The Commodity Futures Trading Commission (CFTC) today issued an order to file and settle charges against Taishin Securities Co., Ltd., a Taiwanese financial services company, for engaging in wash selling and non-competitive trading on the Chicago Mercantile Exchange.
The order requires Taishin to pay a civil monetary penalty of $200,000 and to cease and desist from further violations of the Commodity Exchange Act and CFTC regulations, as charged.
According to the order, Taishin engaged in multiple wash sales and non-competitive transactions while moving open futures positions it held from one broker to another.
Specifically, the order finds that on or about October 2022, a Taishin trader reached internal trading limits with the first broker and decided to transfer futures positions in Taishin’s account to the second broker. To effect this transfer, the trader submitted offsetting orders to buy and sell the same delivery month of the same futures contract at the same price on the Chicago Mercantile Exchange with the intention of offsetting some or all of those orders, knowing that the time and the structure of these orders will minimize market competition.
In this way, Taishin rejected the risk or price competition that an open and competitive market entails.
In total, the trader executed 50 wash trades between October and December 2022, involving 175 contracts worth approximately $17 million.