September 21, 2018

CFTC Finds Mizuho Bank, Ltd. Engaged in Spoofing of Treasury Futures and Eurodollar Futures

CFTC Recognizes Cooperation and Proactive Remediation in Significantly Reduced Penalty

Washington, DC — The Commodity Futures Trading Commission (CFTC) today issued an Order filing and settling charges against Mizuho Bank, Ltd. (Mizuho) for engaging in multiple acts of spoofing in a variety of futures contracts on the Chicago Mercantile Exchange and the Chicago Board of Trade, including futures contracts based on United States Treasury notes and Eurodollars.  The Order finds that Mizuho engaged in this activity through one of its employees (Trader A) who accessed these markets through a trading platform from Mizuho’s Singapore office.  The Order requires Mizuho to pay a $250,000 civil monetary penalty, and cease and desist from violating the Commodity Exchange Act’s prohibition against spoofing. 

The Order finds that during the period starting at least May 2016 through May 2017, Trader A placed multiple orders for futures contracts with intent to cancel the orders before their execution.  Specifically, Trader A placed large buy and sell orders and then cancelled them. Trader A engaged in this spoofing strategy to test the market’s reaction to his spoof orders.

CFTC’s Director of Enforcement Comments

James McDonald, the CFTC’s Director of Enforcement, commented:  “Spoofing is an unlawful trade practice that undermines the integrity of the market, because it injects false information into the market—information on which market participants may rely.  That’s true whether the bad actor is motivated by a desire to manipulate the market for profit, or, as was the case here, to test the market’s reaction to certain types of orders.  This case shows the Commission’s commitment to root out spoofing in all of its forms.  This case also shows that true cooperation—like that of Mizuho here—will be rewarded with a substantially reduced monetary penalty.

The Order makes additional findings about Mizuho’s cooperation and remediation.  The Order finds that Mizuho commenced an internal review and assisted the Division’s investigation of the conduct.  The Order further finds that Mizuho has represented that it has launched an overhaul of its systems and controls and implemented a variety of enhancements to detect and prevent similar misconduct including revising its policies, updating its training, and implementing electronic systems to identify spoofing.  The cooperation and remediation resulted in a significantly reduced civil monetary penalty.

This case is brought in connection with the CFTC Division of Enforcement’s Spoofing Task Force, and the staff members responsible are Maura Viehmeyer, Jordon Grimm, Diana Dietrich, Kim Bruno, Michael Solinsky, and Rick Glaser.