The NFA Has Imposed A $1 Million Fine On The StoneX Market

The Decision, issued by NFA's Business Conduct Committee (BCC), is based on a Complaint made by the BCC and a settlement offer presented by Stone, according to NFA. The company did not accept or deny the accusations in the Complaint in the settlement offer.

In its Decision, the BCC found that Stone violated NFA Compliance Rule 2-4 by failing to provide timely and complete disclosure to its counterparties that the firm was not calculating initial margin (IM) according to its customary procedures; violated NFA Compliance Rule 2-49(a) by failing to maintain and enforce an adequate risk management program with respect to the firm's value-at-risk calculation and daily IM determination, and by failing to retain required records and provide pre-trade mid-market marks to counterparties; and violated NFA Compliance Rules 2-9(d) and 2-49(a) by failing to supervise the firm's operations.

Here are some of the compliance violated by StoneX Markets

NFA Compliance Rule 2-4

Members and Associates shall observe high standards of commercial honor and just and equitable principles of trade in the conduct of their commodity futures business and swaps business.

NFA Compliance Rule 2-49(a)

(a) Any Swap Dealer or Major Swap Participant Member that violates CFTC Regulation 3.3, the trade execution requirements of CFTC Regulation 37.12, or any requirement under Parts 23 or 50 of the CFTC's regulations, as applicable, shall be deemed to have violated an NFA Requirement.

(b) A Swap Dealer or Major Swap Participant Member must promptly submit any reports, documents, or notices, including those required under CFTC Regulation 3.3 or Part 23 of the CFTC's regulations, and any other supplemental information, to NFA and CFTC, as required by NFA, in the form and manner prescribed by NFA.

NFA Compliance Rules 2-9(d)

(a) Each FCM, IB, CPO, or CTA Member shall diligently supervise its employees and agents in the conduct of their commodity interest activities for or on behalf of the Member. Each Associate of an FCM, IB, CPO, or CTA Member who has supervisory duties shall diligently exercise such duties in the conduct of that Associate's commodity interest activities on behalf of the Member.

(b) NFA's Board of Directors may require FCM, IB, CPO, and CTA Members that meet specific criteria established by the Board relating to the employment history of its APs or principals or to the total commissions, fees and other charges paid by their customers to adopt enhanced supervisory requirements specified by the Board. This requirement may, in NFA's discretion, be waived upon a showing by the FCM, IB, CPO, or CTA Member that the Member's current supervisory procedures provide effective supervision over its employees and agents. Any FCM, IB, CPO, or CTA Member seeking such a waiver may submit a written request to a three-member panel consisting of three members of the Business Conduct Committee and/or the Hearing Committee, said members to be appointed by the Board from time to time. Within 30 days after an FCM, IB, CPO, or CTA Member submits a waiver request, the Compliance Department will submit a written response to the panel. The decision of the panel shall be final and shall be based upon the written submissions of the Member and of the Compliance Department.

(c) Each FCM and IB Member shall develop and implement a written anti-money laundering program approved in writing by senior management reasonably designed to achieve and monitor the Member's compliance with the applicable requirements of the Bank Secrecy Act (31 U.S.C. 5311, et. seq.), and the implementing regulations promulgated thereunder by the Department of the Treasury and, as applicable, the Commodity Futures Trading Commission.

(d) Each Swap Dealer or Major Swap Participant Member shall diligently supervise its employees and agents in the conduct of their swap activities for or on behalf of the Member.

According to NFA, the said rules must have complied as stated on the rules to maintain and enforce an adequate risk management program.

Stay tuned for more regulatory news.

Download and install the WikiFX App from the download link below to stay updated on the latest news, even on the go. You can also download the app from the App Store or Google Play Store.

Download link

https://www.wikifx.com/en/download.html