Washington, D.C. — The Commodity Futures Trading Commission today issued an order filing and simultaneously settling charges against BNP Paribas (BNPP), a global financial services corporation and swap dealer, for violations of the Commodity Exchange Act (CEA) and Commission regulations relating to swap reporting and daily mark disclosures.
The order requires BNPP to pay a $6 million civil monetary penalty, cease and desist from violating the applicable provisions of the CEA and CFTC regulations, and comply with certain conditions and undertakings, including that BNPP make, within one year, a written report to the Division of Enforcement regarding the swap dealer’s compliance with the CEA and CFTC regulations.
Case Background
According to the order, for more than five years, from 2016 through at least 2021, BNPP failed to correctly report numerous swap transactions to a swap data repository (SDR) as required by the CEA and CFTC regulations. BNPP did not report more than 6,000 swap transactions with U.S. persons, because the counterparties had been incorrectly classified as non-U.S. persons. As a result, BNPP failed to make more than 300,000 reports relating to these transactions. These reports are required by the CEA and CFTC regulations.
The order also finds that BNPP also entered into more than 3 million swap transactions during this period that were incorrectly reported under the CFTC’s rules. From 2016 to 2018, the swap dealer also failed to correctly report thousands of bunched trades. Instead of correctly reporting them as allocations of trades, BNPP reported these transactions as new trades. In addition, from 2016 to 2020, BNPP incorrectly reported certain commodity swaps. These trades were reported, but were incorrectly described as equity trades rather than commodity trades. In total, approximately 3,000 transactions were incorrectly reported in this fashion.
Moreover, during the period 2016 to 2017, as the order finds, BNPP adjusted daily mark disclosures for 82 swap transactions, which resulted in approximately 19,000 adjusted daily mark disclosures being made to the relevant swap counterparties, contrary to the requirements of the CEA and CFTC regulations.
In accepting BNPP’s Offer of Settlement, the CFTC recognizes BNPP’s substantial cooperation during the Division of Enforcement’s investigation of this matter. The CFTC notes that BNPP’s cooperation and remediation are recognized in the form of a substantially reduced civil monetary penalty.
Division of Enforcement staff members responsible for this action are Lauren Bennett, Jason Wright, Dan Ullman, and Paul Hayeck.
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Customers and other individuals can report suspicious activities or information, such as possible violations of commodity trading laws, to the Division of Enforcement via a toll-free hotline 866-FON-CFTC (866-366-2382), file a tip or complaint online, or contact the CFTC Whistleblower Office. Whistleblowers are eligible to receive between 10 and 30 percent of the monetary sanctions collected paid from the CFTC Customer Protection Fund financed through monetary sanctions paid to the CFTC by violators of the CEA.
Source: CFTC
