CFTC Slams $22 Million Fine On Nasdaq Futures For Regulatory Breaches

Nasdaq Futures, Inc. has been slammed $22 million fine by the Commodity Futures Trading Commission (CFTC) for regulatory breaches from its incentive programs.

The commission stated that the company operated a DCM that focused on energy futures contracts from July 2015 to July 2018. Nasdaq Futures is a former designated contract market (DCM). The company rolled out an incentive program called the DMM program, which offers rewards to customers for their participation.

Nasdaq Futures Provided False Information

According to the regulator, Nasdaq Futures did not disclose a volume-based component that affected some participants in the market. This violation stood even though it reported the fixed stipend for market makers publicly.

According to the CFTC, the value of the fixed stipend was never revealed to the public or the CFTC. It is required by the CFTC and Community Exchange Act to report such activities to the regulator and other concerned bodies.

Apart from omitting the important details about the volume-based payment, CFTC said its investigation discovered other violations. The regulator stated that when the firm was questioned about the matter, it provided false information.

The representatives of the firm denied that there were any volume-based payments despite enough evidence that proved otherwise.

According to the representatives, the misrepresentation went against the SEA’s principle of DCMs, which mandates proper disclosure and observance of the regulatory requirements.

FTX and Alameda Research Pay The Biggest Fine In C FTC’s History

Director of Enforcement at CFTC, Ian McGinley, commented on the enforcement action. He stated that the oversight policies of the CFTC depend on the provision of the right information by CFTC-designated exchanges. He added that the conduct of Nasdaq Futures is a significant violation of its duty to provide accurate information.

To compound the issue further, the firm refused to adhere to the recommendations from the CFTC to provide solutions to specific trading activities. The regulator saw the non-compliance by the company, which has led to the issuance of the overall fines to the firm.

In another development, Alameda Research and FTX have paid $12.7 billion to CFTC for several violations. The financial watchdog stated that the funds would be used as compensation to the victims of the defunct crypto exchange.

This is undoubtedly the highest fund recovery in the history of the CFTC. The order requires crypto exchange FTX to pay $12.7 billion in monetary relief, split into two parts. The first part is $4 billion for disgorgement while the second part is $8.7 billion in restitution for customers.