Back on December 5th of last year a trader was fined for behavior that ICE considered manual spoofing. The fine was low for this type of behavior - $15K. The trader was also suspended from the market for 9 weeks.
Obviously the check hasn't arrived yet. So, on January 25, an additional notice was issued extending the trading access denial until the fine was paid in full. This is the sort of thing you should consider as a "flag risk" for your management. This notice was sent 7 weeks after the original notice - not the full 9 weeks. Regardless, I would imagine every compliance officer would not want their management calling asking about this additional notice. Consider paying any assessed fine well prior to the due date for any exchange fine - otherwise you might be explaining this follow on notice to senior management.
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One thing to note is that compliance problems don't always bite quickly. This month, the CME fined an individual $50K and suspended him for three years from the markets. This order was issued January 7, 2019. The Probable Cause Committee meeting was in August, 2018. The alleged behavior was in October, 2017.
The full time line is over 14 months. This points out one of the critical factors that comes up frequently in any compliance discussion with a client - can you quickly and accurately recreate data and activity AFTER the fact. A simple concept is that the faster you can respond to a regulator or exchange's inquiry with complete documentation of the incident, your internal analysis and resolution, the more likely you are to have a more favorable resolution with the party inquiring. If, on the other hand, you have to spend three weeks even figuring out what happened the inquiring party is going to wonder why you weren't even looking. Remember, regulators and exchanges don't have all your information. Rational trading behavior and disruptive trading CAN look the same. Being prepared can make a difference in the time and effort you have to spend on resolving an inquiry. The CBOT notice is here - https://www.cmegroup.com/notices/disciplinary/2019/01/cbot-16-0571-bc-2-benn-hepworth.html#pageNumber=1. Think about how you would be able to respond to a question about alleged wash trades. |
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