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The US Commodities Futures Trading Commission (CFTC), has slapped six financial institutions with fines totalling $6million for various swap dealing violations.

In a statement, the CFTC said HSBC, Societe Generale, Northern Trust NatWest Markets, BNY Mellon and PNC Bank were all issued orders for a number of different regulatory failures.

HSBC became the first bank to be fined for violating swap dealer risk management regulations. The bank will pay $650,000 for failing to put appropriate risk management systems in place for swaps transactions. The regulator also found that it failed to properly report swap deal data in certain transactions to a swap dealer repository.

The regulator therefore decided to impose a civil monetary penalty which was reduced because they said the bank had cooperated and taken remedial steps.

“The Commission’s swap-dealer risk management rules are designed to monitor and regulate the systemic risk endemic to the swaps market. At the heart of these regulations is the requirement that swap dealers separately consider the risks unique to swaps as an asset class, separate from their other businesses…”

CFtC Director of enforcement, James McDonald

“… this is the first action the CFTC has brought regarding violations of these particular swap-dealer risk management regulations, and the Commission will continue to focus on enforcing these critical requirements.”

James mcdonald contd.

Societe Generale, meanwhile will pay $2.5million for violating swap data reporting obligations. It was also ordered to continue remediation efforts and to update the CTFC on its progress with compliance.

Due to NatWest’s cooperation and “substantial” remediation, the watchdog has imposed an $850,000 civil monetary penalty, amongst other sanctions. The charges were placed against the firm for failing to comply with its obligations to submit accurate large trader reports (LTRs) for physical commodity swap positions to the CFTC.

Northern Trust was charged with several violations of the CEA and CFTC regulations for swap reporting under parts 23,43 and 45 of the CFTC regulations. They were fined a total of $1m.

NatWest’s fine of $850,000 for swap dealer reporting violations, as well as other sanctions, was reduced because of their cooperation with the regulator and what was described as ‘substantial’ remediation efforts.

BNYM is the world’s largest custody bank and asset servicing company. It was fined $750,000 for numerous violations of CEA and CFTC regulations relating to swap reporting.

PNC Bank’s fine of $300,000 was for violations of parts 20, 43 and 45 of the CFTC regulations.

The fines highlight the importance of fulfilling all reporting requirements. The regulator finished by warning that it will “continue to vigorously enforce reporting requirements,” and that it will “take appropriate action where reporting failures are occurring as a result of serious supervisory failures.”


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