Barclays Bank is to pay a USD560,000 penalty to settle Commodity Futures Trading Commission (CFTC) charges that it failed to submit accurate large trader reports (LTRs) for physical commodity swap positions.
Barclays is headquartered in London and has been provisionally registered with the CFTC as a swap dealer since 12 December 2012.
The CFTC order requires Barclays to pay a USD560,000 civil monetary penalty and to cease and desist from committing further violations of the CEA and CFTC regulations, as charged.
As stated in the order, large trader reporting for physical commodity swaps is essential to the CFTC’s ability to conduct effective surveillance of markets in US physical commodity futures and economically equivalent swaps. The order further states that as of 1 March 2013, swap dealers required to submit LTRs are expected to be in full compliance with the requirements governing LTRs set forth in CFTC Regulations 20.4, 20.6, and 20.7, in conjunction with further instructions provided in the Part 20 Guidebook issued by the CFTC’s Division of Market Oversight (DMO).
The order finds that prior to and during the beginning of the mandatory compliance period, specifically from July 2012 through March 2013, Barclays submitted LTRs with incorrect position information and Commodity Reference Price indicators for certain types of transactions.
Subsequently in 2014, Barclays submitted certain LTRs containing inaccurate position information caused by missing or inaccurate prices in crude oil, natural gas, gasoline, heating oil, and agricultural products.
As a result of these errors, Barclays submitted LTRs that inaccurately reported Barclays’ positions in various commodities. Moreover, in many instances, the data processing and reporting systems used by Barclays to generate the LTRs identified potential issues but failed to correct the errors before Barclays first submitted the LTRs to DMO.
The order also finds that Barclays subsequently detected these errors, self-reported the errors to DMO, and thereafter submitted some corrected reports. However, from July 2012 through November 2012, Barclays failed to keep records as required and was unable to submit complete corrected reports due to the inadvertent deletion of some of the underlying data.