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DCM Blog 
​Industry, Compliance, Strategy and Regulatory Updates

There is a difference between the US and Europe futures markets' disciplinary actions - you should take that into account

8/2/2020

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When DCM does trade compliance training for non-US firms trading US markets there is often that moment when the client realizes that thinking trading US futures has the same risk as trading EU futures may be very, very wrong. This doesn't have to do with the basic understanding that markets trade differently or that liquidity pools my differ but rather the understanding that the traders - and their supervisors - may have much more direct contact with and risk from US exchange and regulatory enforcement staff. 
Let's just take one small example. Since June 1, 2020, ICE Futures Europe has issued 3 disciplinary circulars. All three dealt with brokers ("Members" in ICE Europe parlance) and failures of their procedures for handling customer business. CME, on the other hand, has issued 30 disciplinary or summary action notices in the same period. Of those, 13 were summary action notices - minor infractions by brokers that were even less impactful than the ICE Europe circulars. The other 17, however, only four were for brokers - for fines from $35K to $60K. Of the other 13, eight were actions against individuals four individuals with eight notices total). In three cases, they were individuals being disciplined for actions within their employment (either as brokers or traders) and the fines ranged from $15K to $200K with associated suspension from privileges to act on customers behalf or to trade the market ranging from 32 years to a permanent bar from ever entering a customer order to the exchange. The other individual trading their own account had a $20K fine and a 30 bar from the exchange.
This is a significant departure between operating environments. One has a more collaborative regulatory structure with a rule book oriented toward the Member (broker) being the entity with responsibility. The other environment is one where the individual logging into the trading screen had personal responsibility for trading activity and violations with the firm having strict liability for any action of their employee when trading the screen.
DCM suggests you take that into account when considering how different your oversight and training should be when trading global markets. 
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    Thomas Lord

    DCM Founder
    Commodity Adviser

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