Hong Kong futures broker CNCGC fined $150,000 by CFTC for reporting violations


cftc fine

The U.S. Commodity Futures Trading Commission (CFTC) today issued an Order filing and settling charges against CNCGC Hong Kong Ltd. (CNCGC HK), an investment and trading company headquartered in Hong Kong, for failing to file required CFTC Form 304 Cotton On-Call Reports, reporting its call cotton purchases and sales when it held or controlled at least one hundred (100) cotton futures positions, and for filing late Form 304 reports on two occasions.

The CFTC Order requires CNCGC HK to pay a $150,000 civil monetary penalty and prohibits it from committing future violations of CFTC Regulation 19.02, as charged.

Specifically, the Order finds that, on 53 occasions from March 2014 through August 2015, CNCGC HK held or controlled at least 100 cotton futures but failed to file weekly Form 304 reports, and on two occasions, one in October 2015 and the other in January 2016, the firm filed late Form 304 reports. Cotton merchants or dealers that hold or control at least 100 cotton futures positions (the reportable level for cotton futures contracts under CFTC Regulations), are required to file weekly CFTC Form 304 reports that show their call cotton purchases and sales as of the close of business Friday, and file no later than two business days following the date of the report.

According to CFTC Regulations cited in the Order, call cotton refers to “spot cotton bought or sold, or contracted for purchase or sale, at a price to be fixed later based upon a specific future.” The CFTC uses information it gathers from CFTC Form 304 Reports in its weekly Cotton On-Call Reports, published with other Market Reports on the CFTC website.

CFTC Previously Issued a Market Advisory

The CFTC previously issued a market Advisory reminding cotton market participants wherever they are located of their ongoing obligation to comply in a timely manner with applicable reporting obligations (see CFTC Staff Advisory No. 13-14, Obligation of Reportable Market Participants to File CFTC Form 304 Reports for Call Cotton in a Timely Manner as Required by Commission Regulation 19.02, May 8, 2013).

According to the Order, CNCGC HK fully cooperated during the Division of Enforcement’s investigation and has implemented a compliance program for timely reporting cotton transactions to the CFTC.

Fourth Such Action Brought by the CFTC

This is the fourth action that the CFTC has brought for Call Cotton Reporting Violations since issuing the market Advisory:

• In July 2016, the CFTC ordered Singapore-based Agrocorp International Pte Ltd. to pay a $150,000 civil monetary penalty for Call Cotton Reporting Violations (see CFTC Press Release and Order 7405-16, July 11, 2016);

• In May 2015, the CFTC ordered Libero Commodities SA, an agricultural trading company with offices in Geneva, Switzerland and Mato Grasso, Brazil, to pay a $480,000 civil monetary penalty for Call Cotton Reporting Violations (see Press Release and Order 7173-15); and

• In January 2014, the CFTC ordered Brazil-based companies Multigrain SA and Agricola Xingu SA jointly to pay a $500,000 civil monetary penalty for Call Cotton Reporting Violations (see CFTC Press Release and Order 6827-14, January 15, 2014).

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Hong Kong futures broker CNCGC fined $150,000 by CFTC for reporting violations

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