Aggregated News From Investment Management Regulators

CFTC Orders New York-Based Commodity Pool Operator and Commodity Trading Advisor to Pay $400,000 Penalty for Supervision Failures


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— The Commodity Futures Trading Commission today issued an order simultaneously filing and settling charges against BBL Commodities LP (BBL), a New York-based CFTC-registered commodity trading advisor (CTA) and commodity pool operator (CPO). The order finds that BBL failed to establish and implement an adequate supervisory system to detect whether its employees were engaging in disruptive trading or for deterring its employees from such conduct.

The CFTC order requires BBL to pay a $400,000 civil monetary penalty and to cease and desist from further supervision violations, as charged.

Case Background

The order finds that since at least December 2017 to the present, BBL did not maintain an adequate supervisory system with respect to potentially disruptive trading.  As a result, BBL engaged in trading on December 29, 2017 in Gasoil futures calendar spreads on ICE Futures Europe (a foreign board of trade registered with the CFTC) that ICE Futures Europe determined—in connection with the settlement of a disciplinary action against BBL’s executing broker—to be disruptive, reckless, and disorderly.

As detailed in the order, BBL’s policies and procedures did not specifically address potentially disruptive trading, and BBL lacked written policies or procedures for the detection and deterrence of disruptive trading by its employees or directing the implementation of the firm’s trading strategies in such a manner as to avoid disruptive trading.  Nor did BBL’s written policies and procedures provide any guidance to BBL staff with respect to assessing the potential disruptive impact of BBL’s orders; assessing liquidity prior to placing orders; describing appropriate or inappropriate trading during settlement periods; or mitigating the potential disruptive impact of BBL’s orders.  Although BBL also conducted annual training, that training did not provide adequate guidance to BBL personnel with respect to potentially disruptive trading.

As a result of those supervision failures, on December 27, 2017, BBL placed a large order with the BBL’s executing broker to be executed in the final minutes of the settlement period on December 29, 2017—and decided on December 28, 2018 to increase the order size—without adequately considering the potential disruptive impact of BBL’s trading.

The Division of Enforcement staff members responsible for this matter are W. Derek Shakabpa, Elizabeth C. Brennan, Trevor Kokal, R. Stephen Painter, Jr., Lenel Hickson, Jr., and Manal M. Sultan.

This news item was originally published by the Commodity Futures Trading Commission (CFTC US). For more information, see the Source Link.

Regulator Information

Abbreviation: CFTC
Jurisdiction: USA

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