WASHINGTON (Reuters) - The top derivatives regulator ordered Interactive Brokers Group Inc to pay a $225,000 fine, the second time in less than a year it has faulted the futures broker over managing client funds.
The online broker had failed to compute customers funds in segregated accounts at the end of each day, from at least January 2008 to April 4, 2011, the Commodity Futures Trading Commission said on Tuesday.
In July, Interactive Brokers settled charges that it violated reporting rules and failed to “diligently” supervise the handling of accounts, paying a $700,000 penalty.
The futures market is primarily self-regulated by the National Futures Association (NFA), an industry body and CME Group Inc, the world’s largest futures exchange.
The CFTC, a federal agency, separately sees to it that the market adheres to the rules it sets.
But a duo of scandals has tarnished the oversight of the futures market, with the collapse of MF Global Holdings Ltd in October 2011 followed rapidly by the collapse of Peregrine Financial Group, or PGBest.
Interactive Brokers also improperly covered customer obligations with different currencies to maximize interest earnings and not at the request of customers, the CFTC said in its current release.
“As a result, IB did not retain enough (dollars) in segregation to meet its (dollar) denominated obligations to its commodity customers,” the CFTC said.
The group said it reported the errors as soon as it discovered them and that there had never been any deficiency in segregated funds. At the time, it was not aware this was a violation of the CFTC’s rules.
The CFTC has proposed tighter rules to better protect customer funds at futures brokers, but the industry is up in arms about the plan it says will be too costly and could put some firms out of business.
Reporting by Douwe Miedema; Editing by Gerald E. McCormick and Andre Grenon