Swap Dealer Fined for Pre-Trade Mid-Market Mark Compliance Failures

A swap dealer settled charges for failing to adhere to pre-trade mid-market mark ("PTMMM") compliance requirements.

The CFTC found that between 2016 and 2022 the swap dealer (i) failed to disclose thousands of PTMMMs, (ii) did not diligently supervise its PTMMM compliance process, (iii) failed to ensure the accuracy of PTMMMs and did not conform them with its internal pricing methodologies and (iv) provided inadequate training and monitoring of associated persons.

The CFTC found that these deficiencies were in violation of CEA Section 4s(h)(1) ("Registration and regulation of swap dealers and major swap participants") and CFTC Rules 23.431(a) ("Disclosures of material information") and 23.602(a) ("Diligent supervision").

As part of the settlement, the CFTC imposed (i) a civil monetary penalty of $650,000, (ii) a requirement to complete remediation and submit compliance reports to the Division of Enforcement and (iii) cease and desist orders from future violations of the PTMMM Business Conduct Standards.