The Commodity Futures Trading Commission (CFTC) has issued a penalty against one of the largest banking groups in Australia and New Zealand for failing to meet its supervision obligations regarding spoofing surveillance.
The banking group, provisionally registered as a swap dealer, admitted to the charges brought forth by the CFTC, which resulted in a $500,000 civil monetary penalty and a cease and desist order.
During an investigation, the banking group disclosed to the CFTC that its surveillance tool failed to adequately monitor spoofing activity in Eurodollar futures due to timing mismatches with data ingestion. This issue persisted during two separate periods, leading to the evasion of surveillance alerts for thousands of orders. Despite initial detection, the banking group neglected to implement sufficient safeguards, resulting in a recurrence of the problem.
The CFTC reduced the penalty due to the banking group's cooperation during the investigation and efforts toward remediation.
This case underscores the critical importance of robust data controls and governance within trade surveillance. It is imperative that any discrepancies in data ingestion are promptly identified and flagged by the system. Unfortunately, this capability is lacking in many trade surveillance solutions.
How SteelEye can help
SteelEye is the pioneering provider of integrated surveillance solutions.
SteelEye’s Trade Surveillance solution enables firms to effectively monitor their trading operations for any behavior indicative of market abuse. It covers a wide range of risk indicators, including spoofing.
More importantly, SteelEye's data controls and governance framework is designed to ensure the integrity and completeness of data ingestion and processing. Our sophisticated monitoring systems continuously track the flow of data, alerting users promptly if any discrepancies or interruptions occur.
Book a demo with SteelEye to see firsthand how our data-driven surveillance solutions make your compliance practices more robust and effective.
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