Floor Broker Fined $150,000 by the CFTC for “Spoofing” CME Wheat Futures Market
The CFTC fined Anuj C. Singhal $150,000 to settle charges for “spoofing” the Chicago Mercantile Exchange (CME) wheat futures market. The relevant period of the offense was at least between March and June 2016, but this was a repeat offense since disciplinary action was taken against him in September 2014 by the CME. According to the disciplinary action, Singhal engaged in a pattern of spoofing between June and August 2011. The CFTC order mandates Singhal to cease and desist spoofing conduct, imposes a 4 month suspension on all registered entities, and all commodity interest, and the civil moneraty fine.
In both instances Singhal entered large orders in Agricultural futures contracts on the CME Globex trading platform without the intent to trade. He’s goal was to obtain favorable fills on smaller orders on the other side of the order book, and cancel the large orders once the smaller orders began trading. The Commission states that he frequently engaged in spoofing activity with several large orders in succession his aggressive orders would fill instantaneously, within a fraction of a second.
“In most instances, the Order finds, after the smaller order was entered and executed Singhal continued to modify his larger orders further away from the market, each modification generally within seconds of the last, but in all such instances those larger orders were cancelled without any part of the order being filled. The Order finds that Singhal repeated this trading pattern numerous times during the Relevant Period.”
The 2014 disciplinary action conducted by a Panel of the CBOT Business Conduct Committee (while Singhal was a CBOT member) found a similar patter,
“In determining Singhal’s intent to trade the large orders that were fully canceled, the Panel took into consideration the significant imbalance these orders created between the volume on the bid and offer, the percentage of large orders canceled, and the exposure time of the fully canceled orders. The Panel concluded that Singhal thereby violated CBOT Rules 432.B.2., 432.Q., and 432.T.”
B.2. to engage in conduct or proceedings inconsistent with just and equitable principles of trade;
Q. to commit an act which is detrimental to the interest or welfare of the Exchange or to engage in any conduct which tends to impair the dignity or good name of the Exchange;
T. to engage in dishonorable or uncommercial conduct.
His penalty then was a $60,000 fine and suspended membership privileges, along with a three-month trading suspension from accessing any CME Group electronic trading or clearing platform, as well as revoked access to any CME Group trading floor.
The April 9th Press Release stated the current order was brought by the CFTC Division of Enforcement’s Spoofing Task Force, and the Commission expressed gratitude to the CME Group for their assistance on this matter.
This enforcement action concerning Agricultural futures contracts comes just a few days after the CFTC held the first ever Agriculture Futures Market Conference in Kansas State University with the goal of guarding against such spoofing,
“The U.S agricultural market has a global impact on agricultural futures markets and the agricultural community will have a forum for a range of pertinent topics such as who the market participants are, potential market manipulation, spoofing, and how market participants and consumers can guard themselves against frauds and violations of the Commodity Exchange Act.”
The CFTC Order can be found here.