Firm Settles Charges for Employee Supervisory Failures on NEX SEF

A firm settled CME Group charges for failing to adequately supervise an employee trading on the NEX swap execution facility ("SEF").

A Hearing Panel ("Panel") found that the trader executed self-matched trades on the NEX SEF for the purpose of transferring positions between the firm’s books under his control. The Panel said the trader entered the opposing orders in his front-end trading system and received messages from the firm’s intracompany transfer system, which incorrectly indicated that the transactions were internal. The Panel found failures in the firm's surveillance and supervision, that allowed the trader to continue to execute self-matched trades in five products on the NEX SEF for several months, including after NEX SEF contacted the firm regarding the trading at issue.

The Panel determined that the firm violated NEX SEF "Legacy" Rule 407(h) ("Failure to Supervise").

To settle the charges, the firm agreed to pay a $90,000 fine.