CHICAGO (AP) - A Chicago commodities trading firm has agreed to pay a $1.5 penalty after admitting to the Commodity Futures Trading Commission it created and instantly canceling fake orders to induce favorable transactions.
Geneva Trading USA admitted that at least three of its traders engaged in "spoofing" between 2013 and 2016. The orders involved futures contracts that were traded at the Chicago Mercantile Exchange.
Facing an administrative hearing, Geneva Trading settled with the CFTC without admitting or denying any of the findings.
According to CFTC, each trader would issue a small buy or sell order at or near the best price, while placing a series of larger orders on the opposite side of the market. The prices designed to avoid being filled. The market imbalance would induce other participants to bid on the smaller transaction and the spoof orders would instantly be cancelled.
Geneva Trading executives were not available to comment Friday.