CFTC Fines Interactive Brokers $1.75 Million for Supervision Failures

The US Commodity Futures Trading Commission (CFTC) announced that it has filed and settled charges against Interactive Brokers LLC, one of the biggest US-based brokerage firm, for supervision failures in handling its customer accounts.

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The official announcement by the CFTC detailed that the broker was on notice of the possibility of negative oil futures prices prior to April 20, 2020, but did not adequately prepare and configure its electronic trading system to recognize negative prices.

Specifically, Interactive Brokers failed to deploy necessary system changes before negative prices occurred resulting in two significant systems issues, which impacted hundreds of customer accounts. Those customers experienced trading losses on April 20, 2020, initially determined by Interactive Brokers to exceed $82.57 million.

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Considering Interactive Brokers' substantial cooperation and systems remediation, the order requires Interactive Brokers to pay a civil monetary penalty of $1.75 million and restitution of $82.57 million to its customers.

“This enforcement action demonstrates that the CFTC will hold registrants responsible for their handling of customer accounts and ensuring the integrity of trades on their trading platforms and electronic systems, including during instances of market volatility,”said Acting Director of Enforcement Vincent McGonagle.

Earlier this month, Interactive Brokers has named Cecelia Zhong as Executive Director​. Based in Hong Kong, Cecelia will report to David Friedland, Managing Director-Asia Pacific Operations of the company.