CFTC Imposes Fine on StoneX for Alleged Disclosure Breach

<p>The Commodity
Futures Trading Commission (CFTC) has imposed a penalty of $650,000 on StoneX
Markets LLC (StoneX), 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. </p><p>"Specifically,
StoneX failed to implement procedures to ensure that its Pre-Trade Mid-Market
Marks (PTMMMs) were consistent with StoneX's internal pricing methodologies,
failed to adequately train and monitor its associated persons regarding PTMMM disclosure
requirements, and failed to timely provide PTMMMs to counterparties," the
regulator said. </p><p>StoneX Penalized for Business Conduct Standards Breach</p><p>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
PTMMM disclosure process. According to the commodities watchdog, this resulted
in non-compliance with PTMMM disclosure requirements across numerous swap
transactions.</p><p>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 <a href="https://www.financemagnates.com/terms/c/cftc/">CFTC</a>'s Business Conduct Standards, which are in place to
maintain transparency and fairness within the swap market. Finance Magnates
contacted StoneX for comments but was yet to receive a response at the time of
publication. </p><p>In January,
StoneX Markets was hit with a $1 million fine 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 failures in various aspects of
<a href="https://www.financemagnates.com/terms/c/compliance/">compliance</a>. While StoneX Markets chose to settle the charges, it neither admitted
nor denied the allegations.</p><p>Meanwhile,
StoneX Group, the parent company of StoneX Markets, <a href="https://www.financemagnates.com/forex/stonexs-fxcfds-revenue-drops-38-in-q2/" target="_blank" rel="follow">reported
a significant decline</a> of 38% in revenue from its forex and contracts for
difference (CFDs) units during the second quarter of fiscal year 2023. This decline
in revenue was primarily attributed to a decrease in demand for FX/CFDs trading
on StoneX-controlled platforms.</p><p>Specifically,
the average daily volume (ADV) for FX/CFDs instruments fell by 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 31% decrease.</p><p>Expands
Fixed-Income Services</p><p>Meanwhile,
StoneX In a strategic move to expand its cryptocurrency offerings, StoneX
Financial Inc., a subsidiary of StoneX Group, has <a href="https://www.financemagnates.com/cryptocurrency/stonex-taps-coinbase-for-offering-nano-crypto-contracts/" target="_blank" rel="follow">teamed
up with Coinbase</a>, one of the leading names in the crypto industry. This
collaboration opens up access for StoneX Financial clients to a range of
Coinbase Derivatives Exchange (CDE) contracts, including nano Bitcoin and
Ethereum futures. These contracts, designed with retail traders in mind, are
set to provide new opportunities in the crypto market.</p><p>In addition,
StoneX Financial Inc., a subsidiary of StoneX Group Inc., embarked on a
strategic expansion in March by <a href="https://www.financemagnates.com/institutional-forex/stonex-unveils-defeasance-sales-trading-division-hires-experienced-truist-trio/" target="_blank" rel="follow">launching
a new trading offering</a> and defeasance sales division within its US
fixed-income business. This significant move reflects StoneX's commitment to
providing comprehensive securities services to its clients.</p>

This article was written by Jared Kirui at www.financemagnates.com.