On Thursday, the Commodity Futures Trading Commission (CFTC CFTC The 1974 Commodity Exchange Act (CEA) in the United States created the Commodity Futures Trading Commission (CFTC). The Commission protects and regulates market activities against manipulation, fraud, and abuse trade practices and promotes fairness in futures contracts. The CEA also included the Sad-Johnson Agreement, which defined the authority and responsibilities for the monitoring of financial contracts between the Commodity Futures Trading Commission and the Securities and Exchange Commiss The 1974 Commodity Exchange Act (CEA) in the United States created the Commodity Futures Trading Commission (CFTC). The Commission protects and regulates market activities against manipulation, fraud, and abuse trade practices and promotes fairness in futures contracts. The CEA also included the Sad-Johnson Agreement, which defined the authority and responsibilities for the monitoring of financial contracts between the Commodity Futures Trading Commission and the Securities and Exchange Commiss Read this Term) in the U.S. filed a civil enforcement action against two Glen Point Capital entities and Neil Phillips, their Co-Founder and Co-Chief Investment Officer, for market manipulation to trigger the payout of two binary options contracts.

Along with the preliminary charges, the regulatory agency brought additional charges against the defendants for failing to supervise the trading activities of their “officers, employees, and agents.”

Glen Point Capital Advisors LP and Glen Point Capital LLP are two CFTC-registered commodity pool operators. They were holding two sizeable binary option contracts tied to the U.S. dollar (USD) to South African rand (ZAR) exchange rate, with a $30 million payout condition if the USD/ZAR exchange rate fell below certain levels before the contract expiry.

CFTC Issues FX Manipulation Charges Against Glen Point Capital

According to the official press release, Phillips manipulated the USD/ZAR rate on two occasions in late December 2017 when there was low market liquidity in the spot market. He intended to push the currency pair price down to a certain level so that his company could earn the binary options payouts.

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He orchestrated trading a massive volume of the USD/ZAR pair. He even expressed his manipulative intent by explicitly informing the bank salesperson of his objective to trade through the rate of 12.50 rand per dollar, which is the triggering point of the binary options contracts. He even repeatedly asked about the volume of the currency pair he needed to sell to take the prices to the desired level. He immediately stopped selling when the target price of the currency pair was achieved.

FX Manipulation Charges in Focus by CFTC

“Manipulative and deceptive conduct undertaken in connection with swaps Swaps Swaps can be defined as a derivate contact composed of two parties that exchange to cash flow between two separate financial instruments.They are generally divided into two categories. This includes contingent claims (options) and forward claims, where forward contracts, swaps, and exchange-traded funds (ETFs) are exchanged. Commodity price, equity price, interest rate, and foreign exchange rate are common variables used as one of the cash flows in swaps upon initiation. Different Types of Swaps Swaps can be defined as a derivate contact composed of two parties that exchange to cash flow between two separate financial instruments.They are generally divided into two categories. This includes contingent claims (options) and forward claims, where forward contracts, swaps, and exchange-traded funds (ETFs) are exchanged. Commodity price, equity price, interest rate, and foreign exchange rate are common variables used as one of the cash flows in swaps upon initiation. Different Types of Swaps Read this Term harms market integrity and market participants, and we will take action to hold those who commit this type of misconduct accountable,” said the Acting Director of Enforcement, Gretchen Lowe.

The CFTC is now seeking civil monetary penalties, disgorgement of any ill-gotten gains, and permanent trading and registration bans on the defendants. In addition, the agency wants a permanent injunction of the defendants against further regulatory violations.

Meanwhile, other U.S. agencies are doubling down on their actions against market manipulation. Most recently, the Securities and Exchange Commission charged eight financial influencers for using Twitter and Discord to pull off a $100 million pump-and-dump scheme.