CFTC Increasingly Monitoring Futures For Suspicious Trading Around Trade Headlines
Ever since the controversial Vanity Fair article back in mid-Oct. suggested that some futures traders profited billions of dollars around trade headlines, there’s been a significant effort by the Commodity Futures Trading Commission (CFTC) to use technology to comb through time and sales for suspicious trades, sources familiar with the investigation told Bloomberg.
Sources said the purpose of the CFTC investigation is to asses whether some traders had insider information on economic data, government policy, and trade headlines.
CFTC began the investigation in mid/late Oct. after the Vanity Fair article went public. The conclusions the CFTC made about mysterious traders profiting around trade headlines, key economic data points, or even policy decisions were inconclusive of any wrongdoing. A similar conclusion was reached at the Securities and Exchange Commission (SEC), one source told Bloomberg.
CFTC and SEC didn’t comment on the Vanity Fair article when asked by Bloomberg.
CFTC Enforcement Director Jamie McDonald did respond by saying: “The early returns on our investments in data analytics have been positive,” he said in a statement. “We expect the longer-term impact of our efforts to be even more substantial, as we continue to prioritize detecting and prosecuting misconduct that can undermine the integrity of our markets, like the various forms of insider trading prohibited in the derivatives and commodities markets.”
Nearly a dozen Democratic lawmakers have asked the SEC to investigate futures and equity markets following the Vanity Fair publication.
In one instance, the article, titled “Trump Chaos Trades,” described how unnamed traders made $1.8 billion in five perfectly-timed trades using S&P 500 e-mini futures as the trading vehicle.
CME Group Inc. Chief Executive Officer Terry Duffy, called the Vanity Fair article “nonsensical.” Others have said the constant trade headlines on a daily basis could be fraught with suspicious trading activity around the release.
It’s possible that the CTFC and SEC will be investigating time and sales of equity futures around President Trump’s tweet this morning, announcing: “Getting VERY close to a BIG DEAL with China. They want it, and so do we!.”
It’s still unclear if the CTFC and SEC examined time and sales of the futures markets for suspicious trading around past trade headlines from the Trump administration about an “imminent trade deal” that has been released over and over again for the last 12 months.
“China talks are going very well” – Trump, 12/7/18
“We’re getting into the final laps” – Mnuchin, 4/29/19
“We are coming down to the short strokes” – Kudlow, 11/15/19
“Getting VERY close to a BIG DEAL” – Trump, 12/12/19
— Carl Quintanilla (@carlquintanilla) December 12, 2019
Thu, 12/12/2019 – 17:05