A Chicago-based swap dealer agreed to pay $650,000 as part of a settlement with the Commodity Futures Trading Commission (CFTC) addressing admitted disclosure and supervision failures.
StoneX Markets failed to disclose thousands of pre-trade mid-market marks (PTMMM) and to diligently supervise its disclosure process, the CFTC announced in a press release Wednesday. The firm was ordered to complete a remediation plan and submit reports to the CFTC’s Division of Enforcement on its compliance.
The details: From March 2016 to at least June 2022, StoneX failed to comply with the CFTC’s business conduct standards by not properly training and monitoring associated persons regarding its disclosure requirements, the agency said in its order.
Specifically, StoneX failed to implement procedures to confirm disclosures provided to counterparties were calculated in accordance with its internal pricing methodologies.
The firm’s training failures were so troubling that associated persons “did not understand the complete universe of products that required PTMMM disclosures,” the CFTC said.
StoneX’s supervisory system failed to adequately monitor if associated persons were providing disclosures to counterparties when required and in a timely manner.
Compliance considerations: StoneX admitted its violations and agreed to implementing enhanced procedures to prevent failures in the future, including:
- Adopting a trade surveillance and monitoring process for disclosure failure alerts;
- Providing additional training regarding PTMMM disclosure circumstances;
- Enhancing annual review of each associated persons’ PTMMM disclosures; and
- Automating disclosures for certain swaps.
Within 60 days of the order, StoneX must provide a written report certified by its chief compliance officer and chief executive that these remedial efforts have been taken.
The CFTC said it considered StoneX’s cooperation in accepting the settlement offer.
StoneX did not respond to a request for comment.