Stamford, Connecticut – Vision Financial Markets LLC has been slapped with a $140,000 penalty by the U.S. Commodity Futures Trading Commission (CFTC) for failing to properly supervise its operations, according to an order issued today, September 24, 2013.
The CFTC found that Vision, a registered Futures Commission Merchant (FCM), neglected to diligently supervise its employees regarding customer accounts in May 2012. The core of the issue revolved around a customer trading feeder cattle futures on the CME. Vision failed to aggregate this customer’s multiple trading accounts, a crucial step in accurately calculating their overall speculative position.
Further compounding the problem, the firm used an incorrect “delta” – a measure of sensitivity – when calculating the customer’s net positions. This error, combined with reliance on a faulty back-office software program, led to inaccurate calculations of aggregate futures equivalent positions. The software was used to identify potential violations of speculative limits for all customer accounts.
The CFTC’s order details that Vision was aware of the software’s calculation error but failed to correct it for a full six months. This delay in fixing the faulty program created a significant risk of inaccurate reporting and potential market disruption.
As a result of these failures, Vision is required to pay a $140,000 civil monetary penalty and cease and desist from further violations of CFTC Regulation 166.3, which mandates diligent supervision by FCMs. The case was led by CFTC staff members including Michael R. Berlowitz, Mark Picard, and others from the Division of Enforcement, with assistance from the Office of Data Technology.
The CFTC’s action underscores the importance of robust supervisory systems within the financial industry, particularly concerning the accurate calculation and monitoring of customer positions.
Source: CFTC.gov
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