Reed Smith Client Alerts

The Queen (on the application of TF Global Markets (UK) Limited (trading as Thinkmarkets)) v. Financial Ombudsman Service Limited and (1) Mr Samuel Tan (2) Mr Gianmarco Fedele (3) Ms Elene Ribers (the Interested Parties) [2020] EWHC 3178

A final decision of the Financial Ombudsman Service (FOS) has been successfully challenged in judicial review proceedings, and quashed by the Administrative Court. In a case involving FX latency arbitrage robots, it was held that, in construing contracts, the court must read clauses in the context of the entire contract and ascertain the objective meaning of the language used, rather than undertaking a “literalist exercise” focusing on the wording of a particular clause. This decision follows the recent trend in cases concerning contractual interpretation.

Authors: David Calligan Dilpreet Hothi

FOS vanquished in battle of the scalper robots

In judicial review proceedings brought in November 2020, an online FX trading platform provider successfully challenged a final decision issued by the FOS. HHJ Karen Walden-Smith found that the FOS had erred in giving the words of the terms and conditions governing the parties’ relationship a literal meaning, rather than considering the context and the contract as a whole. As such, the judge determined that the FOS had erred in deciding that, on the balance of probabilities, the Interested Parties had not been taking advantage of price latency arbitrage.


In November 2017, TF Global Markets (UK) Limited (TF), an online investment platform, sought to rely on its contractual trading terms to suspend 30 accounts, including suspending the accounts of three individuals (the Interested Parties), and withholding their profits. TF suspected that the Interested Parties had used algorithms/robots to identify lags in prices being displayed on TF’s platform and the market and had taken advantage of price latency, or had been engaged in market manipulation, to generate profit. Although the practice of price latency and arbitrage is not unlawful in the UK, it is regarded by many as being unfair. TF had prepared its terms and conditions so as to protect itself from unfair activities.

Clause 7.8 provided:

“We reserve the right to refuse any trades placed by you that we judge to be clearly outside the prevailing market price such that they may be deemed non-market price Transactions, whether due to manifest error or stale, incorrect or broken price feeds. Where we have opened or closed a trade before becoming aware of the price disparity, we may at our absolute discretion either treat that trade as void ….”

Clause 7.10 provided:

“…ThinkMarkets does not permit the practice of arbitrage, nor does it allow Client to take advantage of price latency. Transactions that rely on price latency or arbitrage opportunities may be revoked at our discretion.”

Clause 18 set out various client warranties, including that:

“18.2.2 (a) You will not place and have not placed a Transaction with ThinkMarkets or otherwise behaved, nor will you behave in a manner that would amount to market abuse and/or market manipulation by you (or by you acting jointly or in collusion with other persons).”

Complaint to the FOS

The Interested Parties each complained initially to TF, which considered and rejected those complaints, based on the proper construction of the contractual terms with its clients. The Interested Parties then complained to the FOS over TF’s decision to suspend their accounts and withhold profits on those accounts. The determination of the complaints followed the FOS’s iterative process, with the complaints being referred to an ombudsman for final decision as the Interested Parties did not agree with the adjudicator’s initial assessment of their complaints (being to agree with TF and reject them). 

The ombudsman considered and then upheld the complaints, finding that it was no more than a possibility that the individuals had conducted abusive trading, applying the balance of probabilities test. It ordered that the profits of each of the Interested Parties should be released, together with interest and compensation of £250. The Interested Parties accepted the ombudsman’s determination.