Washington, D.C. – The Bank of Tokyo-Mitsubishi UFJ, Ltd. (BTMU) has been ordered to pay a $600,000 penalty by the U.S. Commodity Futures Trading Commission (CFTC) for engaging in spoofing, a form of market manipulation, between July 2009 and December 2014. The activity primarily occurred in 2010 and 2011 and involved futures contracts for U.S. Treasury notes and Eurodollars traded on the Chicago Mercantile Exchange and Chicago Board of Trade.
According to the CFTC order, a BTMU trader, referred to as “Trader A,” placed orders with the intent to cancel them before execution. This tactic, known as spoofing, involved simultaneously submitting orders on opposing sides of the market to create a false impression of supply and demand, ultimately manipulating prices to benefit the trader’s other orders.
The CFTC discovered the misconduct through BTMU’s voluntary self-reporting. Following the discovery of “Trader A’s” actions, BTMU promptly suspended the employee and reported the issue to the CFTC’s Division of Enforcement. The bank then initiated a comprehensive internal review and fully cooperated with the subsequent investigation.
James McDonald, CFTC’s Director of Enforcement, highlighted the benefits of self-reporting and cooperation. He stated the agency anticipates such actions will be a key component of its enforcement program moving forward, and that BTMU received a reduced penalty due to its proactive approach.
BTMU has since overhauled its systems and controls to prevent future instances of spoofing. Improvements included enhanced detection systems, revised policies, updated employee training, and the implementation of electronic monitoring tools. The CFTC order requires BTMU to cease and desist from violating the Commodity Exchange Act’s prohibition against spoofing.
The case was led by CFTC staff members Kara Mucha, Jordon Grimm, Laura Brookover, Philip Tumminio, and Rick Glaser.
Source: CFTC.gov
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