The futures brokers failed to announce negative oil prices in April and were unable to accept orders from clients, among other failures.
Taiwan’s FSC (Financial Supervisory Commission) has announced it has imposed administrative sanctions on 12 futures brokers for violating futures management laws and regulations and for having deficient internal controls.
The penalties relate to failures by the futures brokers to immediately announce that CME crude oil futures were trading at a negative value in April, and failures to accept negative price orders from clients at the time.
An FSC audit also identified that the futures brokers’ dealing desks were unable to correctly calculate the profit, loss and equity in customers’ foreign futures accounts under the negative price environment, in addition to failures to process high-risk account notifications and perform offsetting operations.
After considering the circumstances of the violations and related efforts to settle and negotiate with affected customers, the FSC fined the 12 futures brokers a total CNY 5.16 million (USD 754,000) and ordered them to issue customer refunds.
The 12 firms that were fined were Yuanta Futures, KGI Futures, JihSun Futures, Concord Futures, President Futures, Hua Nan Futures, Dah Chang Futures, Mega Futures, SinoPac Futures, Capital Futures, Cathay Futures and Fubon Futures.
The futures brokers are additionally required to actively cooperate with the mediation efforts to resolve disputes “as soon as possible”.
The firms have all completed system adjustments to support negative trading values and related settlement functions in future.
