StoneX Financial Inc. has agreed to pay a $20,000 fine to settle allegations of violating exchange rules with ICE Futures.
The settlement comes after an investigation into a potential wash trade in the Cocoa Futures market.
According to a disciplinary notice released by ICE Futures, a StoneX employee may have placed opposing buy and sell orders for the same principal on April 27, 2023.
The firm explained that the orders, which were executed in the Cocoa Futures spread market, allegedly resulted in a wash trade.
As per CME Group, a wash trade is “a form of fictitious trade in which a transaction or a series of transactions give the appearance that authentic purchases and sales have been made.” However, the trades have been taken without the intent to take a market position and aim to create a false impression of market activity.
Wash trades can distort market prices and undermine the integrity of the trading process.
In the settlement, StoneX neither admitted nor denied the alleged rule violations. However, the company agreed to pay the monetary penalty as part of the agreement, with the settlement effective immediately.
ICE Futures said no customer harm was identified in this case.