Washington D.C. – Global financial services firm BNP Paribas (BNPP) has been slapped with a $6 million penalty by the Commodity Futures Trading Commission (CFTC) for widespread failures in swap reporting and daily mark disclosures, according to an order filed and settled on Tuesday.
The CFTC alleges that from 2016 through at least 2021, BNPP systematically failed to accurately report swap transactions to a swap data repository (SDR) as mandated by regulations. The firm allegedly misclassified over 6,000 swap transactions involving U.S. persons as non-U.S. transactions, resulting in the omission of over 300,000 required reports.
Beyond the initial misclassification, the CFTC found that BNPP incorrectly reported over 3 million swap transactions overall. From 2016 to 2018, the firm failed to properly report “bunched trades” – allocations of larger trades – instead submitting them as entirely new transactions. Additionally, between 2016 and 2020, approximately 3,000 commodity swaps were erroneously categorized as equity trades.
The investigation also revealed that BNPP manipulated daily mark disclosures for 82 swap transactions between 2016 and 2017. This resulted in roughly 19,000 adjusted disclosures being sent to counterparties, violating CFTC regulations. Daily mark disclosures provide crucial information about the current value of swap agreements.
While the CFTC acknowledged BNPP’s “substantial cooperation” during the investigation and its subsequent remediation efforts, the firm was still required to pay the $6 million civil monetary penalty and cease and desist from further violations. BNPP must also submit a written report to the Division of Enforcement within one year detailing its compliance with relevant regulations.
Lauren Bennett, Jason Wright, Dan Ullman, and Paul Hayeck of the CFTC’s Division of Enforcement led the investigation. The CFTC encourages individuals with information about potential commodity trading violations to report them via toll-free hotline (866-FON-CFTC), online tip submission, or through the Whistleblower Office, which offers potential financial rewards for information leading to successful enforcement actions.
Source: CFTC.gov
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