REGULATION

Japanese bank fined for spoofing treasury and Eurodollar futures

Bank of Tokyo-Mitsubishi informed the CFTC one of its traders had engaged in spoofing activity.

By Hayley McDowell hayley.mcdowell@strategic-i.com August 08, 2017 9:33 AM GMT

The Bank of Tokyo-Mitsubishi UFJ has told authorities in the US that one of its traders had engaged in spoofing the treasury and Eurodollar futures markets, leading to a $600,000 fine.

The Commodity Futures Trading Commission (CFTC) was informed that between July 2009 and December 2014, the trader had placed multiple orders for futures contracts with intent to cancel before execution.

Once the Bank of Tokyo became aware of the activities, the trader was suspended and then reported to the CFTC’s division of enforcement.

It then launched an overhaul of its systems and controls to improve methods of detecting and preventing spoofing activity.

James McDonald, director of enforcement at the CFTC, explained his case shows the benefits of self-reporting and cooperation.

“When market participants discover wrongdoing, we want to incentivise them to voluntarily report it and to cooperate with our investigation, as the Bank of Tokyo did here.

“The Bank of Tokyo benefitted from its self-reporting and cooperation in the form of a substantially reduced penalty,” he said.