The Commodity Futures Trading Commission (CFTC) has imposed a penalty of $650,000 on StoneX Markets, a registered swap dealer. This penalty comes as a result of StoneX's alleged failure to adhere to the CFTC's Business Conduct Standards for swap dealers.

"Specifically, StoneX failed to implement procedures to ensure that its Pre-Trade Mid-Market Marks (PTMMMs) were consistent with its internal pricing methodologies, failed to adequately train and monitor its associated persons regarding PTMMMs disclosure requirements, and failed to timely provide PTMMMs to counterparties," the regulator said.

StoneX Penalized for Business Conduct Standards Breach

StoneX Markets has openly admitted to these violations, which occurred over several years, from 2016 to 2022, during which StoneX failed to adequately oversee its PTMMMs disclosure process. According to the commodities watchdog, this resulted in non-compliance with PTMMMs disclosure requirements across numerous swap transactions.

Moreover, StoneX Markets was unable to deliver PTMMMs to counterparties in a timely manner, further exacerbating its compliance issues. These failures represent a stark breach of the CFTC CFTC The 1974 Commodity Exchange Act (CEA) in the United States created the Commodity Futures Trading Commission (CFTC). The Commission protects and regulates market activities against manipulation, fraud, and abuse trade practices and promotes fairness in futures contracts. The CEA also included the Sad-Johnson Agreement, which defined the authority and responsibilities for the monitoring of financial contracts between the Commodity Futures Trading Commission and the Securities and Exchange Commiss The 1974 Commodity Exchange Act (CEA) in the United States created the Commodity Futures Trading Commission (CFTC). The Commission protects and regulates market activities against manipulation, fraud, and abuse trade practices and promotes fairness in futures contracts. The CEA also included the Sad-Johnson Agreement, which defined the authority and responsibilities for the monitoring of financial contracts between the Commodity Futures Trading Commission and the Securities and Exchange Commiss Read this Term's Business Conduct Standards, which are in place to maintain transparency and fairness within the swaps market. Finance Magnates contacted StoneX for comments but was unable to receive a response prior to the time of publication.

In January, StoneX Markets was hit with a fine of $1 million by the National Futures Association (NFA) due to a series of compliance violations. The NFA, a self-regulatory body overseeing derivatives activities in the United States, issued complaints against the company, alleging failure in various aspects of compliance Compliance In finance, banking, investing, and insurance compliance refers to following the rules or orders set down by the government regulatory authority, either as providing a service or processing a transaction. Compliance concerning finance would also be a state of being following established guidelines or specifications. This designation can also encompass efforts to ensure that organizations are abiding by both industry regulations and government legislation. Understanding ComplianceCompliance is a In finance, banking, investing, and insurance compliance refers to following the rules or orders set down by the government regulatory authority, either as providing a service or processing a transaction. Compliance concerning finance would also be a state of being following established guidelines or specifications. This designation can also encompass efforts to ensure that organizations are abiding by both industry regulations and government legislation. Understanding ComplianceCompliance is a Read this Term. While StoneX Markets chose to settle the charges, it neither admitted nor denied the allegations.

Meanwhile, StoneX Group, the parent company of StoneX Markets, reported a significant decline of 38% in revenue from its forex and contracts for difference (CFDs) units during the second quarter of the fiscal year 2023. This decline in revenue was primarily attributed to a decrease in demand for FX/CFDs trading on StoneX-controlled platforms.

Specifically, the average daily volume (ADV) for FX/CFDs instruments fell 10% over the three months, decreasing from $14,937 to $13,490. Additionally, the FX/CFDs rate per million (RPM) dropped to $72 from $104, indicating a decrease of 31%.

Expanding Fixed-Income Services

Meanwhile, in a strategic move to expand its cryptocurrency offerings, StoneX Financial Inc., a subsidiary of StoneX Group, teamed up with Coinbase, one of the leading names in the crypto industry. This collaboration was aimed at opening up access for StoneX's Financial clients to a range of Coinbase Derivatives Exchange (CDE) contracts, including Bitcoin and Ethereum futures.

In addition, StoneX Financial Inc. embarked on a strategic expansion in March by launching a new trading offering and defeasance sales division within its US fixed-income business.