Cantor Futures Exchange aims to amend rules concerning disruptive practices

Maria Nikolova

CX proposes to adopt new chapter VI-12, in line with recent amendments to the Commodity Exchange Act, which prohibit certain disruptive practices, including spoofing.

Cantor Futures Exchange is seeking to change its rules with regard to disruptive practices. On Friday, September 29, 2017, Cantor Futures Exchange L.P. filed a rule amendment submission with the United States Commodity Futures Trading Commission (CFTC).

Among the proposed changes, is the adoption of a new chapter VI-12, as requested by the Commission staff. The proposed changes reflect recent amendments to the Commodity Exchange Act, 7 U.S.C.§ et seq. Under section 4c(a)(5), several disruptive practices, including spoofing, are prohibited.

Accordingly, the proposed new chapter to be added to CX’s rules states:

VI-12

Disruptive Practices

It shall be a violation of this rule for any person to engage in any trading, practice, or conduct on or subject to the rules of the Exchange that:

  • a) violates bids or offers;
  • b) demonstrates intentional or reckless disregard for the orderly execution of transactions during the closing period; or
  • c) is, is of the character of, or is commonly known to the trade as, “spoofing” (bidding or offering with the intent to cancel the bid or offer before execution).”

Absent objections from the CFTC, the rule amendment is set to become effective on October 16, 2017.

Recently, Nadex, a subsidiary of IG Group Holdings plc (LON:IGG), announced its plans to amend its rules with the aim to prevent any malicious activities on the Exchange. Under a submission with the CFTC, Nadex will amenda Rule 5.5 (Order Entry). The proposed amendments include a requirement for adequate messaging controls to prevent disruption to the Exchange.

The announcement about the planned rule changes was made shortly after the CFTC had released the results of a Rule Enforcement Review of Nadex. The regulator gave the Exchange a clean bill of health, but it also made a number of recommendations, including one stating that “Nadex should promptly complete its development of a surveillance program to detect spoofing on its markets”.

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