Washington D.C. – Commodity Futures Trading Commission (CFTC) officials announced settlements with two Swap Execution Facilities (SEFs), BGC Derivative Markets, L.P. and GFI Swaps Exchange, LLC, for failures in reporting swap transaction data. The settlements, finalized October 1st, 2024, stem from violations of SEF Core Principles and swap reporting requirements.
According to the CFTC, BGC SEF failed to report, accurately report, or publish data related to thousands of transactions between December 2022 and April 2024 due to five separate system issues. The firm also reported inaccurate execution times for voice-executed interest rate swaps. GFI SEF experienced similar failures, with six system issues leading to inaccurate or missing data reported from July 2017 to February 2024.
The CFTC found that both SEFs lacked adequate internal controls, system design, and testing procedures to ensure accurate and timely reporting. These failures resulted in incomplete and inaccurate swap transaction information being submitted to data repositories.
BGC SEF is facing additional scrutiny as this is not their first offense. The firm was previously penalized by the CFTC on September 30, 2022, for similar violations. As a result, the current order requires BGC SEF to retain an independent compliance consultant to oversee remediation efforts.
As part of the settlements, BGC SEF will pay a $750,000 civil monetary penalty, while GFI SEF will pay $550,000. Both firms are required to cease further violations and submit reports, attested to by their Chief Compliance Officer and Chief Executive Officer, within one year to demonstrate compliance.
“These actions continue to highlight the value of timely self-reporting, remediation, and cooperation with the Division of Enforcement, along with the importance the CFTC places on accurate and timely swaps reporting,” said Director of Enforcement Ian McGinley. “They also demonstrate the importance of SEFs’ obligations to enact appropriate controls for system design, implementation, and testing.”
Source: CFTC.gov
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