NFA fines StoneX $1 million for multiple violations
The swap dealer arm of StoneX, formerly known as INTL FCStone, agreed to pay a $1,000,000 fine to the US National Futures Association (NFA) that accused it of violating margin rules.
The industry self-regulatory organization said the firm violated NFA Compliance Rule 2-4 by failing to disclose to its counterparties that it was not calculating initial margin (IM) according to its customary procedures.
Additionally, NFA accuses StoneX Markets LLC of failing to maintain and enforce adequate risk management with respect to its value-at-risk calculation and daily IM determination.
The Chicago-based regulator, which is responsible for policing the US futures industry, added that the firm didn’t retain required records to provide pre-trade mid-market marks to counterparties. The NFA statement says StoneX also violated two other compliance rules by the lack of supervising certain operations.
StoneX Markets is a wholly-owned subsidiary of StoneX Group Inc., which is a diversified global financial services organization providing execution, risk management, advisory, and clearing services. The firm has been provisionally registered as a swap dealer with the CFTC since the inception of the regime in 2012.
StoneX has consented to a censure and a fine of $1 million, but it didn’t admit or deny the NFA’s findings, according to the statement. And the regulator mentioned that it will not bring any future actions against the respondent alleging violations based on the same factual findings.
Earlier in December, NFA ordered Gain Capital and its CEO Alexander Robert Bobinski to pay a civil penalty of $700,000 for making changes to client accounts without permission.
Specifically, GAIN’s FOREX.com trading platform was impacted by a system malfunction between March 31 and April 1, 2021. During this period, some users were able place stop and limit orders at prices that differed from those shown on FOREX.com’s platform. As a result, the broker incurred losses to the tune of $3 million.
To remedy the situation, Gain negatively adjusted the accounts of the most-affected customers, clawing back the profits they made. A day later, Gain also made adjustments to the accounts of other customers who had executed smaller trades during the system malfunction, crediting or debiting accounts down to a threshold of $10.
In total, GAIN deducted around $2.84 million from the accounts of 17 clients and added nearly $35,000 to the accounts of 33 consumers. Gain’s CEO Bobinski personally approved these negative and positive adjustments, as well as the threshold of $10.