ICE Exchange Fined $3M Over Flawed Data

The erroneous data included natural gas prices that were reported at 1,000 times their actual level.
Matthew HellerMarch 16, 2015
ICE Exchange Fined $3M Over Flawed Data

The ICE Futures U.S. commodity exchange has agreed to pay $3 million to settle charges that it submitted inaccurate and incomplete trading reports to the U.S. Commodity Futures Trading Commission every day for 20 months.

The trading reports submitted between October 2012 and at least May 2014 contained “thousands of errors and omissions,” the CFTC said Monday in an order disclosing the settlement. The erroneous data included natural gas prices that were reported at 1,000 times their actual level.

According to the CFTC, its staff repeatedly notified ICE of the problems and requested corrective action, but the exchange, which is part of the Intercontinental Exchange group, did not comply.

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“The CFTC cannot carry out its vital mission of protecting market participants and ensuring market integrity without correct and complete reporting by registrants,” CFTC Director of Enforcement Aitan Goelman said in a news release.

“Today’s action makes clear that registrants who fail to meet their reporting obligations will be held accountable and that the CFTC takes a particularly dim view of reporting violations that continue over many months, especially after CFTC staff has repeatedly alerted the registrant in question to the problems in its reporting,” he added.

The Financial Times said the case “underscores the [CFTC’s] tougher stance on exchanges” and was “a black eye for ICE, known as a technological innovator in the exchange industry.”

The CFTC has expanded its power to monitor energy and financial markets under the 2010 Dodd-Frank Act and uses reports from exchanges to help with surveillance and enforce limits on speculative trading. “Reporting is at the heart of the commission’s market and financial surveillance programs,” the agency said Monday.

ICE’s violations coincided with technology upgrades related to a new data-reporting format required by the CFTC that involved migrating data from its old reporting system to a new one. The upgrades “introduced software logic errors that resulted in most of the reporting errors and omissions,” the CFTC’s order said.

As part of the settlement, ICE also agreed to strengthen its reporting by adding a chief data officer and hiring at least three additional quality assurance staff.