CFTC Fines Swap Dealer Natixis $2.8M for Failure to Supervise Traders on Two Derivatives Trading Desks

The Commodity Futures Trading Commission (CFTC) yesterday issued an order filing and settling charges against Natixis, a global bank and swap dealer, for failure to diligently supervise traders on the bank's New York-based Interest Rate Derivatives Desk (IRD Desk) and its Equity Derivatives Flow and Solution Trading Desk (FAST Desk).

The traders on the IRD Desk and FAST Desk separately engaged in misconduct by mismarking their positions for the purpose of either inflating profits and minimizing losses, or to "smooth" out returns, respectively. The order requires Natixis to pay a $2.8 million civil monetary penalty, cease and desist from violating applicable provisions of the Commodity Exchange Act (CEA) and CFTC regulations, and comply with certain conditions and undertakings. 

"Swap dealers must comply with their supervisory and regulatory responsibilities under the CEA and Commission regulations, and ensure that their valuation controls are properly calibrated to ensure that derivatives positions reflect fair value," said CFTC Acting Director of Enforcement Gretchen Lowe.