UNITED STATES OF AMERICA 

Before the 

COMMODITY FUTURES TRADING COMMISSION 

In the Matter of: 

Interactive Brokers LLC, 

Respondent. 

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CFTC Docket No. 21-19 

ORDER INSTITUTING PROCEEDINGS PURSUANT TO 

SECTION 6(c) AND (d) OF THE COMMODITY EXCHANGE ACT, 

MAKING FINDINGS, AND IMPOSING REMEDIAL SANCTIONS

I. INTRODUCTION

The Commodity Futures Trading Commission (“Commission”) has reason to believe that 

from at least early-April 2020 through April 22, 2020 (“Relevant Period”), Interactive Brokers 

LLC (“Interactive Brokers”), a registered futures commission merchant (“FCM”), violated 

Commission Regulation (“Regulation”) 166.3, 17 C.F.R. § 166.3 (2020). Therefore, the 

Commission deems it appropriate and in the public interest that public administrative 

proceedings be, and hereby are, instituted to determine whether Interactive Brokers engaged in 

the violations set forth herein and to determine whether any order should be issued imposing 

remedial sanctions. 

In anticipation of the institution of an administrative proceeding, Interactive Brokers has 

submitted an Offer of Settlement (“Offer”), which the Commission has determined to accept. 

Without admitting or denying any of the findings or conclusions herein, Interactive Brokers 

consents to the entry of this Order Instituting Proceedings Pursuant to Section 6(c) and (d) of the 

Commodity Exchange Act, Making Findings, and Imposing Remedial Sanctions (“Order”) and 

acknowledges service of this Order.1

II. FINDINGS

The Commission finds the following: 

1

 Interactive Brokers consents to the use of the findings of fact and conclusions of law in this Order in this 

proceeding and in any other proceeding brought by the Commission or to which the Commission is a party or 

claimant, and agrees that they shall be taken as true and correct and be given preclusive effect therein, without 

further proof. Interactive Brokers does not consent, however, to the use of this Order, or the findings or conclusions 

herein, as the sole basis for any other proceeding brought by the Commission or to which the Commission is a party 

or claimant, other than: a proceeding in bankruptcy or receivership; or a proceeding to enforce the terms of this 

Order. Interactive Brokers does not consent to the use of the Offer or this Order, or the findings or conclusions in 

this Order, by any other party in any other proceeding. 
2 

A. SUMMARY

During the Relevant Period, Interactive Brokers failed to diligently supervise its FCM 

activities with respect to its electronic trading system’s preparedness for and ability to handle 

negative crude oil futures prices on April 20, 2020. Interactive Brokers’ supervisory failures 

violated Regulation 166.3, 17 C.F.R. § 166.3 (2020). 

 

Interactive Brokers’ supervisory failures came to light on April 20, 2020, when the 

benchmark West Texas Intermediate light, sweet crude oil (“CL”) futures contract on the CME 

Group Inc.’s (“CME Group”) New York Mercantile Exchange (“NYMEX”) traded into negative 

prices, settling at negative $37.63 per barrel for the May contracts set to expire the following 

day. This price was the basis for determining the settlement price for certain cash-settled 

contracts, including the E-mini crude oil (“QM”) futures contract on the NYMEX and the West 

Texas Intermediate light, sweet crude oil (“WTI”) futures contract on the Intercontinental 

Exchange Europe (“ICE Europe”). Because the QM and WTI contracts settle based on the 

trading of the CL contract in the settlement window, both contracts settled at negative $37.63 per 

barrel. Interactive Brokers customers held long positions in the May QM and WTI contracts on 

April 20, 2020 and experienced trading losses on those positions. 

Although Interactive Brokers was on notice of the possibility of negative oil futures 

prices prior to April 20, 2020, it did not adequately prepare and configure its electronic trading 

system for negative prices, impacting hundreds of its customers on April 20, 2020. Specifically, 

Interactive Brokers failed to enable its system to accept negative pricing in QM and WTI futures 

contracts, and its margin system failed to charge customers appropriate initial margin for WTI 

contracts. These issues impacted hundreds of customer accounts, and customers holding long 

positions in the May QM and WTI contracts2

 experienced losses estimated by the firm at the 

time to exceed $82.57 million on April 20, 2020. By virtue of this conduct, Interactive Brokers 

violated Regulation 166.3, which requires FCMs to diligently supervise the handling of their 

customer accounts. 

Interactive Brokers represents that it has already proactively compensated 272 customers 

for losses exceeding $82.57 million. 

* * * 

In accepting Respondent’s Offer, the Commission recognizes the substantial cooperation 

of Interactive Brokers with the Division of Enforcement’s (“Division”) investigation of this 

matter. The Commission also acknowledges Respondent’s representations concerning its 

remediation in connection with this matter. The Commission’s recognition of Respondent’s 

substantial cooperation and appropriate remediation is further reflected in the form of a reduced 

civil monetary penalty. 

 

 

2

 Interactive Brokers had no customers with positions in the CL contract on the NYMEX because, like many FCMs, 

it does not allow customers to carry the contract close to settlement. 
3 

B. RESPONDENT

 

Interactive Brokers LLC is registered with the Commission as an FCM that maintains 

its principal place of business at One Pickwick Plaza, Greenwich, Connecticut 06830. 

Interactive Brokers has been registered with the Commission since December 2, 1994. 

Interactive Brokers is also a Forex Dealer Member of the National Futures Association. 

C. FACTS 

1. Interactive Brokers Failed to Adequately Supervise its Electronic Trading 

System for Receiving Negative Prices and Calculating Margin in Customer 

Accounts 

 

Prior to April 20, 2020, CME Group issued a series of advisory notices warning of 

potential negative oil futures pricing.3 Although Interactive Brokers had taken steps to prepare 

for negative oil prices, it had not changed its system’s market rule configuration for crude oil 

futures contracts to make them “negative-capable” on or before April 20, 2020. As a result of 

Interactive Brokers’ failure to deploy the necessary system changes before negative prices 

occurred, it encountered two significant systems issues on April 20, 2020: (1) negative prices 

were not displayed to customers and customers were unable to place orders with negative-priced 

limit orders to buy or sell; and (2) internal minimum margin requirements were not correctly 

enforced prior to trade execution for trades in the WTI contract. These two issues impacted 

hundreds of customer accounts that held long QM or WTI futures positions into settlement, and 

those customers experienced trading losses estimated by the firm at the time to exceed $82.57 

million. 

 

a. Interactive Brokers’ System Did Not Recognize Negative Prices for QM and 

WTI Contracts 

The first issue concerned the price feed and order entry issues experienced by customers 

on April 20, 2020. Although Interactive Brokers was in the process of making the necessary 

coding changes for negative prices pursuant to its own internal procedures and had begun testing 

those changes, it had not changed the market rules on crude oil futures to make them “negativecapable” as of April 20, 2020. Interactive Brokers’ “Ticker Farm” system, which provides 

customer-facing interfaces and internal systems with real-time market data, rejected negative 

prices for the QM and WTI contracts that it perceived to be erroneous. As a result, Interactive 

Brokers’ customer-facing platforms did not properly display negative prices when the QM and 

WTI contracts traded below zero. In addition, customers were unable to place negative-priced 

 

3 See CME Globex and Market Data Customer Notice No. 20200403, Changes to Price and Strike Eligibility Flags 

for Certain Energy Products (Apr. 3, 2020), available at https://www.cmegroup.com/notices/electronictrading/2020/04/20200403.html; CME Group Advisory Notice No. 20-152, CME Clearing Plan to Address the 

Potential of a Negative Underlying in Certain Energy Options Contracts (Apr. 8, 2020), available at

https://www.cmegroup.com/notices/clearing/2020/04/Chadv20-152.pdf; CME Group Advisory Notice No. 20-160, 

Testing Opportunities in CME’s “New Release” environment for negative prices and strikes for certain NYMEX 

energy contracts (Apr. 15, 2020), available at https://www.cmegroup.com/notices/clearing/2020/04/Chadv20-

160.html. 
4 

limit orders to buy or sell4

 and were unable to enter orders liquidating long positions for the QM 

and WTI contracts after the price fell below zero on April 20, 2020. Finally, Interactive Brokers’ 

credit system did not receive negative prices and was therefore unable to properly value 

accounts. The credit system overstated the value of accounts with long positions in the QM and 

WTI contracts and did not attempt to auto-liquidate positions in accounts that would have been 

in margin deficit if correctly marked-to-market.5 According to Interactive Brokers, by April 22, 

2020, it had resolved enough of its systems issues that, had oil derivative futures prices turned 

negative again, customers would have been able to enter orders and see negative prices. 

b. Interactive Brokers’ Margin System Failed to Enforce Initial Margin 

Requirements for WTI Contracts 

The second issue concerned Interactive Brokers’ internal “Credit Manager” system which 

calculates margin requirements and customer account value to determine if an order is authorized 

using real-time market data. Generally, the system will not accept orders unless customers have 

sufficient excess liquidity in their accounts to meet house initial margin requirements. While 

reviewing trade records from April 20, 2020, Interactive Brokers discovered a latent flaw in its 

margin system that permitted customers to establish WTI positions on April 20, 2020, before 

they posted the requisite capital. Interactive Brokers determined that the Credit Manager system 

had calculated the initial margin required to open a long position in the WTI contract to be 

capped at the lesser of: (1) the notional value of the contract; or (2) Interactive Brokers’ house 

margin requirement for the day. On April 20, 2020, the initial house margin for long WTI was 

$8,462.50 per contract. As the price of the WTI contract fell and the contract’s notional value 

became lower than the house margin requirement, Interactive Brokers’ margin system required 

customers to have excess liquidity equal to only the notional value of the contract to open a long 

position. As a result, customers were able to open more than three times as many WTI contracts 

than they would have been able to open if Interactive Brokers had required the pre-trade initial 

margin it normally requires. According to Interactive Brokers, it deployed a coding change to 

remediate the initial margin issue on April 21, 2020, for trade date April 22, 2020. 

 

4

 According to Interactive Brokers, customers may have been able to enter market orders in some instances (e.g., if 

the order was placed when the price was above zero), but if the price fell below zero after order entry and before the 

order was routed to the exchange, Interactive Brokers’ system would have indicated to the customer that the order 

was not routed to the market. In some instances, customers were able to place buy orders that were filled at negative 

prices. 

 

5

 When an account has a margin deficit, Interactive Brokers generally liquidates on an automated, real-time basis, 

although it is not obligated to do so. 
5 

2. Interactive Brokers’ Reporting, Cooperation, Customer Compensation, and 

Systems Remediation 

Interactive Brokers reported its system issues to the Division on or about April 21, 2020, 

and cooperated with the Division’s investigation.6

 As part of that cooperation, Interactive 

Brokers voluntarily produced documents and provided important information and analysis at the 

Division’s request. Interactive Brokers’ cooperation expedited the completion of the Division’s 

investigation. 

Interactive Brokers represents that it has engaged in substantial customer compensation 

and systems remediation efforts. Interactive Brokers also represents that it has restored more 

than $82.57 million to accounts impacted by the system issues described above, by forgiving 

unsecured debts owed to Interactive Brokers and crediting lost customer positive equity.7

 

Following the market events of April 20, 2020, Interactive Brokers promptly implemented 

substantial system remediation changes to enable negative prices for oil futures products and to 

ensure that its margin system charges appropriate initial margin for futures products. Interactive 

Brokers also instituted an early close-out period for cash-settled futures similar to the restrictions 

already in place on physically-settled futures, including preventing customers from opening new 

positions within five trading days before the futures’ last trade date. 

The Commission’s recognition of Interactive Brokers’ substantial cooperation and 

systems remediation is reflected in the form of a reduced civil monetary penalty. 

III. LEGAL DISCUSSION 

Interactive Brokers Failed to Supervise Diligently the Handling of its Customer Accounts 

in Violation of Regulation 166.3 

Regulation 166.3, 17 C.F.R. § 166.3 (2020), imposes on every Commission registrant 

(except associated persons who have no supervisory duties) an affirmative duty to “diligently 

supervise the handling by its partners, officers, employees and agents . . . of all commodity 

interest accounts carried, operated, advised or introduced by the registrant and all other activities 

of its partners, officers, employees and agents . . . relating to its business as a Commission 

registrant.” A violation of Regulation 166.3 is an independent violation for which no underlying 

violation is necessary. See, e.g., In re Collins, CFTC No. 94-13, 1997 WL 761927, at *10 (Dec. 

10, 1997) (“It is well settled that a violation under Rule 166.3 is ‘an independent and primary 

violation for which no underlying violation is necessary.’” (citation omitted)); In re GNP 

 

6

 Interactive Brokers also reported its system issues to the CFTC’s Market Participants Division, previously known 

as the Division of Swap Dealer and Intermediary Oversight (DSIO), on or about April 22, 2020. 

7

 Interactive Brokers compensated customers who held long positions in QM and/or WTI through settlement and 

were logged into the relevant account during some or all of the time that prices were trading negative (between 2:08 

pm and 2:30 pm EDT on April 20, 2020). Interactive Brokers represents that it offered to compensate customers the 

full amount of each such customer’s losses resulting from the difference between WTI and QM settling at $0.00 and 

WTI and QM settling at -$37.63. 

 
6 

Commodities, Inc., CFTC No. 89-1, 1992 WL 201158, at *17 n.11 (Aug. 11, 1992) (“Rule 166.3 

establishes failure to supervise as an independent and primary violation . . . .” (citation omitted)),

aff’d in part and modified sub nom. Monieson v. CFTC, 996 F.2d 852 (7th Cir. 1993). 

For a registrant to fulfill its duties under Regulation 166.3, it must both design an 

adequate program of supervision and ensure that the program is followed. See GNP 

Commodities, 1992 WL 201158, at *17-19 (providing that, even if an adequate supervisory 

system is in place, Regulation 166.3 can still be violated if the supervisory system is not 

diligently administered). As a result, a violation of Regulation 166.3 “is demonstrated by 

showing either that: (1) the registrant’s supervisory system was generally inadequate; or (2) the 

registrant failed to perform its supervisory duties diligently.” In re FCStone, LLC, CFTC No. 

15-21, 2015 WL 2066891, at *3 (May 1, 2015) (consent order) (citing In re Murlas 

Commodities, Inc., CFTC No. 85-29, 1995 WL 523563, at *9 (Sept. 1, 1995)). “[A] showing 

that the registrant lacks an adequate supervisory system can be sufficient to establish a breach of 

duty under Regulation 166.3.” Collins, 1997 WL 761927, at *10. Evidence of violations that 

“should be detected by a diligent system of supervision, either because of the nature of the 

violations or because the violations have occurred repeatedly[,]” is probative of a failure to 

supervise. In re Paragon Futures Ass’n, CFTC No. 88-18, 1992 WL 74261, at *14 (Apr. 1, 

1992). 

Pursuant to Regulation 166.3, 17 C.F.R. § 166.3 (2020), registrants have a duty to 

supervise their officers, employees, and agents who are responsible for establishing, monitoring, 

maintaining, and controlling electronic trading platforms and systems. See, e.g., In re 

FXDirectDealer, CFTC No. 13-34, 2013 WL 5295802, at *2 (Sept. 18, 2013) (consent order) 

(finding supervision failures for FCM’s failure to “supervise diligently its officers’, employees’, 

and agents’ handling of customer accounts that traded on FXDDs MT4 platform by allowing 

these officers, employees, and agents to establish and maintain asymmetrical slippage parameters 

on the MT4 system, to the detriment of FXDD’s customers”); In re Open E Cry LLC, CFTC No. 

12-24, 2012 WL 10259805, at *2, *4-5 (June 7, 2012) (consent order) (finding FCM failed to 

supervise its employees’ handling and oversight of customer accounts, where one customer was 

able to take advantage of a flaw in FCM’s customized trading software by engaging in a prearranged trading scheme that exploited a systematic price miscalculation associated with Russian 

ruble futures contract); In re Forex Capital Markets LLC, CFTC No. 12-01, 2011 WL 4689390, 

at *2 (Oct. 3, 2011) (consent order) (finding FCM’s officers, employees, and agents responsible 

for its trading platforms “failed to establish a system that prevented asymmetrical slippage on 

market orders and market liquidation orders”). 

During the Relevant Period, with respect to ensuring the transmission of accurate pricing 

information to customers and allowing negative-priced order entry on its trading platforms, 

Interactive Brokers failed to perform its supervisory duties diligently in violation of Regulation 

166.3, 17 C.F.R. § 166.3 (2020). Specifically, Interactive Brokers was required to ensure the 

integrity of all trades on its trading platforms. See In re Forex Capital Markets, 2011 WL 

4689390, at *4 (“Because trade execution is such a critical function, FXCM should have 

monitored more closely its officers, employees, and agents responsible for establishing an 

adequate system to ensure trade integrity and for policing its platforms to detect inequities with 

its execution practices.”). Interactive Brokers’ officers, employees, and agents charged with 
7 

monitoring and maintaining its trading platforms were made aware of the possibility of negative 

crude oil futures prices prior to April 20, 2020. However, these individuals failed to manage the 

risks associated with the possibility of negative prices, including by failing to adequately 

configure Interactive Brokers’ electronic trading system to accept negative prices prior to April 

20, 2020. 

IV. FINDINGS OF VIOLATION 

Based on the foregoing, the Commission finds that, during the Relevant Period, 

Interactive Brokers failed to adequately supervise its officers, employees, and agents in violation 

of Regulation 166.3, 17 C.F.R. § 166.3 (2020). 

V. OFFER OF SETTLEMENT 

 Interactive Brokers has submitted the Offer in which it, without admitting or denying the 

findings and conclusions herein: 

A. Acknowledges service of this Order; 

B. Admits the jurisdiction of the Commission with respect to all matters set forth in this 

Order and for any action or proceeding brought or authorized by the Commission based 

on a violation of or enforcement of this Order; 

C. Waives: 

1. The filing and service of a complaint and notice of hearing; 

2. A hearing; 

3. All post-hearing procedures; 

4. Judicial review by any court; 

5. Any and all objections to the participation by any member of the Commission’s 

staff in the Commission’s consideration of the Offer; 

6. Any and all claims that it may possess under the Equal Access to Justice Act, 

5 U.S.C. § 504 (2018) and 28 U.S.C. § 2412 (2018), and/or the rules promulgated 

by the Commission in conformity therewith, Part 148 of the Commission’s 

Regulations, 17 C.F.R. pt. 148 (2020), relating to, or arising from, this proceeding; 

7. Any and all claims that it may possess under the Small Business Regulatory 

Enforcement Fairness Act of 1996, Pub. L. No. 104-121, tit. II, §§ 201-253, 110 

Stat. 847, 857-74 (codified as amended at 28 U.S.C. § 2412 and in scattered 

sections of 5 U.S.C. and 15 U.S.C.), relating to, or arising from, this proceeding; 

and 
8 

8. Any claims of Double Jeopardy based upon the institution of this proceeding or the 

entry in this proceeding of any order imposing a civil monetary penalty or any 

other relief, including this Order; 

D. Stipulates that the record basis on which this Order is entered shall consist solely of the 

findings contained in this Order to which Interactive Brokers has consented in the Offer; 

E. Consents, solely on the basis of the Offer, to the Commission’s entry of this Order that: 

1. Makes findings by the Commission that Interactive Brokers violated Regulation 

166.3, 17 C.F.R. § 166.3 (2020); 

2. Orders Interactive Brokers to cease and desist from violating Regulation 166.3; 

3. Orders Interactive Brokers to pay restitution in the amount of eighty-two million, 

five hundred seventy thousand dollars ($82,570,000). Respondent is credited the 

full amount due to its previous payment of compensation to its customers, such 

that no further payment is owed. 

4. Orders Interactive Brokers to pay a civil monetary penalty in the amount of one 

million, seven hundred fifty thousand dollars ($1,750,000), plus post-judgment 

interest, within ten days of the date of entry of this Order; and 

5. Orders Interactive Brokers and its successors and assigns to comply with the 

conditions and undertakings consented to in the Offer and as set forth in Part VI of 

this Order. 

Upon consideration, the Commission has determined to accept the Offer. 

VI. ORDER 

Accordingly, IT IS HEREBY ORDERED THAT: 

 

A. Interactive Brokers and its successors and assigns shall cease and desist from violating 

Regulation 166.3, 17 C.F.R. § 166.3 (2020). 

B. Interactive Brokers shall pay restitution in the amount of eighty-two million, five hundred 

seventy thousand dollars ($82,570,000) (“Restitution Obligation”). Respondent is 

credited the full amount due to its previous payment of compensation to its customers, 

such that no further payment is owed to satisfy the Restitution Obligation. 

C. Interactive Brokers shall pay a civil monetary penalty in the amount of one million, seven 

hundred fifty thousand dollars ($1,750,000) (“CMP Obligation”) within ten days of the 

date of the entry of this Order. If the CMP Obligation is not paid in full within ten days 

of the date of entry of this Order, then post-judgment interest shall accrue on the CMP 

Obligation beginning on the date of entry of this Order and shall be determined by using 

the Treasury Bill rate prevailing on the date of entry of this Order pursuant to 28 U.S.C. 

§ 1961 (2018). 
9 

Interactive Brokers shall pay the CMP Obligation and any post-judgment interest by 

electronic funds transfer, U.S. postal money order, certified check, bank cashier’s check, 

or bank money order. If payment is to be made other than by electronic funds transfer, 

then the payment shall be made payable to the Commodity Futures Trading Commission 

and sent to the address below: 

CFTC 

C/O ESC/AMK-326; RM 265 

6500 S. MacArthur Blvd. 

Oklahoma City, OK 73169 

(405) 954-6569 office 

(405) 954-1620 fax 

9-AMC-AR-CFTC@faa.gov 

 If payment is to be made by electronic funds transfer, Interactive Brokers shall contact 

Marie Thorne or her successor at the above address to receive payment instructions and 

shall fully comply with those instructions. Interactive Brokers shall accompany payment 

of the CMP Obligation with a cover letter that identifies Interactive Brokers as the payer 

and the name and docket number of this proceeding. Interactive Brokers shall 

simultaneously transmit copies of the cover letter and the form of payment to the Chief 

Financial Officer, Commodity Futures Trading Commission, Three Lafayette Centre, 

1155 21st Street, N.W., Washington, DC 20581. 

D. Interactive Brokers and its successors and assigns shall comply with the following 

conditions and undertakings set forth in the Offer: 

1. Public Statements: Interactive Brokers agrees that neither it nor any of its 

successors and assigns, agents or employees under its authority or control shall 

take any action or make any public statement on behalf of Interactive Brokers 

denying, directly or indirectly, any findings or conclusions in this Order or 

creating, or tending to create, the impression that this Order is without a factual 

basis; provided, however, that nothing in this provision shall affect Interactive 

Brokers’: (i) testimonial obligations; or (ii) right to take legal positions in other 

proceedings to which the Commission is not a party. Interactive Brokers and its 

successors and assigns shall comply with this agreement, and shall undertake all 

steps necessary to ensure that all of its agents and/or employees under its 

authority or control understand and comply with this agreement. 

2. Cooperation, In General: Interactive Brokers shall cooperate fully and 

expeditiously with the Commission, including the Division, in this action, and in 

any current or future Commission investigation or action related thereto 

(“Commission Related Matters”). Interactive Brokers shall also cooperate in any 

investigation, civil litigation, or administrative matter related to, or arising from, 

the subject matter of this action (“Subject Related Matters”). Interactive Brokers’ 

cooperation shall continue for a period of five years from the date of the entry of 
this Order, or until any Commission Related Matters or Subject Related Matters 

are concluded, whichever is longest. 

3. Partial Satisfaction: Interactive Brokers understands and agrees that any 

acceptance by the Commission of any partial payment oflnteractive Brokers' 

CMP Obligation or Restitution Obligation shall not be deemed a waiver of its 

obligation to make further payments pursuant to this Order, or a waiver of the 

Commission's right to seek to compel payment of any remaining balance. 

The provisions of this Order shall be effective as of this date. 

By the Commission. 

Christopher J. Kirkpatrick 

Secretary of the Commission 

Commodity Futures Trading Commission 

Dated: September 28, 2021 

10