Based on the CFTC order, JPMorgan Chase & Co. (NYSE:JPM) held positions in cotton no. 2 futures contracts, traded at the Intercontinental Exchange between September 16, 2010 and October 5, 2010, in excess of the 3,5000 contracts (single month) and 5,000 contracts (all months combined), speculative position limits set by the commission.
The commission found that JPMorgan Chase & Co. (NYSE:JPM)’s excess positions were due to “inadvertent deficiency in its automated position limit monitoring system.” The system is used by commodity traders in generating reports and tracking their current positions, in conjunction with the proper speculative position limits.
According to CFTC, the automated monitoring system failed to identify applicable long and short side position limits for cotton no. 2, to JP Morgan. The company decided to monitor its position limits manually, due to the technical failure until it was resolved.
Quant ESG With PanAgora Asset Management’s George Mussalli
ValueWalk's Raul Panganiban interviews George Mussalli, Chief Investment Officer and Head of Equity Research at PanAgora Asset Management. In this epispode, they discuss quant ESG as well as PanAgora’s unique approach to it. The following is a computer generated transcript and may contain some errors. Q3 2020 hedge fund letters, conferences and more Interview . Read More
JP Morgan violated its short-side speculative position limits several times during the period, when the company monitored its position limits manually.
Aside from paying the $600,000 civil monetary fine, JPMorgan Chase & Co. (NYSE:JPM) also agreed to prevent further violations of Section 4a(b)(2) of the Commodity Exchange Act and CFTC regulation 150.2.
The commission also announced earlier on Thursday that Australia and New Zealand Banking (PINK:ANZBY) also agreed to pay a $350,000 penalty to settle violations in wheat and cotton futures speculative position limits.
According to CFTC, Australia and New Zealand Banking Group exceeded the 6,500 contracts speculative position limits for wheat futures traded at the Chicago Board of Trade, in multiple occasions, in August 2010. The company also held excess net short positions in cotton no. 2 futures, in February 2011.
Last September 21, CFTC ordered Citigroup Inc. (NYSE:C) and its subsidiary Citigroup Global Markets Ltd to pay a penalty of $525,000 for violating the wheat futures speculative position limits. The commission said the company exceeded its net long positions in wheat contracts several times in December 2009.
The commission also directed Weidong Ge and Sheenson Investments Ltd to pay a $1.5 million penalty for violating the cotton and soybean futures speculative position limits. Both China-based companies agreed to pay the penalty to settle the case.