Swiss energy trading company TOTSA TotalEnergies Trading SA has agreed to pay $48 million to settle allegations brought by the Commodity Futures Trading Commission (CFTC) that it attempted to manipulate the market for futures contracts tied to a refined gasoline used primarily in European automobiles. The CFTC announced the settlement on Tuesday, though one commissioner dissented, citing “flimsy evidence” that was largely circumstantial.
CFTC Fines TOTSA $48M : Alleged Market Manipulation
The case centers on TOTSA’s alleged attempt to manipulate the market for EBOB-linked futures contracts in March 2018. EBOB, a type of refined gasoline, is commonly used in European cars. The CFTC claimed that TOTSA traders intentionally sold winter-grade EBOB at prices below the market rate to influence futures prices and boost the value of the company’s short position in those futures contracts.
The CFTC’s order explained that TOTSA’s trading desk, known as the “lights desk,” sold physical EBOB at artificially low prices in an attempt to push down the benchmark price set by London-based price reporting service Argus. Since TOTSA had a short position in EBOB-affiliated futures, it stood to profit if the benchmark price dropped. As a result, TOTSA reportedly sold more gas in March 2018 than in any previous month, accounting for over 60% of the brokered market’s reported transactions.
Dissenting Opinion from Commissioner Pham
Commissioner Caroline D. Pham dissented from the CFTC’s decision, arguing that the evidence supporting the allegations was speculative and circumstantial. Pham also criticized the CFTC’s enforcement division for failing to provide the commission with relevant information that could have weakened its case. She emphasized that TOTSA’s actions were consistent with legitimate business activities in the gasoline and energy markets.
