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CFTC Settles with Barclays Over Alleged Large-Trader Swap Reporting Violations
Practical Law Legal Update w-002-7734 (Approx. 3 pages)
CFTC Settles with Barclays Over Alleged Large-Trader Swap Reporting Violations
by Practical Law Finance
| Published on 12 Jul 2016 • USA (National/Federal) |
The CFTC issued an order settling charges with Barclays Bank PLC for allegedly failing to file accurate large-trader reports for physical commodity swaps.
On July 6, 2016, the CFTC issued an order, filing, and simultaneously settling charges against Barclays Bank PLC for allegedly engaging in activities that violated Section 4s(f) of the Commodity Exchange Act (CEA) (7 U.S.C. § 6s(f)) and CFTC Regulations 20.4, 20.6, and 20.7 (17 C.F.R. § 20), adopted under Title VII of the Dodd-Frank Act.
Specifically, the CFTC alleged that Barclays failed to:
- Submit accurate large-trader reports (LTRs) for reportable positions in physical commodity swaps.
- Maintain records of swap information.
In anticipation of administrative proceedings, Barclays prepared and submitted a settlement offer, which was accepted by the CFTC. The order requires Barclays to:
- Pay a civil monetary penalty of $560,000.
- Cease and desist from committing further violations of the CEA and CFTC Regulations.
Under the terms of the settlement, Barclays neither admitted nor denied any wrongdoing.
Certain swap dealers (SDs) are required to file daily LTRs for physical commodity swap positions, which must include specific data and conform to the form and manner reporting as prescribed by CFTC Regulations 20.4 and 20.7, in conjunction with further instructions provided in the CFTC's Division of Market Oversight Part 20 Guidebook.
SDs are also required to keep historical swap records under CFTC Regulations 20.4, 20.6., and 20.7 and the Part 20 Guidebook.
The order covered two separate periods of inaccurate reporting:
- From July 2012 through March 2013, Barclays submitted LTRs with inaccurate position information and Commodity Reference Price indicators for certain transactions.
- In 2014, Barclays submitted additional LTRs with inaccurate position information caused by missing or inaccurate crude oil, natural gas, gasoline, heating oil, and agricultural products prices.
Some errors were caused by incorrect information provided by third-party vendors. In some instances, data processing and reporting systems used by Barclays to produce LTRs identified potential issues, but these issues were not corrected prior to the initial submission of the LTRs.
This order also covered a five-month period in which records of transactions were not kept:
- From July 2012 through November 2012, swap data was inadvertently deleted from Barclays' system resulting in Barclays being unable to submit complete corrected reports due to the missing underlying data.
In accepting Barclays' offer to settle, the CFTC acknowledged Barclays' self-disclosure of reporting deficiencies and the submitting of corrected historical reports, where available.
For more details on the CFTC large-trader reporting rules for physical commodity swap positions, see: