CFTC Fines Trader $200,000 for Spoofing Treasury Futures

A former bond futures trader settled CFTC charges for engaging in spoofing on the Chicago Board of Trade ("CBOT") on approximately 50 occasions. 

According to the Order, the trader served as head of the linear rates desk of a global financial institution during the relevant period. The CFTC found that he placed large orders for Treasury futures contracts, primarily the Ultra U.S. Treasury Bond futures contract traded on the CBOT, with the intent to cancel them before execution. The CFTC determined that these spoof orders were designed to create false signals of supply or demand and induce other market participants to execute against his genuine orders, which were placed on the opposite side of the market in correlated cash Treasury securities or other futures contracts. The CFTC said that once the trader's orders were filled, he canceled the spoof orders.

The CFTC found that the trader violated CEA Section 4c(a)(5)(C) ("Prohibited Transactions") which prohibits bidding or offering with the intent to cancel before execution.

To settle the charges, the trader agreed to (i) a civil monetary penalty of $200,000, due within 10 days of entry of the order; (ii) a 30-day ban on trading on or subject to the rules of any registered entity, during which all registered entities must refuse him trading privileges; and (iii) a cease-and-desist order from further violations of CEA rules.