UPDATE 1-CFTC fines Bunge for distorting soy futures price

Tue Mar 22, 2011 12:45pm EDT

* CFTC fines Bunge Global Markets $550,000

* Says traders had no intention of executing trades (New throughout)

By Christopher Doering

WASHINGTON, March 22 (Reuters) - The U.S. futures regulator fined Bunge Global Markets (BG.N) $550,000 for entering soybean futures contract orders that were never executed but which distorted market prices.

The U.S. Commodity Futures Trading Commission said on Tuesday that Bunge entered orders to purchase or sell soybean futures contracts in pre-opening trading sessions on Globex for the May 2009 contract.

"The Bunge traders sought to gain an advantage over other traders," CFTC said in a statement. "By entering orders at prices that were above or below the prevailing bid and offer, they were able to move the IOP (Indicative Opening Price) up or down, and in essence they were trying to see what orders other traders had."

CFTC found that in March 2009 two of Bunge's proprietary traders entered electronic orders for Chicago Board of Trade soybean futures contracts on Globex, a CME Group trading platform, during its pre-opening session.

The Bunge traders entered the orders to determine the depth of support for soybean futures at specific price levels before the market opened. The futures regulator said the traders had no intention of executing the orders and pulled them before the open. The action affected the price of soybeans, violating the Commodity Exchange Act.

The CFTC has been stepping up its enforcement efforts to boost oversight of the market.

It recently hired a high-profile former federal prosecutor for its top enforcement position.

The regulator also gained new power under the Dodd-Frank law to crack down on sophisticated market-manipulation schemes that had largely escaped its enforcement efforts in the past. (Editing by Walter Bagley)

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