Washington, D.C. – The Commodity Futures Trading Commission (CFTC) settled charges against IBFX, Inc., formerly known as Tradestation Forex, Inc., on December 10, 2014, for multiple violations of CFTC regulations. The Florida-based Retail Foreign Exchange Dealer (RFED) was found to have repeatedly failed to meet minimum net capital requirements and maintain adequate supervisory controls.
According to the CFTC order, IBFX violated regulations between December 2011 and June 9, 2014, by failing to maintain the required minimum net capital on three separate occasions. The first instance occurred between December 2011 and June 2012, due to uncovered foreign currency positions. A failure to accurately account for these positions led to a net capital deficit as of January 31, 2012.
A second violation occurred on January 9, 2013, stemming from a typographical error that briefly caused a net capital shortfall. While the error was quickly identified, IBFX failed to report the deficit to the CFTC in a timely manner, waiting until January 11, 2013. The third violation occurred on June 9, 2014, when newly installed software, which hadn’t been fully tested, created uncovered positions and again resulted in a failure to meet minimum net capital requirements.
The CFTC cited IBFX’s inadequate testing of the new software, the lack of a system to detect erroneous trades, and an inability to accurately correct errors as evidence of a lack of diligent supervision. This, the CFTC argues, is a direct violation of established regulations.
As a result of these findings, IBFX has been ordered to pay a $600,000 civil monetary penalty. Furthermore, the company is required to develop an automated system for real-time monitoring of forex exposure and to implement improved risk management procedures. IBFX must also engage a third-party consultant to review and improve its information technology development and implementation policies, and implement any resulting recommendations.
The CFTC noted that IBFX cooperated with the investigation conducted by the Division of Enforcement and the Division of Swap Dealer and Intermediary Oversight. The National Futures Association also provided assistance in the matter.
Source: CFTC.gov
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