Last week, the Commodity Futures Trading Commission (CFTC) announced it has ordered Nasdaq Futures, Inc. to pay a $22 million civil monetary penalty for violating core principles and failing to fully disclose incentive programs offered to certain traders.
Nasdaq Futures, Inc. Fined $22 Million for ‘Core Principle Violations, Failing to Fully Disclose Incentives’
The CFTC said it found that Nasdaq Futures, Inc. operated a “Designated Market Maker” (DMM) program that included a volume-based component that was not disclosed to the CFTC or the public.
They explain that the component provided additional payments to select DMM program participants based on the total volume of contracts they traded.
The CFTC also said that Nasdaq Futures Inc made false and misleading statements to the CFTC about the incentive program, repeatedly denying the existence of a volume-based component.
“Nasdaq Futures, Inc.’s failure to disclose this volume-based component of the DMM program to the CFTC, the public, its own compliance staff, and regulatory service provider led to the violation of several DCM Core Principles mandated in the CEA,” said the CFTC.
The CFTC’s Director of Enforcement, Ian McGinley, stressed the importance of CFTC-designated exchanges providing accurate information to the CFTC and market participants.
“Nasdaq Futures, Inc.’s conduct here represents significant violations of both its duty to provide such information and several statutory Core Principles applicable to CFTC-designated exchanges,” he said.
The CFTC’s order requires Nasdaq Futures, Inc. to pay a $22 million penalty.
