The CFTC Takes Action Against StoneX for Compliance and Reporting Violations
The Commodity Futures Trading Commission (CFTC) has taken strong enforcement action against swap dealer StoneX, accusing the firm of violating its Business Conduct Standards. As part of the CFTC’s order, StoneX will be required to pay a $650,000 penalty and provide regular reports on its compliance progress.
The CFTC Alleges Compliance and Reporting Violations Over Years
In its enforcement action, the CFTC has highlighted the extent of its authority over daily trading activities. StoneX has chosen not to contest the charges brought against it by the CFTC. The allegations include a failure to properly oversee Pre-Trade Mid-Market Marks (PTMMM) reporting in accordance with CFTC standards from 2016 to 2022. The accuracy of PTMMMs was found to be problematic, and employees were not adequately trained on the process. Additionally, PTMMMs were not sent to counterparties in a timely manner according to the CFTC.
StoneX Ventures Into Crypto Transactions
StoneX’s enforcement action and significant penalty come just over a year after the firm entered the cryptocurrency market. It executed its first Bitcoin swap settled with cash for institutional client Liquidity Solutions Global in May 2022. StoneX also offered institutional clients the ability to trade crypto swaps settled with USD that same month. The company’s pro-crypto stance may have drawn attention from regulators who have shown reluctance towards innovation in the fintech sector.
Hot Take: The CFTC’s Aggressive Stance on Crypto Compliance
The CFTC’s actions against StoneX reflect its increasing determination to enforce compliance within the crypto space. Coinbase CEO Brian Armstrong recently criticized the CFTC’s targeting of decentralized finance (DeFi) platforms and urged companies to challenge the regulator in court. The extent to which DeFi and crypto-oriented firms will choose to settle with regulators or engage in legal battles remains to be seen.
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