CFTC’s market manipulation enforcement position under fire

Author: John Crabb | Published: 2 May 2019

The Commodity Futures Trading Commission’s (CFTC) enforcement position on market manipulation has been weakened by two recent developments.

The first saw the CFTC suffer an in-court defeat to DRW Trading, which it had originally sued in 2013 for entering inflated bids in an interest rate swap futures market in order to inflate the price.

The case was heard in a federal court where US District Judge Richard Sullivan found that the company had acted in line with market regulation. "It is not illegal to be smarter than your counterparties in a swap transaction," read his verdict.

The second saw the CFTC settle terms with food giants Mondelez International and Kraft Heinz just a few months later for allegedly taking part in wash sales and manipulating the price of red winter wheat futures in 2011.

Although this was settled out of court, sources believe the Commission’s reluctance to advance the...