March 22, 2011
Washington DC – The U.S. Commodity Futures Trading Commission (CFTC) today filed and simultaneously settled charges against Bunge Global Markets, Inc. (Bunge) of White Plains, N.Y., for entering orders to purchase or sell soybean futures contracts in pre-opening trading sessions on Globex that Bunge had no intention of having executed. These orders caused prices to be reported that were not true and bona fide. The soybean futures orders also constituted false, misleading or knowingly inaccurate reports concerning soybean market information that affected or tended to affect the price of soybeans, in violation of the Commodity Exchange Act, the order finds.
The CFTC order requires Bunge to pay a $550,000 civil monetary penalty and to cease and desist from future violations.
Specifically, the CFTC order finds that in March 2009, two of Bunge’s proprietary traders (and employees) entered electronic orders for Chicago Board of Trade soybean futures contracts on Globex, the CME Group, Inc.’s (CME) electronic trading platform, during Globex’s pre-opening session. These soybean futures orders would become executable on the open. The purpose of the pre-opening session is to help determine at what price the market will open for the day’s trading session, according to the CFTC order.
The Bunge traders entered the orders for the sole purpose of determining the depth of support for soybean futures at specific price levels before the market opened, the order finds. The order specifically finds that the traders had no intention of buying or selling the quantities of soybean futures in the orders and ultimately cancelled them prior to the open, before they could be executed.
Nevertheless, the orders caused the recording of non-bona fide prices and caused significant distortion in Globex’s Indicative Opening Price (IOP) — the price at which the futures contract is expected to trade at the opening of trading — for the May 2009 soybean contract during the pre-opening session, according to the CFTC order. The CME sends IOP information to Globex users and the CME market data feed, after which it is available to publishers of financial data, who disseminate the IOP information to the general public.
The Bunge traders sought to gain an advantage over other traders, the order finds. By entering orders at prices that were above or below the prevailing bid and offer, they were able to move the IOP up or down, and in essence they were trying to see what orders other traders had, the order finds. Thus, if successful, the Bunge traders would have information that was unavailable to other traders, according to the order.
CFTC Division of Enforcement staff responsible for this matter are David Terrell, Elizabeth M. Streit, Scott R. Williamson, Rosemary Hollinger and Richard Wagner.
Last Updated: March 22, 2011