ANZ fined in US for cotton speculation

UNITED STATES regulators have punished ANZ and JPMorgan for excessive speculation in cotton markets during one of the most tumultuous periods in the contract’s history, tagging them with fines totalling nearly US$1 million (NZ$1.2m).

In the latest sign that the US Commodity Futures Trading Commission is cracking down on trading limits in futures markets, JPMorgan agreed to pay US$600,000 for exceeding position limits in the cotton market in September and October 2010.

It was one

of

the

agency’s largest civil penalties for position limits violations.

Earlier in the day it said ANZ would pay US$350,000 for exceeding limits in the CME Group’s Chicago Board of Trade wheat futures contract on multiple occasions in August 2010, and in IntercontinentalExchange cotton futures in February 2011.

‘‘These breaches of CFTC regulations were inadvertent, technical in nature and confined to a small number of transactions,’’ ANZ chief risk officer Nigel Williams said.

‘‘However,

ensuring

we

are compliant with regulations is a key priority in every part of ANZ.’’

JPMorgan ment.

Coupled with two previous settlements in the past week and one in February, the CFTC has collected more than US$2m in five civil fines related to position limits this year.

Before the summer of 2010, when the Dodd-Frank financial reforms set in motion new rules to expand federal trading limits to all commodity markets, the CFTC had issued only five fines since

declined

to

com- 1995, according to a Reuters review of enforcement actions on the agency’s website.

The JPMorgan order is the latest in a flurry of position limits settlements announced by the CFTC in the lead-up to the October 12 effective date for new caps on the number of contracts traders can hold in certain markets.

They are also the second and third penalties related to a particularly volatile period in the cotton market, which surged more than threefold from August 2010 to March 2011 – and then more than halved in five months.