The National Futures Association (NFA) has imposed a $400,000 fine on X-Change Financial Access (XFA), part of Marex, and suspended one of its executives from supervisory duties, following an investigation that revealed alleged compliance violations at the Chicago-based introducing broker.

Chicago Broker X-Change Financial Access Fined $400,000 by NFA

Timothy Francis Hendricks, an associated person and principal at XFA, will be barred from supervisory roles for 90 days and share liability for $100,000 of the total fine, according to the NFA's decision issued Wednesday.

The regulatory action stems from alleged multiple violations, including the firm's failure to maintain proper transaction records and pre-trade communications. The NFA also found that XFA allowed unregistered individuals to operate as associated persons without proper registration or NFA association status.

"The firm failed to keep full, complete, and systematic records of all transactions," the NFA stated in its decision, highlighting broader supervision inadequacies under Hendricks' watch.

The settlement, reached without admission or denial of the allegations, requires XFA and Hendricks to implement remedial measures outlined in a separate agreement with the regulator. These undertakings specifically address the violations and relate to Hendricks' temporary supervision prohibition.

NFA sanctions Chicago-based introducing broker X-Change Financial Access LLC and two employees https://t.co/isrMtAbn4k pic.twitter.com/vialSOSpOA

— NFA News (@NFA_News) November 20, 2024

It is worth noting that this is not the first settlement Settlement Settlement in finance refers to the process when a buyer makes payment and receives the agreed-upon services or goods. The term is used on exchanges such as New York Stock Exchange (NYSE) when security changes hands. When the asset is transferred and placed in the new buyer's name, it is considered settled. This process could take a few hours or several days after a trade is made. It depends on the clearance process. In the United States, the settlement date for marketable stocks is usually 2 Settlement in finance refers to the process when a buyer makes payment and receives the agreed-upon services or goods. The term is used on exchanges such as New York Stock Exchange (NYSE) when security changes hands. When the asset is transferred and placed in the new buyer's name, it is considered settled. This process could take a few hours or several days after a trade is made. It depends on the clearance process. In the United States, the settlement date for marketable stocks is usually 2 Read this Term and fine paid by XFA to the NFA. In 2018, the regulator imposed a $100,000 penalty on the company for executing transactions on behalf of an individual who had been banned from trading.

The case originated from a complaint filed by the NFA's Business Conduct Committee in April 2024, which led to a formal investigation of the firm's practices and supervisory controls.

The sanctions also render Hendricks ineligible to serve on disciplinary committees, arbitration panels, or governing boards of any self-regulatory organization for at least three years, as per CFTC regulations.

Part of Marex

Global commodities broker Marex, headquartered in London, acquired XFA four years ago. Founded in 2001, XFA operates out of Chicago, with additional offices in New York and San Francisco. The company offers a broad range of services, including market information, strategic data, futures execution, and direct market access.

XFA serves a diverse customer base across Europe, North America, and Asia, including global financial services firms, some of the world's largest hedge funds, institutional investors, commodity trading advisors (CTAs), and market makers Market Makers Market makers or called dealing desk brokers represent a type of broker that internalize flows and are taking the opposite side of a transaction submitted by their clients. The market making broker is only quoting a feed of prices to its clients. These feeds may or may not be the exact same as the prices quoted on the interbank market.Any order a client enters is processed internally and never goes out to the market, except in rare cases where a market making brokerage identifies a client as a v Market makers or called dealing desk brokers represent a type of broker that internalize flows and are taking the opposite side of a transaction submitted by their clients. The market making broker is only quoting a feed of prices to its clients. These feeds may or may not be the exact same as the prices quoted on the interbank market.Any order a client enters is processed internally and never goes out to the market, except in rare cases where a market making brokerage identifies a client as a v Read this Term.

XFA is the latest Chicago-based broker to face a financial penalty from the NFA this week. As reported yesterday (Wednesday) by Finance Magnates, NinjaTrader Clearing and its president, Michael Cavanaugh, were also penalized for alleged significant failures in anti-money laundering (AML) controls and suspicious activity monitoring at the Chicago-based futures commission merchant.