The Commodity Futures Trading Commission fined ICE Futures U.S., Inc. US $3 million last week for filing allegedly inaccurate or incomplete reports related to trading activity, prices and delivery notices from October 2012 to at least May 2014. According to the CFTC, IFUS’s “reporting errors and omissions cumulatively numbered in the thousands” and affected certain data in the exchange’s required reports to the CFTC “for every reporting day” on the 325 reporting days during the relevant time period.
Moreover, claimed the CFTC, during the relevant time period and period of the Division of Enforcement’s investigation into IFUS’s reporting miscues, IFUS “did not respond in a timely and satisfactory manner” to inquiries from Commission staff from various divisions, including enforcement staff, about the data reporting issues. The CFTC acknowledged, however, that ultimately IFUS “did cooperate fully” with the Division of Enforcement’s investigation and fixed the reporting problems.
The CFTC said that IFUS’s reporting errors and omissions arose “primarily” as a result of technology upgrades and data migration projects. The Commission also acknowledged that, although there were problems during the relevant time with reports made by IFUS to the CFTC, there were no problems with data published by IFUS on its website.
Under CFTC rules, a derivatives contract market, like IFUS, is required to submit to the CFTC for each business day certain information in order for the Commission to conduct its routine oversight of markets and participants. According to the Commission, it uses the information provided by DCMs,
to detect and prevent situations that could pose a threat to the markets and to keep the Commission informed of significant market developments. The effectiveness of the Commission's market and financial surveillance programs depends on accurate and timely reporting from DCMs.
The CFTC said it initially notified IFUS of its reporting issues at the beginning of the relevant time period and throughout 2013.
In addition to agreeing to pay the fine to resolve this matter, IFUS consented to the creation and appointment of a new senior position of chief data officer who will be directly responsible for all regulatory reporting. IFUS also agreed to maintain at least three additional quality assurance staff members dedicated to regulatory reporting, and to conduct certain testing to ensure the quality of certain past and future reporting.
IFUS agreed to the settlement of this matter “without admitting or denying the findings and conclusions” in the relevant CFTC order.