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DCM Blog 
​Industry, Compliance, Strategy and Regulatory Updates

You paid all this money for systems - are you running them right? Today's CME fine says you better be.

10/26/2018

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The CME just fined Deutsche Bank $75K for a single trade between two accounts that was a wash trade masquerading as an EFRP. They were fined for both violating the EFRP rules and the wash trade rules.
The real kicker was this line in the notice:
Notwithstanding DBAG’s implementation of a multi-tiered pre- and post- execution system to monitor the execution of EFRP transactions, which incorporates front, mid and back office functionality, in this instance DBAG, through a series of mistakes, reported a non-bona fide EFP to the Exchange
This is a fairly large fine for a single action. But it is also an indication that just having the systems isn't enough, especially if the controls then fail in a serial manner to allow a trade that should be caught to go through.
This is a signal indication that training and testing of controls and processes should be something anyone who has installed systems should be focusing on. The mitigation factor of having the systems isn't very valuable if the exchange finds out they aren't being operated properly.

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    Thomas Lord

    DCM Founder
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