CFTC sanctions financial institutions for swap reporting violations

The U.S. Commodity Futures Trading Commission (CFTC) issued orders settling enforcement charges in two separate cases involving violations of reporting requirements for swaps dealers.

In a case against French bank BNP Paribas, the regulator ordered a US$6 million monetary penalty, and required the firm to comply with undertakings regarding its adherence to CFTC regulations.

According to the CFTC’s order, between 2016 and 2021, BNP failed to correctly report numerous swap transactions to a data repository.

Among other things, the regulator’s order found that BNP entered into more than three million swap transactions during this period that were incorrectly reported. BNP is also said to have failed to correctly report thousands of bunched trades, and to have incorrectly reported certain commodity swap transactions as equity trades.

The bank cooperated with the regulator’s investigation and it received a “substantially reduced” penalty as a result of its cooperation and remediation efforts, the CFTC noted.

Separately, the CFTC also settled allegations against various J.P. Morgan subsidiaries for failing to comply with their reporting obligations as swap dealers.

According to the regulator, between September 2015 and February 2020, J.P. Morgan failed to report approximately 2.1 million short-dated foreign exchange (FX) swap transactions.

J.P. Morgan was ordered to pay a US$850,000 monetary penalty and to cease and desist from further violations.

“Timely and accurate reporting of swaps transactions by registered swaps dealers is critical to the CFTC’s mission to protect market participants and ensure market transparency and integrity,” said Gretchen Lowe, acting director of enforcement at the CFTC, in a release.

James Langton

James is a senior reporter for Advisor.ca and its sister publication, Investment Executive. He has been reporting on regulation, securities law, industry news and more since 1994.