Nasdaq to Pay $22 M to Settle CFTC Charges Over Incentive Program Misconduct

Nasdaq has agreed to a $22 million settlement with the U.S. Commodity Futures Trading Commission (CFTC) to resolve charges related to its former energy futures market. The CFTC accused Nasdaq Futures Inc., which operated from July 2015 to November 2018, of failing to disclose critical details about an incentive program that provided payments to market makers and certain customers based on their trading volumes. This program was not reported to the CFTC as required by U.S. law and regulations, leading to allegations of false and misleading statements.

The CFTC's enforcement director, Ian McGinley, criticized Nasdaq for committing a "significant violation" of its obligations. McGinley stated, "The firm withheld accurate information from market participants."

A Nasdaq spokesperson commented on the settlement, expressing that the company is "pleased to have resolved the matter with the CFTC," and that the resolution allows them to move forward.

However, the settlement has faced criticism from some quarters. Republican Commissioner Caroline Pham dissented, arguing that the enforcement action targets incentive programs that are commonplace in financial markets. Pham's dissent highlights ongoing debates about the regulatory scrutiny of market practices and the appropriateness of enforcement actions in such cases.