Two Citigroup Global Markets Inc. ("Citigroup") traders ("respondents") settled CFTC charges that they engaged in "spoofing" in the U.S. Treasury futures markets. The CFTC determined that the respondents took part in "bidding or offering with the intent to cancel the bid or offer before execution." The CFTC found that the traders made "bids or offers of 1,000 lots or more," which "exacerbate[d] an imbalance in the order book."
The CFTC found that the spoofing strategy created an impression of greater buying or selling interest than otherwise existed absent the spoofing bids. The CFTC determined that the spoofing was done to induce other market participants to fill the respondents' smaller resting offers on the opposite side of the market in advance of anticipated price changes. In addition, the CFTC found that both traders "knew that at least one other U.S. Treasury trader was using the spoofing strategy, and . . . did not report it to compliance." As part of the settlement, the respondents agreed to pay $350,000 and $200,000, respectively, in civil monetary penalties.
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