Washington, D.C. – The Commodity Futures Trading Commission (CFTC) has settled charges against TOTSA TotalEnergies Trading SA (TOTSA), formerly known as TOTSA Total Oil Trading SA, for attempting to manipulate the market for EBOB-linked futures contracts. The alleged scheme aimed to benefit the company’s derivatives positions, violating the Commodity Exchange Act (CEA) and CFTC regulations.
The CFTC order requires TOTSA to pay a $48 million civil monetary penalty and cease and desist from further violations of the CEA and CFTC regulations. The company is not registered with the CFTC.
“Benchmark manipulation is an age-old scheme firms have attempted in many markets,” stated Ian McGinley, Director of Enforcement at the CFTC. “This settlement demonstrates such attacks will not be tolerated in any market.”
According to the CFTC, the attempted manipulation centered around EBOB, a refined gasoline used primarily in Europe. TOTSA, along with other energy-trading companies, blends and sells EBOB gasoline. Futures contracts linked to EBOB trade on CFTC-regulated exchanges, with the value determined by the Argus EBOB Benchmark – a price based on brokered physical EBOB transactions reported to Argus.
In March 2018, TOTSA allegedly attempted to manipulate the EBOB market by selling physical EBOB at prices below what buyers were willing to pay. During this period, TOTSA’s sales volume exceeded that of any previous month, accounting for over 60% of all brokered market transactions. These transactions were reported to Argus and factored into the Argus EBOB Benchmark.
Simultaneously, TOTSA held a significant short position in March-settled EBOB-linked futures. A decline in the reported price of EBOB would increase the value of this short position. TOTSA reportedly blended and sold large quantities of physical EBOB, and even offered to sell it at prices lower than existing bids, effectively sacrificing revenue to depress the benchmark price and increase profits from its futures position.
The CFTC alleges this conduct constitutes attempted market manipulation, violating Section 6(c)(1) of the CEA and CFTC Regulation 180.1(a)(1). While TOTSA cooperated with the investigation, the CFTC noted the company did not promptly produce certain WhatsApp communications requested by the Division of Enforcement.
Source: CFTC.gov
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