New York, NY – JP Morgan has agreed to pay $100 million to settle a probe by the Commodity Futures Trading Commission (CFTC) that found the bank failed to adequately monitor billions of client orders from 2014 to 2021.
The issue was uncovered in 2021 during the onboarding of a new trading exchange. JP Morgan identified that its surveillance systems for monitoring trading activities on various venues and trading platforms were not functioning correctly, leading to significant surveillance gaps.
The primary cause of the problem was the improper configuration of data feeds, which prevented the comprehensive ingestion of trade and order data into JP Morgan’s surveillance tools. Specifically, on one US-designated contract market, the bank failed to process billions of order messages over the seven-year period.
JP Morgan has admitted to some of the CFTC’s findings. The CFTC initially imposed a $200 million penalty but reduced it to $100 million due to previous settlements with the Federal Reserve and the Office of the Comptroller of the Currency (OCC), which had collectively fined the bank over $300 million earlier this year.
In a prior statement, JP Morgan stated: “We self-identified the issue, significant remedial actions have been taken and others are underway; and we have not found any employee misconduct or harm to clients or the market in our review of the previously uncaptured data.”