Australia and New Zealand Banking Group Ltd (ANZ) has agreed to pay a civil monetary penalty of $500,000 to settle charges of supervision failures with the Commodity Futures Trading Commission (CFTC). ANZ has also agreed to cease and desist from violating section 4s(h)(1)(B) of the Commodity Exchange Act, and other CFTC regulations.

As a registered swap dealer, ANZ was found to be violating its supervision obligations when it failed to ensure that its spoofing surveillance tool was operating properly.

When the CFTC investigated ANZ’s trading activity, ANZ disclosed that their surveillance tool to monitor spoofing activity was not performing sufficiently for futures data from one vendor between November 2019 to June 2020, and from November 2020 to February 2021.

During both periods, mismatches were found between the time when the data was placed into the surveillance tool and the time when the tool was actually running. 

Failed to prevent issue from recurring

ANZ did however discover the issue after the first period, and reset the time so the tool would run after the data was put in. Yet ANZ failed to add additional safeguards to prevent the timing issue happening again – which it did for four months before it was discovered.

“As a result, thousands of orders were not timely surveilled for spoofing and ANZ should have, but did not, received a substantial number of surveillance alerts that would have been generated during the two gap periods”, the CFTC said.

When deciding on the penalty, the CFTC said it recognized “ANZ’s substantial cooperation”, and acknowledged its remediation regarding this matter, which was reflected in the form of a reduced penalty.