Washington, D.C. – Mizuho Bank, Ltd. has been slapped with a $250,000 penalty by the Commodity Futures Trading Commission (CFTC) for engaging in a pattern of spoofing across multiple futures contracts traded on the Chicago Mercantile Exchange and the Chicago Board of Trade. The charges stem from manipulative trading practices conducted between May 2016 and May 2017.
According to the CFTC’s order, the spoofing activity was carried out by an employee of Mizuho, identified only as “Trader A,” who operated from the bank’s Singapore office. Trader A allegedly placed large buy and sell orders for futures contracts – including those based on U.S. Treasury notes and Eurodollars – with the intention of cancelling them before execution. This tactic was used to gauge market reaction to the orders, a clear violation of the Commodity Exchange Act.
The CFTC’s Director of Enforcement, James McDonald, emphasized the seriousness of spoofing, stating it “undermines the integrity of the market” by introducing false information. He clarified that the motivation behind the manipulation is irrelevant; spoofing is illegal whether intended for profit or for testing purposes.
While the charges carry significant weight, Mizuho received a reduced penalty due to its cooperation with the CFTC’s investigation. The bank initiated an internal review, provided assistance to the Division of Enforcement, and undertook a comprehensive overhaul of its trading systems and controls. These enhancements included revisions to existing policies, updated employee training programs, and the implementation of new electronic systems designed to detect and prevent future instances of spoofing.
The case was pursued by the CFTC’s Spoofing Task Force, with staff members Maura Viehmeyer, Jordon Grimm, Diana Dietrich, Kim Bruno, Michael Solinsky, and Rick Glaser leading the investigation. The order requires Mizuho to cease and desist from all further violations of the Commodity Exchange Act related to spoofing.
Source: CFTC.gov
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