US regulators investigate CFD trading, trading bot, trading firm for Chicago market
Chicago’s trading industry is under intense scrutiny following the collapse of two major trading firms, CFD Trading and the Chicago-based trading company for Chicago.CFD Trading said Friday it will no longer operate as a standalone entity.
The firm has filed for bankruptcy protection, and the city of Chicago is seeking bankruptcy protection.
The Chicago Department of Financial and Professional Regulation (CFDP) said it is looking into CFD’s financial and trading activities.
The CFDP will determine whether CFD should be shut down, or whether it should be put on probation for a period of time.CFDP spokesman John Bussard said the city is also looking into the firms’ financials, but would not release details about those.
CFDP has been the financial regulator in Chicago since 2013.
The city also is looking at whether CFDP should revoke its approval to purchase a second trading firm.
CFD will seek approval to buy a third firm, according to the CFDP.
The city said CFD is still waiting for approval to put on a new trading firm, but the city expects to complete that process by the end of the year.
The company that would buy CFD has not been named.
Chicago Mayor Rahm Emanuel said Friday that he was “devastated” by the collapse, adding that the city will be looking into whether CFDT is violating Chicago’s regulations.
“The CFDT team of executives and traders has performed superbly, with excellent oversight,” Emanuel said in a statement.
“We are devastated that this tragedy has occurred and that it was a result of a serious breach of the company’s internal control.
We will review CFDT’s practices, as we would any breach of any of our regulatory responsibilities.”
Chicago’s Mayor Rahim Daley said the CFDT board and CFDP are “not going to be able to be in any position to determine whether there was a breach of its policies, and that would be my primary focus as mayor.”
Chicago Mayor Emanuel, right, and CFDT CEO Brian Hovis discuss the Chicago Stock Exchange collapse at a press conference in Chicago, Feb. 16, 2017.
Chicago Stock Exchanges, Chicago Stock Commodities Exchange, Chicago Mercantile Exchange, CME Group, and Nasdaq announced Friday that the CFD and CFD Trade are no longer trading on the Chicago stock exchange.
The Chicago Stock Commission is investigating the collapse and will be conducting a criminal investigation into CFDT.
CFDT and the CFDF are under criminal investigation.
Chicago city officials said in the statement that the companies’ directors are not working for CFD or CFDT as long as they continue to work for CFDT, as is required by law.
They are no more allowed to continue to own shares in CFDT or CFDP, and all of the directors will have to leave CFDT by Feb. 20, the statement said.CFDT has been part of the Chicago Mercants Exchange since 2014, but its trading activities are still overseen by CFDP and the Securities and Exchange Commission.
In 2017, CFDT reported a net loss of $3.1 million, but in 2018 it reported a profit of $2.8 million.
The CFD trade company was created by former CFD CEO Brian O’Donnell in 2013.
It was founded by former CME Chairman and CEO John G. Shultz.
The company’s board is made up of former CFDT Chairman and Chief Executive Officer John R. Shuckerman, CFDP Chief Financial Officer John B. Wertheimer, CFDS Chief Financial Advisor Thomas B. Gagnon, and a former CFTD President, Patrick O’Keefe.
The agency is responsible for the CFDS trading market and CFTD’s futures and options markets.
The CME said in an email that the Chicago exchange was “incredibly successful,” but that it is the company that is most affected.
“Chicago Mercantiles Exchange is a global trading and futures marketplace and we are deeply saddened by the tragic events today,” CME spokesperson Julie Sperling said in that email.
“The CMBE board and staff are in contact with the CFTD and CFDC management teams and will work closely with them as they work to gather the facts.
Our thoughts and prayers are with all those affected.”
Chicago Mercants has said in its statement that it has suspended CFDT from its trading operations.
CFDS’ operations are also suspended until Feb. 18.
Chicago Mercantes said it would work closely and cooperatively with authorities to assist in their investigation.
The collapse comes a day after a CME board member resigned from CFDT amid a controversy over CFDT buying its own futures.
CFDA board member John Breen resigned on Feb. 8, and he has since been placed on leave pending the results of an investigation into his actions.