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The US derivatives industry watchdog has fined HSBC Bank USA $45 million for allegedly allowing ‘manipulative and deceptive transactions’ by its traders and failing to keep records of its calls commercial. The Commodity Futures and Trading Commission (CFTC) announcement the monetary penalty on Friday, noting that it had reached an agreement with the subsidiary of the British global bank, HSBC.
Today @CFTCjohnson issued a statement on CFTC orders against HSBC for fraudulent and manipulative trading in swaps and more. Read it here: https://t.co/GgenohESmS
— CFTC (@CFTC) May 12, 2023
According to the CFTC, between March 2012 and 2015, traders at the HSBC subsidiary, which is registered as a provisional swap dealer, repeatedly engaged in deceptive trades and identity theft
swaps
related to
with bond issuers. The watchdog noted that the firm’s traders used its counterparties’ material confidential information about the timing and pricing of issuer swaps to increase HSBC’s profitability to their detriment.
In addition, the regulator alleged that the subsidiary attempted to manipulate screen prices, on which issuer swaps were based in part, by usurping the interdealer brokers who controlled the screens. Spoofing refers to a fraudulent practice where traders place orders with the intention of canceling them before they are executed.
“HSBC traders intentionally traded on the brokerage firms controlling the relevant screens during pricing phone calls during which bond issues and associated issuer swaps were valued, and HSBC traders intentionally structured their trades to move relevant swap prices onto these screens,” the CFTC explained.
The watchdog pointed out that the exchange broker’s supervisors and senior management were aware of this conduct and encouraged their traders to engage in the practice.
On the other hand, the derivatives watchdog said that between March and July 2020 at least, HSBC failed to record or maintain records of its exchange-related mobile phone calls due to of a registration failure.
In a separate statement, the derivatives market supervisor said it criticized two HSBC interim swap brokers, HSBC Bank USA and HSBC Bank Plc, as well as HSBC Securities (USA) Inc., a forward broker,
with more than 30 million dollars fine for their record keeping failures and discuss offers through unapproved methods such as personal text and WhatsApp.
This just happened, @CFTCcgr released a statement about HSBC and market manipulation and the widespread use of WhatsApp and other unauthorized communication platforms to evade regulatory scrutiny. Read it here: https://t.co/rqmqMYFCm3
— CFTC (@CFTC) May 12, 2023
“The order further finds that the widespread use of unapproved methods of communication violated HSBC’s own policies and procedures, which generally prohibited commercial communication through unapproved methods,” the CFTC explained.
“In addition, some of the same supervisory personnel responsible for ensuring compliance with the policies and procedures of the companies themselves used unapproved methods of communication to engage in commercial communications, in violation of the company’s policy. company,” he added.
CFTC steps up crackdown on ‘out-of-channel communications’
Meanwhile, the CFTC announced earlier Thursday that it had fined Bank of Nova Scotia (BNS), another provisionally registered exchange broker, and Scotia Capital USA Inc, a commission merchant on futures contracts, with a fine of 15 million dollars for failing to keep their records “for several years”. The regulator also found “widespread use of unapproved communication methods” among affiliates.
Today, the CFTC announced that it has ordered the Bank of Nova Scotia to pay a fine of $15 million for failures in record keeping and supervision for the widespread use of unsafe communication methods. approved. Learn more: https://t.co/Ecdvrznljp
— CFTC (@CFTC) May 11, 2023
The CFTC’s latest action against subsidiaries of HSBC and BNS is a continuation of its crackdown on e-commerce companies in the country for using WhatsApp-like devices for official business communications. In September last year, the watchdog fined 16 Wall Street firms a total of $1.1 billion for their “out-of-channel communications”.
The companies include subsidiaries of Barclay, BofA, Citigroup and Goldman Sachs, among others.
The US derivatives industry watchdog has fined HSBC Bank USA $45 million for allegedly allowing ‘manipulative and deceptive transactions’ by its traders and failing to keep records of its calls commercial. The Commodity Futures and Trading Commission (CFTC) announcement the monetary penalty on Friday, noting that it had reached an agreement with the subsidiary of the British global bank, HSBC.
Today @CFTCjohnson issued a statement on CFTC orders against HSBC for fraudulent and manipulative trading in swaps and more. Read it here: https://t.co/GgenohESmS
— CFTC (@CFTC) May 12, 2023
According to the CFTC, between March 2012 and 2015, traders at the HSBC subsidiary, which is registered as a provisional swap dealer, repeatedly engaged in deceptive trades and identity theft
swaps
related to
with bond issuers. The watchdog noted that the firm’s traders used its counterparties’ material confidential information about the timing and pricing of issuer swaps to increase HSBC’s profitability to their detriment.
In addition, the regulator alleged that the subsidiary attempted to manipulate screen prices, on which issuer swaps were based in part, by usurping the interdealer brokers who controlled the screens. Spoofing refers to a fraudulent practice where traders place orders with the intention of canceling them before they are executed.
“HSBC traders intentionally traded on the brokerage firms controlling the relevant screens during pricing phone calls during which bond issues and associated issuer swaps were valued, and HSBC traders intentionally structured their trades to move relevant swap prices onto these screens,” the CFTC explained.
The watchdog pointed out that the exchange broker’s supervisors and senior management were aware of this conduct and encouraged their traders to engage in the practice.
On the other hand, the derivatives watchdog said that between March and July 2020 at least, HSBC failed to record or maintain records of its exchange-related mobile phone calls due to of a registration failure.
In a separate statement, the derivatives market supervisor said it criticized two HSBC interim swap brokers, HSBC Bank USA and HSBC Bank Plc, as well as HSBC Securities (USA) Inc., a forward broker,
with more than 30 million dollars fine for their record keeping failures and discuss offers through unapproved methods such as personal text and WhatsApp.
This just happened, @CFTCcgr released a statement about HSBC and market manipulation and the widespread use of WhatsApp and other unauthorized communication platforms to evade regulatory scrutiny. Read it here: https://t.co/rqmqMYFCm3
— CFTC (@CFTC) May 12, 2023
“The order further finds that the widespread use of unapproved methods of communication violated HSBC’s own policies and procedures, which generally prohibited commercial communication through unapproved methods,” the CFTC explained.
“In addition, some of the same supervisory personnel responsible for ensuring compliance with the policies and procedures of the companies themselves used unapproved methods of communication to engage in commercial communications, in violation of the company’s policy. company,” he added.
CFTC steps up crackdown on ‘out-of-channel communications’
Meanwhile, the CFTC announced earlier Thursday that it had fined Bank of Nova Scotia (BNS), another provisionally registered exchange broker, and Scotia Capital USA Inc, a commission merchant on futures contracts, with a fine of 15 million dollars for failing to keep their records “for several years”. The regulator also found “widespread use of unapproved communication methods” among affiliates.
Today, the CFTC announced that it has ordered the Bank of Nova Scotia to pay a fine of $15 million for failures in record keeping and supervision for the widespread use of unsafe communication methods. approved. Learn more: https://t.co/Ecdvrznljp
— CFTC (@CFTC) May 11, 2023
The CFTC’s latest action against subsidiaries of HSBC and BNS is a continuation of its crackdown on e-commerce companies in the country for using WhatsApp-like devices for official business communications. In September last year, the watchdog fined 16 Wall Street firms a total of $1.1 billion for their “out-of-channel communications”.
The companies include subsidiaries of Barclay, BofA, Citigroup and Goldman Sachs, among others.
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