Trader Arcadia unbowed by CFTC oil-rigging deal

Well before settling a long-running oil price manipulation case this week, global oil trader Arcadia had shrunk itself to a leaner operation with an almost singular focus: trading the very contracts US regulators accused them of rigging.

Arcadia, a London-based trading firm founded in 1988 and bought eight years ago by Norwegian shipping billionaire John Fredriksen, does not expect restrictions agreed with the US Commodities Futures Trading Commission (CFTC) to disrupt its new strategy focused mainly on trading US-based crude, said Paul Adams, chief executive of the US-based Parnon arm.

The two traders allegedly at the centre of the trading scheme, who like Adams were former star traders at oil major BP, continue working for the company, he said. And Parnon still has years to run on oil storage tank leases in Oklahoma, the focal point for the commission's inquiry.

"The case has obviously been a concern hanging over us, and we're glad to get it resolved," Adams said in his first interview after Monday's US$13 million settlement with the CFTC ended a high-profile case launched in 2011.

Arcadia, Parnon and the two traders did not admit or deny wrongdoing in the settlement. They agreed to a number of limits, including a cap on how much physical crude they can hold in the tanks, as well as tougher record-keeping and reporting.

"The terms of the settlement don't constrain the business as we are currently operating," he said.

Once known as a leading trader of West African crude and a major exporter from Yemen and South Sudan, Arcadia has shrunk to a group of just 30 to 35 traders based almost wholly in London's exclusive Knightsbridge area, down from a peak of more than 100 spread across over half a dozen offices worldwide.