“Throughout March 2018, TOTSA sold more physical EBOB than it had ever previously sold in a single month. The volume of EBOB that TOTSA sold in March constituted more than 60% of the reported volume transacted by all brokered market participants.”

💡 This shows TOTSA had unprecedented market power to influence the benchmark price through sheer volume of sales.

“TOTSA’s traders were willing to accept less revenue from the company’s sales of physical EBOB, in an attempt to depress the reported price of EBOB, and increase TOTSA’s overall trading profits (by boosting the value of the company’s EBOB-linked short position).”

💡 The CFTC explicitly found traders sacrificed physical sales revenue to manipulate benchmark prices for derivatives profits.

“A broker specifically told Trader A that another market participant was willing to buy winter-grade EBOB for $2 more per tonne, and asked if TOTSA would sell at the open for this higher price. Trader A indicated that TOTSA did not want to sell at this higher price, and reiterated TOTSA’s previously expressed lower price.”

💡 This demonstrates traders knowingly rejected more profitable transactions to keep prices artificially low.

“Another market participant subsequently indicated that it was prepared to buy EBOB from TOTSA for $10 more per tonne than the level at which Trader A had initially indicated TOTSA was prepared to sell. Trader A repeatedly refused to sell EBOB for this higher price.”

💡 Refusing a $10 per tonne premium is economically irrational unless the goal is benchmark manipulation, not maximizing sales revenue.

“TOTSA did not have to blend winter-grade EBOB during this period (it could have blended summer-grade EBOB, or some grade of gasoline other than EBOB).”

💡 The choice to blend winter-grade just before the seasonal transition was strategic, creating artificial selling pressure.

“In March 2018, TOTSA LIGHTS desk traders attempted to sell winter-grade EBOB, at prices that were lower than what other market participants had indicated they were willing to pay, in an attempt to depress the price of EBOB-linked futures, and increase the value of TOTSA’s short position in these futures.”

💡 The CFTC found traders deliberately tried to depress futures prices through manipulative physical sales.

“The short position was large enough that the financial benefit to TOTSA, if the price of EBOB was lower during March, could potentially more than offset any lost revenue a lower physical price might cause TOTSA to incur on sales of physical EBOB.”

💡 This explains the economic rationale for accepting losses on physical sales to gain on derivatives positions.

“If TOTSA had been trying to maximize its profits from selling physical gasoline, blending a large quantity of winter-grade EBOB in February and March would not have been a prudent strategy.”

💡 The CFTC recognized the blending strategy made no sense for physical profit maximization, only for benchmark manipulation.

“Prohibitions on manipulative devices are designed to protect the market from devices that could interfere with legitimate pricing forces.”

💡 This establishes the public policy purpose behind the anti-manipulation rules TOTSA violated.

“TOTSA did not timely produce certain WhatsApp communications that the Division requested (or adequately preserve these communications following the Division’s request), with the result that other potentially relevant evidence was not available to the Division.”

💡 TOTSA’s failure to preserve evidence likely prevented discovery of additional misconduct and witness communications.

“TOTSA Trader B initially responded by indicating that TOTSA was not interested in selling winter-grade EBOB at either of these higher prices. Trader B also emphasized that TOTSA’s offer to sell at a lower price was ‘valid.'”

💡 Emphasizing a lower offer remains valid despite higher bids shows deliberate intent to keep prices down, not maximize revenue.

“The LIGHTS desk established this short position in EBOB-linked futures not just to hedge TOTSA’s physical product, but as part of an effort to make money by speculating on the price of physical EBOB.”

💡 The futures position was primarily speculative rather than legitimate hedging, making the manipulation more egregious.

“Without admitting or denying any of the findings or conclusions herein, Respondent consents to the entry of this Order.”

💡 The settlement allows TOTSA to avoid formally admitting guilt despite paying $48 million and being found in violation.

“The act, omission, or failure of any official, agent, or other person acting for any individual, association, partnership, corporation, or trust within the scope of his employment or office shall be deemed the act, omission, or failure of such individual, association, partnership, corporation, or trust.”

💡 This establishes TOTSA’s corporate liability for its traders’ actions even without proving senior management knew.

“Section 6(c)(1) of the Act and Regulation 180.1 do not require the showing of an intent to affect prices or an actual effect on prices. Nor does Regulation 180.1 require a showing of reliance or harm to market participants in a government action brought under CEA section 6(c)(1) and final Rule 180.1.”

💡 The CFTC only needed to prove the attempt to manipulate, not that prices actually moved or anyone was directly harmed, making enforcement easier.