Washington, D.C. – CNCGC Hong Kong Ltd. (CNCGC HK), a Hong Kong-based investment and trading company, has been penalized $150,000 by the U.S. Commodity Futures Trading Commission (CFTC) for failing to accurately and timely report its cotton trading activity. The CFTC issued an order detailing the violations on January 17, 2017.
The firm was cited for 53 instances between March 2014 and August 2015 where it failed to file required weekly CFTC Form 304 Cotton On-Call Reports, despite holding or controlling at least 100 cotton futures positions – the threshold for reporting. Additionally, CNCGC HK submitted late reports on two separate occasions, in October 2015 and January 2016.
These reports are crucial for the CFTC’s weekly Cotton On-Call Reports, which provide insight into the cotton market. “Call cotton” refers to spot cotton transactions with prices determined at a later date based on future contracts. The CFTC uses this data to monitor market activity and ensure fair trading practices.
The CFTC previously issued a market advisory in 2013 reminding all cotton market participants of their reporting obligations. This case marks the fourth enforcement action taken by the CFTC regarding call cotton reporting violations since that advisory.
Prior actions include penalties against Agrocorp International Pte Ltd. ($150,000 in July 2016), Libero Commodities SA ($480,000 in May 2015), and a joint penalty of $500,000 against Multigrain SA and Agricola Xingu SA in January 2014.
According to the CFTC, CNCGC HK cooperated fully with the investigation and has since implemented a compliance program to ensure timely and accurate reporting of cotton transactions. The order prohibits CNCGC HK from committing future violations of CFTC Regulation 19.02.
The case was led by CFTC Division of Enforcement staff members Diane M. Romaniuk, Ava Gould, Mary Elizabeth Spear, Scott Williamson, and Rosemary Hollinger, with assistance from Kelly Beck and Janet Briner of the Division of Market Oversight, and Andrew Ba.
Source: CFTC.gov
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