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DCM Blog 
​Industry, Compliance, Strategy and Regulatory Updates

Do you have a compliance issue lurking? Problems don't always surface quickly.

1/22/2019

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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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    Thomas Lord

    DCM Founder
    Commodity Adviser

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