Libero Commodities S.A., a non-US-based agricultural trading company, agreed to pay a fine of US $480,000 to the Commodity Futures Trading Commission for not filing mandatory weekly reports of its cotton purchases and sales since it began trading in May 2010 through April 29, 2014. Under CFTC rules, all cotton merchants and dealers, wherever located, who hold or control cotton futures positions in excess of reportable levels (e.g., 100 contracts for cotton) are required to file with the CFTC a Form 304 on a weekly basis setting forth all cotton bought or sold, or contracted for purchase or sale, at a price to be fixed later, referencing the relevant ICE Futures U.S. futures contract month on which the price is based (or if the reference is other than an ICE Futures U.S. contract month). According to the CFTC, on over 200 occasions during the relevant period, Libero failed to file with the CFTC a required Form 304. Libero, which is principally based in Geneva, Switzerland and maintains an office in Mato Grasso, Brazil, self-reported its violations, said the CFTC. In accepting Libero’s offer of settlement, the CFTC acknowledged Libero”s “cooperation in this matter, which included proactively and voluntarily analyzing its past trading activity since its inception and retroactively compiling and providing all of the back CFTC Form 304[s] that should have been filed with the Commission.” Last year, the CFTC fined two subsidiaries of Mitsui Corp US $500,000 for their failure to file mandatory weekly cotton reports. (Click here to access details in the article, "CFTC Fines Cotton Traders for Not Filing Weekly Reports Showing Their Physical Purchases and Sales" in the January 20, 2014 edition of Bridging the Week.)
Compliance Weeds: The Cotton On-Call Report references part III of Form 304. It must be prepared by relevant cotton merchants and dealers as of the close of business each Friday and received in the CFTC’s New York office by no later than the second business day following the Friday date of the report. All persons holding or controlling reportable futures positions in cotton, any part of which are used for hedging fixed-price cash positions in cotton and cotton products are required to prepare a monthly report of their cash positions as of the close of business on the last Friday of each month on Parts I and II of Form 304, and received in the CFTC’s NY office no later than the second business day following the Friday date of the report. There is an equivalent CFTC report for persons who hold or control futures positions that are reportable in grains, soybeans, soybean oil and soybean meal, any part of which is a bona fide hedging position. This report – CFTC Form 304 – must also be prepared monthly as of close of business on the last Friday of each relevant month and received in the CFTC’s Chicago office by no later than the following third business day.