On Thursday, the Commodity Futures Trading Commission (CFTC) ordered J.P Morgan Securities, LLC, o pay a $200 million penalty over its failure to capture billion of orders in its surveillance systems.
The CFTC said J.P. Morgan admitted to the facts and acknowledged it had violated CFTC regulations, but neither admitted nor denied the CFTC’s findings of fact. The CFTC said the company, which is a registered futures commission merchant and swap dealer, failed to diligently supervise its business as a CFTC registrant.
Starting in 2021, in the course of onboarding a new trading exchange, the company found that it surveillance of trading on multiple venues and systems was not operating correctly. This led to gaps in its trade surveillance. The gaps were a result of the company’s failure to configure data feeds to ensure complete trade and order data were being ingested, the CFTC alleges. Because of the configuration errors, one a specific U.S. designated contract market, JP. Morgan failed to surveil billions of order messages between 2014 and 2021. The company said the surveillance gaps were fully remediated by 2023.
The CFTC’s order requires the company to pay $200 million in civil penalties, cease and desist from further violations and comply with the conditions and undertakings in the order.
“Today’s resolution includes a significant penalty, certain factual admissions, and the appointment of a consultant to ensure remediation,” CFTC Director of Enforcement Ian McGinley said. “We hope it sends a clear message that CFTC registrants must take appropriate steps to ensure, through testing and other means, that complete trade and order data direct from exchanges are being ingested into trade surveillance systems and that orders are being surveilled.”