{"id":7025,"date":"2021-09-30T05:16:55","date_gmt":"2021-09-30T05:16:55","guid":{"rendered":"https:\/\/www.futuresandoptions.gr\/en\/?p=7025"},"modified":"2021-09-30T05:16:56","modified_gmt":"2021-09-30T05:16:56","slug":"cftc-orders-interactive-brokers-llc-to-pay-a-1-75-million-penalty-for-supervision-failures","status":"publish","type":"post","link":"https:\/\/www.futuresandoptions.gr\/en\/cftc-orders-interactive-brokers-llc-to-pay-a-1-75-million-penalty-for-supervision-failures\/","title":{"rendered":"CFTC Orders Interactive Brokers LLC to Pay a $1.75 Million Penalty for Supervision Failures"},"content":{"rendered":"\n

The Commodity Futures Trading Commission today filed and simultaneously settled charges against Interactive Brokers LLC<\/strong>, a registered futures commission merchant, for failing to diligently supervise the handling of its customer accounts by not adequately preparing and configuring its electronic trading system to receive negative prices and calculate margin on April 20, 2020, in violation of CFTC Regulation 166.3.         <\/p>\n\n\n\n

The order requires Interactive Brokers to pay a civil monetary penalty of $1.75 million and restitution of $82.57 million to its customers. Interactive Brokers is credited the full restitution due to its compensation payment to its customers. <\/p>\n\n\n\n

\u201cThis enforcement action demonstrates that the CFTC will hold registrants responsible for their handling of customer accounts and ensuring the integrity of trades on their trading platforms and electronic systems, including during instances of market volatility,\u201d said Acting Director of Enforcement Vincent McGonagle.<\/p>\n\n\n\n

Case Background<\/strong><\/p>\n\n\n\n

According to the order, Interactive Brokers\u2019\u00a0supervisory failures were discovered on April 20, 2020, when the benchmark West Texas Intermediate light, sweet crude oil (CL) futures<\/a> contract on CME Group Inc.\u2019s New York Mercantile Exchange (NYMEX<\/a>) traded into negative prices, settling at negative $37.63 per barrel for the May 2020 contracts set to expire the following day. This price was the basis for determining the settlement price for certain cash-settled contracts, including the E-mini crude oil (QM) futures contract on the NYMEX and the West Texas Intermediate light, sweet crude oil (WTI) futures contract on the Intercontinental Exchange Europe. Because the QM and WTI contracts settle based on the trading of the CL contract in the settlement window, both contracts settled at negative $37.63 per barrel. Interactive Brokers customers held long positions in the May QM and WTI contracts on April 20, 2020 and experienced trading losses on those positions as a result of the firm\u2019s systems issues.<\/p>\n\n\n\n

The order finds that Interactive Brokers was on notice of the possibility of negative oil futures prices prior to April 20, 2020, but did not adequately prepare and configure its electronic trading system to recognize negative prices. Specifically, Interactive Brokers failed to deploy necessary system changes before negative prices occurred resulting in two significant systems issues on April 20, 2020: (1) negative prices were not displayed to customers and customers were unable to place orders with negative-priced limit orders to buy or sell; and (2) internal minimum margin requirements were not correctly enforced prior to trade execution for trades in the WTI contract. These issues impacted hundreds of customer accounts that held long QM or WTI futures positions into settlement, and those customers experienced trading losses on April 20, 2020, initially determined by Interactive Brokers to exceed $82.57 million.<\/a> <\/a><\/p>\n\n\n\n

The order recognizes Interactive Brokers\u2019 substantial cooperation and systems remediation in the form of a reduced civil monetary penalty. <\/p>\n\n\n\n

The Division of Enforcement staff members responsible for this matter are Danielle Karst, Julia Colarusso, Dmitriy Vilenskiy, Christine Ryall, and Paul G. Hayeck.<\/p>\n","protected":false},"excerpt":{"rendered":"

CFTC filed and simultaneously settled charges against\u00a0Interactive Brokers LLC, a registered futures commission merchant, for failing to diligently supervise the handling of its customer accounts by not adequately preparing and configuring its electronic trading system to receive negative prices and calculate margin on April 20, 2020<\/p>\n","protected":false},"author":2,"featured_media":7026,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"inline_featured_image":false,"footnotes":""},"categories":[1123,14,22],"tags":[1086,37,263,1667,1668],"class_list":["post-7025","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-finreg","category-financial-news","category-wall-street","tag-cftc","tag-futures","tag-futures-contract","tag-interactive-brokers","tag-trading-system"],"yoast_head":"\nCFTC Orders Interactive Brokers LLC to Pay a $1.75 Million Penalty for Supervision Failures<\/title>\n<meta name=\"description\" content=\"CFTC filed and simultaneously settled charges against\u00a0Interactive Brokers LLC, a registered futures commission merchant, for failing to\" \/>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/www.futuresandoptions.gr\/en\/cftc-orders-interactive-brokers-llc-to-pay-a-1-75-million-penalty-for-supervision-failures\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"CFTC Orders Interactive Brokers LLC to Pay a $1.75 Million Penalty for Supervision Failures\" \/>\n<meta property=\"og:description\" content=\"CFTC filed and simultaneously settled charges against\u00a0Interactive Brokers LLC, a registered futures commission merchant, for failing to\" \/>\n<meta property=\"og:url\" content=\"https:\/\/www.futuresandoptions.gr\/en\/cftc-orders-interactive-brokers-llc-to-pay-a-1-75-million-penalty-for-supervision-failures\/\" \/>\n<meta property=\"og:site_name\" content=\"Futures and Options\" \/>\n<meta property=\"article:published_time\" content=\"2021-09-30T05:16:55+00:00\" \/>\n<meta property=\"article:modified_time\" content=\"2021-09-30T05:16:56+00:00\" \/>\n<meta property=\"og:image\" content=\"https:\/\/www.futuresandoptions.gr\/en\/wp-content\/uploads\/2021\/09\/Interactive-Brokers.png\" \/>\n\t<meta property=\"og:image:width\" content=\"600\" \/>\n\t<meta property=\"og:image:height\" content=\"400\" \/>\n\t<meta property=\"og:image:type\" content=\"image\/png\" \/>\n<meta name=\"author\" content=\"pnik\" \/>\n<meta name=\"twitter:card\" content=\"summary_large_image\" \/>\n<meta name=\"twitter:label1\" content=\"Written by\" \/>\n\t<meta name=\"twitter:data1\" content=\"pnik\" \/>\n\t<meta name=\"twitter:label2\" content=\"Est. reading time\" \/>\n\t<meta name=\"twitter:data2\" content=\"3 minutes\" \/>\n<script type=\"application\/ld+json\" class=\"yoast-schema-graph\">{\"@context\":\"https:\/\/schema.org\",\"@graph\":[{\"@type\":\"WebPage\",\"@id\":\"https:\/\/www.futuresandoptions.gr\/en\/cftc-orders-interactive-brokers-llc-to-pay-a-1-75-million-penalty-for-supervision-failures\/\",\"url\":\"https:\/\/www.futuresandoptions.gr\/en\/cftc-orders-interactive-brokers-llc-to-pay-a-1-75-million-penalty-for-supervision-failures\/\",\"name\":\"CFTC Orders Interactive Brokers LLC to Pay a $1.75 Million Penalty for Supervision Failures\",\"isPartOf\":{\"@id\":\"https:\/\/www.futuresandoptions.gr\/en\/#website\"},\"primaryImageOfPage\":{\"@id\":\"https:\/\/www.futuresandoptions.gr\/en\/cftc-orders-interactive-brokers-llc-to-pay-a-1-75-million-penalty-for-supervision-failures\/#primaryimage\"},\"image\":{\"@id\":\"https:\/\/www.futuresandoptions.gr\/en\/cftc-orders-interactive-brokers-llc-to-pay-a-1-75-million-penalty-for-supervision-failures\/#primaryimage\"},\"thumbnailUrl\":\"https:\/\/www.futuresandoptions.gr\/en\/wp-content\/uploads\/2021\/09\/Interactive-Brokers.png\",\"datePublished\":\"2021-09-30T05:16:55+00:00\",\"dateModified\":\"2021-09-30T05:16:56+00:00\",\"author\":{\"@id\":\"https:\/\/www.futuresandoptions.gr\/en\/#\/schema\/person\/e724181c2b6dddb5e6c826e406faac26\"},\"description\":\"CFTC filed and simultaneously settled charges against\u00a0Interactive Brokers LLC, a registered futures commission merchant, for failing to\",\"breadcrumb\":{\"@id\":\"https:\/\/www.futuresandoptions.gr\/en\/cftc-orders-interactive-brokers-llc-to-pay-a-1-75-million-penalty-for-supervision-failures\/#breadcrumb\"},\"inLanguage\":\"en-US\",\"potentialAction\":[{\"@type\":\"ReadAction\",\"target\":[\"https:\/\/www.futuresandoptions.gr\/en\/cftc-orders-interactive-brokers-llc-to-pay-a-1-75-million-penalty-for-supervision-failures\/\"]}]},{\"@type\":\"ImageObject\",\"inLanguage\":\"en-US\",\"@id\":\"https:\/\/www.futuresandoptions.gr\/en\/cftc-orders-interactive-brokers-llc-to-pay-a-1-75-million-penalty-for-supervision-failures\/#primaryimage\",\"url\":\"https:\/\/www.futuresandoptions.gr\/en\/wp-content\/uploads\/2021\/09\/Interactive-Brokers.png\",\"contentUrl\":\"https:\/\/www.futuresandoptions.gr\/en\/wp-content\/uploads\/2021\/09\/Interactive-Brokers.png\",\"width\":600,\"height\":400,\"caption\":\"Interactive Brokers\"},{\"@type\":\"BreadcrumbList\",\"@id\":\"https:\/\/www.futuresandoptions.gr\/en\/cftc-orders-interactive-brokers-llc-to-pay-a-1-75-million-penalty-for-supervision-failures\/#breadcrumb\",\"itemListElement\":[{\"@type\":\"ListItem\",\"position\":1,\"name\":\"Home\",\"item\":\"https:\/\/www.futuresandoptions.gr\/en\/\"},{\"@type\":\"ListItem\",\"position\":2,\"name\":\"CFTC Orders Interactive Brokers LLC to Pay a $1.75 Million Penalty for Supervision Failures\"}]},{\"@type\":\"WebSite\",\"@id\":\"https:\/\/www.futuresandoptions.gr\/en\/#website\",\"url\":\"https:\/\/www.futuresandoptions.gr\/en\/\",\"name\":\"Futures and Options\",\"description\":\"Serving Intelligent Investors\",\"potentialAction\":[{\"@type\":\"SearchAction\",\"target\":{\"@type\":\"EntryPoint\",\"urlTemplate\":\"https:\/\/www.futuresandoptions.gr\/en\/?s={search_term_string}\"},\"query-input\":{\"@type\":\"PropertyValueSpecification\",\"valueRequired\":true,\"valueName\":\"search_term_string\"}}],\"inLanguage\":\"en-US\"},{\"@type\":\"Person\",\"@id\":\"https:\/\/www.futuresandoptions.gr\/en\/#\/schema\/person\/e724181c2b6dddb5e6c826e406faac26\",\"name\":\"pnik\",\"url\":\"https:\/\/www.futuresandoptions.gr\/en\/author\/pnik\/\"}]}<\/script>\n<!-- \/ Yoast SEO plugin. -->","yoast_head_json":{"title":"CFTC Orders Interactive Brokers LLC to Pay a $1.75 Million Penalty for Supervision Failures","description":"CFTC filed and simultaneously settled charges against\u00a0Interactive Brokers LLC, a registered futures commission merchant, for failing to","robots":{"index":"index","follow":"follow","max-snippet":"max-snippet:-1","max-image-preview":"max-image-preview:large","max-video-preview":"max-video-preview:-1"},"canonical":"https:\/\/www.futuresandoptions.gr\/en\/cftc-orders-interactive-brokers-llc-to-pay-a-1-75-million-penalty-for-supervision-failures\/","og_locale":"en_US","og_type":"article","og_title":"CFTC Orders Interactive Brokers LLC to Pay a $1.75 Million Penalty for Supervision Failures","og_description":"CFTC filed and simultaneously settled charges against\u00a0Interactive Brokers LLC, a registered futures commission merchant, for failing to","og_url":"https:\/\/www.futuresandoptions.gr\/en\/cftc-orders-interactive-brokers-llc-to-pay-a-1-75-million-penalty-for-supervision-failures\/","og_site_name":"Futures and Options","article_published_time":"2021-09-30T05:16:55+00:00","article_modified_time":"2021-09-30T05:16:56+00:00","og_image":[{"width":600,"height":400,"url":"https:\/\/www.futuresandoptions.gr\/en\/wp-content\/uploads\/2021\/09\/Interactive-Brokers.png","type":"image\/png"}],"author":"pnik","twitter_card":"summary_large_image","twitter_misc":{"Written by":"pnik","Est. reading time":"3 minutes"},"schema":{"@context":"https:\/\/schema.org","@graph":[{"@type":"WebPage","@id":"https:\/\/www.futuresandoptions.gr\/en\/cftc-orders-interactive-brokers-llc-to-pay-a-1-75-million-penalty-for-supervision-failures\/","url":"https:\/\/www.futuresandoptions.gr\/en\/cftc-orders-interactive-brokers-llc-to-pay-a-1-75-million-penalty-for-supervision-failures\/","name":"CFTC Orders Interactive Brokers LLC to Pay a $1.75 Million Penalty for Supervision Failures","isPartOf":{"@id":"https:\/\/www.futuresandoptions.gr\/en\/#website"},"primaryImageOfPage":{"@id":"https:\/\/www.futuresandoptions.gr\/en\/cftc-orders-interactive-brokers-llc-to-pay-a-1-75-million-penalty-for-supervision-failures\/#primaryimage"},"image":{"@id":"https:\/\/www.futuresandoptions.gr\/en\/cftc-orders-interactive-brokers-llc-to-pay-a-1-75-million-penalty-for-supervision-failures\/#primaryimage"},"thumbnailUrl":"https:\/\/www.futuresandoptions.gr\/en\/wp-content\/uploads\/2021\/09\/Interactive-Brokers.png","datePublished":"2021-09-30T05:16:55+00:00","dateModified":"2021-09-30T05:16:56+00:00","author":{"@id":"https:\/\/www.futuresandoptions.gr\/en\/#\/schema\/person\/e724181c2b6dddb5e6c826e406faac26"},"description":"CFTC filed and simultaneously settled charges against\u00a0Interactive Brokers LLC, a registered futures commission merchant, for failing to","breadcrumb":{"@id":"https:\/\/www.futuresandoptions.gr\/en\/cftc-orders-interactive-brokers-llc-to-pay-a-1-75-million-penalty-for-supervision-failures\/#breadcrumb"},"inLanguage":"en-US","potentialAction":[{"@type":"ReadAction","target":["https:\/\/www.futuresandoptions.gr\/en\/cftc-orders-interactive-brokers-llc-to-pay-a-1-75-million-penalty-for-supervision-failures\/"]}]},{"@type":"ImageObject","inLanguage":"en-US","@id":"https:\/\/www.futuresandoptions.gr\/en\/cftc-orders-interactive-brokers-llc-to-pay-a-1-75-million-penalty-for-supervision-failures\/#primaryimage","url":"https:\/\/www.futuresandoptions.gr\/en\/wp-content\/uploads\/2021\/09\/Interactive-Brokers.png","contentUrl":"https:\/\/www.futuresandoptions.gr\/en\/wp-content\/uploads\/2021\/09\/Interactive-Brokers.png","width":600,"height":400,"caption":"Interactive Brokers"},{"@type":"BreadcrumbList","@id":"https:\/\/www.futuresandoptions.gr\/en\/cftc-orders-interactive-brokers-llc-to-pay-a-1-75-million-penalty-for-supervision-failures\/#breadcrumb","itemListElement":[{"@type":"ListItem","position":1,"name":"Home","item":"https:\/\/www.futuresandoptions.gr\/en\/"},{"@type":"ListItem","position":2,"name":"CFTC Orders Interactive Brokers LLC to Pay a $1.75 Million Penalty for Supervision Failures"}]},{"@type":"WebSite","@id":"https:\/\/www.futuresandoptions.gr\/en\/#website","url":"https:\/\/www.futuresandoptions.gr\/en\/","name":"Futures and Options","description":"Serving Intelligent Investors","potentialAction":[{"@type":"SearchAction","target":{"@type":"EntryPoint","urlTemplate":"https:\/\/www.futuresandoptions.gr\/en\/?s={search_term_string}"},"query-input":{"@type":"PropertyValueSpecification","valueRequired":true,"valueName":"search_term_string"}}],"inLanguage":"en-US"},{"@type":"Person","@id":"https:\/\/www.futuresandoptions.gr\/en\/#\/schema\/person\/e724181c2b6dddb5e6c826e406faac26","name":"pnik","url":"https:\/\/www.futuresandoptions.gr\/en\/author\/pnik\/"}]}},"_links":{"self":[{"href":"https:\/\/www.futuresandoptions.gr\/en\/wp-json\/wp\/v2\/posts\/7025","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.futuresandoptions.gr\/en\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.futuresandoptions.gr\/en\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.futuresandoptions.gr\/en\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.futuresandoptions.gr\/en\/wp-json\/wp\/v2\/comments?post=7025"}],"version-history":[{"count":2,"href":"https:\/\/www.futuresandoptions.gr\/en\/wp-json\/wp\/v2\/posts\/7025\/revisions"}],"predecessor-version":[{"id":7028,"href":"https:\/\/www.futuresandoptions.gr\/en\/wp-json\/wp\/v2\/posts\/7025\/revisions\/7028"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.futuresandoptions.gr\/en\/wp-json\/wp\/v2\/media\/7026"}],"wp:attachment":[{"href":"https:\/\/www.futuresandoptions.gr\/en\/wp-json\/wp\/v2\/media?parent=7025"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.futuresandoptions.gr\/en\/wp-json\/wp\/v2\/categories?post=7025"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.futuresandoptions.gr\/en\/wp-json\/wp\/v2\/tags?post=7025"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}