CFTC charges trader with spoofing in financial futures markets
The US Commodity Futures Trading Commission (CFTC) issued an order filing and settling charges against Benjamin Cox, a trader and CFTC-registered floor broker based in Chicago, Illinois, for engaging in spoofing in the Chicago Mercantile Exchange (CME) E-mini S&P 500 and E-mini Nasdaq 100 futures markets.
James McDonald, CFTC’s director of enforcement, says: “As this case shows, the CFTC will vigorously pursue actions against individuals, as well as entities, who engage in the unlawful practice of spoofing. We will continue to work closely with our regulatory partners, as we did in this case, to protect the integrity of our markets.”
The CFTC order requires Cox to pay a $150,000 civil monetary penalty that suspends him from trading on or subject to the rules of any CFTC-designated exchange and all other CFTC registered entities and in all commodity interests for a period of three months.
It also orders him to cease and desist from violating the Commodity Exchange Act’s prohibition of spoofing and other disruptive practices.
The CFTC order finds that during the period from April 2014 through, at least, February 2018 (relevant period), Cox manually placed orders in the E-mini S&P 500 and E-mini Nasdaq 100 futures markets with the intent to cancel the orders before their execution.
Typically, while Cox had one or more smaller bids or offers resting in a futures market (genuine orders), he placed relatively large bids or offers on the opposite side of the same market, which he intended to cancel before execution (spoof orders).
Cox placed the spoof orders to induce other market participants to fill his genuine orders on the opposite side of the market. Typically, once the genuine orders were filled, Cox cancelled the spoof orders. Cox repeated this trading pattern multiple times during the relevant period, primarily in the E-mini S&P 500 market and occasionally in the E-mini Nasdaq 100 market.
The CFTC’s investigation was conducted in conjunction with a related inquiry by the CME Group, which today also announced a disciplinary action against Cox. The CFTC thanks CME Group for its assistance in this matter.
This case is brought in connection with the CFTC Division of Enforcement’s Spoofing Task Force.