US CFTC Orders ICE Clear Europe to Pay a $450,000 Penalty

The ICEU allegedly failed to obtain written acknowledgment letters from a depository.

The US Commodity Futures Trading Commission (CFTC) announced on Wednesday that it had issued an order and simultaneously filed and settled charges against ICE Clear Europe Limited (ICEU) for violating customer protection regulations. According to the press release, the ICEU allegedly violated regulations that require derivatives clearing organizations to obtain written acknowledgement letters from a depository.

The order revealed that from February 17, 2015, to February 12, 2019, ICEU opened six customers’ segregated accounts without obtaining executed acknowledgement letters from a depository before or with the opening of those accounts. “Two of the accounts ICEU opened in April 2018 and May 2019 held customer funds in connection with tri-party reverse repurchase transactions pursuant to an investment services agreement. In aggregate, the two funded accounts collectively held more than $500 million at one time,” the CFTC found.

That said, the authority asked ICE Clear Europe Limited to pay a $450,000 civil monetary penalty and cease and desist from any further violations of the CFTC regulations.

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In recent CFTC orders, the watchdog filed and settled charges against Societe Generale on September 30, a leading financial services provider based in France, for swap valuation data and supervision failures.

The French banking services provider failed to comply with certain swap dealer requirements for disclosing mid-market marks to counterparties and reported inaccurate swap valuation data to a swaps data repository. That said, the authority imposed a $1,500,000 civil monetary penalty and issued a cease and desist order while asking Societe Generale to meet the compliance requirements on time.

A similar order was recently enacted against Citibank and Citigroup Global Markets Limited for failing to comply with certain swap dealer requirements. The CFTC said that both registered swap dealers did not allegedly report the Legal Entity Identifier (LEI) data to a swap repository known as SDR, among other supervision failures.

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