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Screenshot of a breaking news alert e-mail from Q2 2017
The U.S. Commodity Futures Trading Commission (CFTC) today issued an Order filing and simultaneously settling charges against IBFX, Inc. f/k/a Tradestation Forex, Inc. (IBFX), a Florida-based Retail Foreign Exchange Dealer (RFED), for violating CFTC Regulations by failing to meet the minimum net capital requirements on three separate occasions, failing to timely report one of the minimum net capital deficits, and failing to supervise its employees and agents diligently by establishing, implementing, and executing an adequate supervisory structure and compliance programs.
The CFTC Order finds that from December 2011 through June 9, 2014 (the Relevant Period), IBFX violated CFTC Regulations by failing to meet the minimum net capital requirements on three separate occasions. First, during the period December 2011 to June 2012, IBFX had uncovered foreign currency positions. Based on the corrected charges to capital for these uncovered positions, as calculated on a month-end basis, IBFX failed to meet the minimum net capital requirements for January 31, 2012.
Second, IBFX failed to meet the minimum net capital requirements for a brief period of time on January 9, 2013, due to a typographical error. IBFX immediately discovered this failure, but failed to report the failure to the CFTC until January 11, 2013.
Finally, IBFX failed to meet the minimum net capital requirements on June 9, 2014, when software that IBFX installed, but did not fully test prior to installation, resulted in uncovered positions requiring charges to capital. IBFX’s failure to adequately test the new software, lack of a system to timely detect erroneous trades generated by the new software, and inability to accurately assess and reverse the errors evidence IBFX’s lack of diligent supervision in violation of a CFTC Regulation.
The CFTC Order requires IBFX to pay a $600,000 civil monetary penalty and requires IBFX to develop an automated forex exposure monitoring system that will enable the comprehensive real-time monitoring of its actual forex exposure, and adopt and implement risk management procedures regarding 24-hour forex exposure monitoring.
The Order also requires IBFX to retain a nationally recognized independent third-party consultant to review and evaluate IBFX’s information technology development and implementation policies and procedures and prepare a written report with recommendations for improvement, as applicable, which IBFX will implement absent extenuating circumstances.
IBFX has cooperated with Division of Enforcement and Division of Swap Dealer and Intermediary Oversight staff. The CFTC acknowledges the valuable assistance of the National Futures Association in connection with this matter.
The CFTC Division of Enforcement staff members responsible for this matter are Allison Baker Shealy, Timothy J. Mulreany, and Paul Hayeck, with assistance from CFTC Division of Swap Dealer and Intermediary Oversight (DSIO) staff Kevin Piccoli, Robert Laverty, Gerald J. Nudge, Timothy J. Wigand, Ronald Carletta, and Linda Santiago.
For the official release from the CFTC, click here.