By Alexandra Alper
WASHINGTON, Sept 27 JPMorgan Chase Bank NA
agreed to pay $600,000 to settle charges it violated cotton
futures position limits, the U.S. Commodity Futures Trading
Commission said on Thursday.
According to the CFTC, the bank's positions in cotton
futures traded on the IntercontinentalExchange U.S.
exceeded limits on several days between Sept. 16 and Oct. 5,
JPMorgan's positions were held as a result of an
"inadvertent deficiency" in the bank's automated position limit
monitoring system, which tracks current positions relative to
the applicable position limits, the CFTC said.
However, after learning of the deficiency, JPMorgan put in
place a manual position limit monitoring process that failed to
keep the bank from further violations, the CFTC said.
JP Morgan Chase Bank NA is owned by JPMorgan Chase and Co
. The bank declined to comment.
The order is the latest in a flurry of position limit
settlements announced by the CFTC in the lead-up to new caps on
the number of contracts that traders can hold in certain
Earlier on Thursday, the CFTC announced that Australia and
New Zealand Banking Group Ltd had agreed to pay
$350,000 to settle charges it violated position limits in the
wheat and cotton futures markets.
On Tuesday, the CFTC announced that a little-known Shanghai,
China, firm, Sheenson Investments Ltd, and its founder, Weidong
Ge, had agreed to return $1 million in ill-gotten gains and pay
a $500,000 civil penalty for exceeding federal limits on
speculative bets in soybean oil and cotton futures.
Last Friday, the agency ordered Citigroup Inc and a
subsidiary to pay $525,000 for violating limits in the wheat
The new set of trading curbs kicks in Oct. 12. The rules,
which aim to rein in speculation and limit price spikes, were
included in the 2010 Dodd-Frank financial reform law and
finalized by the agency last October. Additional caps are
expected to take effect next year.
Financial industry groups have sued to stop the new
position-limit rules, saying they would irreparably harm the
marketplace and that the CFTC failed to sufficiently weigh the
economic consequences of the rule, as is required by law.
Traders and some Republican lawmakers have argued there is
no evidence that speculators inflate prices.
A judge has not yet ruled in the case, which was filed by
the Securities Industry and Financial Markets Association and
the International Swaps and Derivatives Association in December.