The National Futures Association (NFA) announced on Tuesday that it has fined X-Change Financial Access LLC (XFA) $100,000. The trade execution services provider was found to have executed transactions for an individual who had been banned from trading as a result of a Member Responsibility Action (MRA) issued by the NFA.
Yesterday’s decision stems from an MRA issued against Jonathan Hansen, the owner of a commodity pool operator and commodity trading advisor, in September of 2013. The MRA meant Hansen was forbidden from disbursing or transferring any funds, other than to margin existing positions, from any trading accounts or from any pool accounts without prior approval from NFA.
Having failed to meet certain conditions to regain the ability to trade, Hansen was banned entirely from trading in January 2014. Being the cunning man he is, Hansen began to trade through an account set up in his wife’s name (they’ll never know!). Just four months after his ban, the Chicago Mercantile Exchange (CME) informed the NFA of his activity.
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Throughout Hansen’s time trading via his wife’s account, he would use XFA’s execution services. He would place orders without providing an account identification number. After he had determined whether or not a trade was profitable, he would allocate funds to different accounts, some held by XFA but others not.
XFA was able to accept these orders as ‘bunched orders’ under a specific piece of regulation provided by the Commodity Futures Trading Commission (CFTC). This was despite the fact that over 50 percent of the bunched orders went solely to one account – the one ‘controlled’ by Hansen’s wife.
As a result of their investigation, the NFA’s Business Conduct Committee submitted a complaint against XFA yesterday. On the same day, the firm made an offer in which it would pay a fine of $100,00 without having to admit to any wrongdoing.
The firm’s offer also means it will have 30 days after it is accepted to improve its compliance procedures. Given the nature of the accusations against it, XFA will focus on improving compliance procedures related to bunched orders.