CFTC secures permanent injunction order against Edge Financial Technologies

Maria Nikolova

Edge aided and abetted a trader’s spoofing and use of a manipulative and deceptive scheme.

The United States Commodity Futures Trading Commission (CFTC) today announced that the US District Court for the Northern District of Illinois entered a consent order of permanent injunction against Edge Financial Technologies, LLC, an Illinois firm that provided software development and computer programming services for traders. The ruling resolves a 2018 enforcement action brought in connection with the Division of Enforcement’s Spoofing Task Force.

Edge aided and abetted Trader A’s spoofing (bidding or offering with the intent to cancel the bid or offer before execution) and use of a manipulative and deceptive scheme involving the E-mini S&P futures contract from at least January 30, 2013, through October 30, 2013. Edge enabled Trader A’s violations by programming a custom software application that helped send false supply and demand signals for E-mini S&P futures contracts and induced other market participants to react.

The court’s permanent injunction prohibits Edge from providing any computer programming services in connection with trading in CFTC-regulated markets for a period of two years. Further, it orders disgorgement of $24,200 and a civil monetary penalty of $48,400, for a total of $72,600 in monetary relief.

According to the order, Edge programmed a “Back-of-Book” function for Trader A knowing that he planned to use this function to engage in spoofing and to employ a manipulative scheme. The Back-of-Book function had two features helpful to Trader A’s illegal conduct. First, it kept Trader A’s orders, which were visible to other market participants, behind other orders at a particular price level. This was done to minimize the chances that Trader A’s orders would result in executed trades. Second, the Back-of-Book function immediately and automatically cancelled Trader A’s orders as soon as any portion of these orders was filled by other market participants.

Edge programmed the Back-of-Book function with these features with the understanding that they would help Trader A place large spoof orders and trick other market participants into making decisions and executing trades based on this false information.

The order permanently enjoins Edge from selling or possessing any application that includes the Back-of-Book function.

Read this next

Institutional FX

Euronext reports double-digit growth in FX volume

Pan-European exchange, Euronext has reported a 10 percent rebound in the average daily volume on its spot foreign exchange market. The ADV figure stood at $19.6 billion in January 2022, which is up from December’s $18 billion.

Digital Assets

Voyager subpoenas FTX’s inner circle over Alameda loan

Bankrupt crypto broker Voyager Digital, represented by law firm Kirkland & Ellis, is seeking court approval to subpoena Sam Bankman-Fried’s inner circle, as well as Alameda Research’s former executives.

Retail FX

AvaTrade seals sponsorship deal with F1’s Aston Martin team

Dublin-based forex broker AvaTrade today announced that it has concluded a sponsorship deal with Formula One’s Aston Martin Cognizant team that entails sponsorship rights and other marketing benefits.

Executive Moves

M4Markets onboards Invaxa CEO Marios Antoniou as COO

Seychelles-regulated brokerage firm M4Markets has appointed Marios Antoniou, who has a colorful career within the foreign exchange industry, in the capacity of its Chief Operations Officer.

Digital Assets

GK8 now allows clients to control their digital assets as they would their fiat

“As the institutional market is increasingly turning to self custody, our policy engine empowers them to automate transactions, approvals, and even crucial workflows, while providing the highest degree of security, consistency, governance and control.”

Digital Assets

Retail CBDCs in the UK: “Welcomed” by CryptoUK and R3, but “Dystopian” for ETC Group

“At this stage, we judge it likely that the digital pound will be needed in the future. It is too early to decide whether to introduce the digital pound, but we are convinced preparatory work is justified”, said the BoE and HM Treasury.

Institutional FX

Centroid taps Iress API to provide retail brokers with real-time market data

“It has always been a challenge to have an efficient, elegant solution for market data and order execution for retail brokers, but with Iress we have found absolutely the right partner to add to our client offering.”

Digital Assets

Ramp launches FCA-approved off-ramp product, onboards Brave, Trust Wallet, Ledger

“To obtain and maintain our FCA registration, we must meet and operate within their strict anti-money laundering and counter-terrorist financing standards. This is a huge achievement for us, as compliance is a cornerstone of our business and what we stand for.”

Institutional FX

State Street launches FIX API for Fund Connect ETF platform

“Expanding from proprietary APIs to the FIX industry standard will bring us closer to our goal of 100% digital interactions. This is another example of innovations we’ve brought to our operating model as we celebrate 30 years of servicing ETFs since the launch of SPY.”

<