CFTC’s Division of Enforcement, said: “Benchmark manipulation is an age-old scheme firms have attempted in many markets.”  

The market regulator stated that TOTSA tried to take advantage of its EBOB-linked short futures position by blending and selling a lot of physical EBOB and also attempted to sell it at prices lower than what buyers were willing to pay.

It said that on multiple occasions in March 2018, TOTSA traders consistently offered to sell EBOB for a lower price than another market participant’s indicated bid.  

McGinley added that in “numerous cases over the past 20 years, the CFTC has guarded market integrity by detecting and prosecuting these benchmark-related schemes”.

He continued that this scheme “involved an attack on the market integrity of CFTC-regulated futures contracts on gasoline, and this settlement demonstrates such attacks will not be tolerated in any market”.  

The order requires TOTSA to pay a $48m civil penalty and “cease and desist” from any CEA and CFTC regulations violations.

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