25 September 2020 | AtoZ Markets – The regulatory environment is changing dramatically in the financial industry. Regulators are also modernizing regulatory, legal, and compliance risk management programs to meet the regulations and oversight expectations of financial services companies.
Meanwhile, CFTC aims to maintain and strengthen its role as a significant regulator of the US futures, swaps, and options market.
EOX, Futures International, OTC Europe Settling CFTC's Capital Deficiencies Charges
US CFTC has filed and settled charges order against three registered introducing brokers for capital deficiencies. Those three brokers are as follows:
- EOX Holdings LLC;
- Futures International LLC; and
- OTC Europe LLP
The CFTC requires each broker to pay a $ 120,000 fine. Besides, the regulator also issued a cease and desist order for any further regulatory violations. "We will continue working cooperatively with the Division of Swap Dealer and Intermediary Oversight to bring enforcement actions when registered firms fail to meet minimum capital requirements," said Division of Enforcement Director James McDonald.
According to the CFTC, these brokers lacked the required minimum net worth, ranging from $9 million to $25 million. These brokers did not make the necessary deductions when calculating their obligations. Division of Swap Dealer and Intermediary Oversight Director Joshua B. Sterling said:
"Ensuring the financial integrity of derivatives market intermediaries is also a key aspect of the CFTC's mission, making necessary the reporting of guaranteed obligations and liabilities of subsidiaries or affiliates in the computation of adjusted net capital".
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These brokers failed to maintain the minimum net capital during the various periods in which they were held as guarantors for their affiliates' benefit. During this time, the funds "were drawn on the line of credit every month for the benefit of the affiliated company. The amounts were ranging from $10 million to $26 million," the regulator said.
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