Washington, D.C. – ICE Clear Europe Limited (ICEU) has agreed to pay a $450,000 penalty to settle charges brought by the Commodity Futures Trading Commission (CFTC) for violations of regulations governing derivatives clearing organizations (DCOs). The CFTC order, issued October 6, 2021, details failures in maintaining proper documentation related to customer funds.
According to the CFTC, ICEU violated rules requiring written acknowledgment letters from depositories confirming they were informed deposited funds were designated as customer funds, and outlining restrictions on their use. The investigation found that between February 17, 2015, and August 12, 2019, ICEU opened six customer segregated accounts labeled as holding futures customer funds *without* securing these required acknowledgment letters from the depository – neither at the time of account opening nor at any point thereafter.
This lack of documentation constitutes a failure to adhere to CFTC regulations designed to protect the assets of clearing members and their customers. The CFTC also determined that ICEU lacked adequate standards and procedures to ensure the safety of those assets.
The violations specifically involved two accounts opened in April 2018 and May 2019, which were used for tri-party reverse repurchase transactions under an investment services agreement. These two accounts, in aggregate, held over $500 million in customer funds at one point.
As part of the settlement, ICEU is required to pay the $450,000 civil monetary penalty and cease any further violations of the cited CFTC regulations. The case was led by CFTC Enforcement staff members Ansley Schrimpf, Bryan Hsueh, Elizabeth N. Pendleton, Scott R. Williamson, and Robert T. Howell, with assistance from the Division of Clearing and Risk.
Source: CFTC.gov
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