FCM Settles Charges for Supervisory Failures on Surveillance of Customer Trading Activity

A registered futures commission merchant settled CFTC charges for failing to supervise adequately the monitoring of its customers' trading.

In its order, the CFTC found that between July 2018 and June 2022, the FCM failed to receive data from two different vendors over three distinct trading periods for surveillance of customers' potentially "disruptive" trading. The CFTC stated that the FCM did not verify that its vendor was receiving and processing all customer trading data, which led to "certain of its customers’ products trading not being surveilled for nearly two and a half years." The CFTC determined that $12.8 million of cleared contracts were not surveilled.

The CFTC charged the FCM for violating CFTC Rule 166.3 ("Supervision"). The settlement included (i) a civil monetary penalty of $395,000, (ii) a cease and desist from future violations and (iii) other remedial steps.