UNITED STATES OF AMERICA 

Before the 

COMMODITY FUTURES TRADING COMMISSION 

In the Matter of: 

BGC Derivative Markets, L.P., 

Respondent. 

)

) 

) 

) 

)

)

) 

)

) 

CFTC Docket No. 22-52

ORDER INSTITUTING PROCEEDINGS PURSUANT TO 

SECTION 6b 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 on or about January 2017 to March 2022 (“Relevant Period”), Respondent BGC Derivative 

Markets, L.P. (“BGCD”) violated Sections 2(a)(13) and 5h(f)(9)-(10) of the Commodity 

Exchange Act (“Act”), 7 U.S.C. §§ 2(a)(13), 7b-3(f)(9)-(10); and, Regulations 16.01, 37.900, 

37.901, and 37.1000, 17 C.F.R. §§ 16.01, 37.900, 37.901, 37.1000 (2021), of Commission 

Regulations (“Regulations”) promulgated thereunder. The Commission has further reason to 

believe that during the Relevant Period, BGCD also violated Regulation 43.3 (since amended), 

17 C.F.R. § 43.3 (2020) (amended 2021).1 Therefore, the Commission deems it appropriate and 

in the public interest that public administrative proceedings be, and hereby are, instituted to 

determine whether BGCD 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, BGCD has submitted an 

Offer of Settlement (“Offer”) that the Commission has determined to accept. Without admitting 

or denying any of the findings or conclusions herein, BGCD consents to the entry of this Order 

1

 On November 25, 2020, Part 43 of the Regulations was amended by the Commission. These amendments became 

effective January 25, 2021, but compliance was not required until May 25, 2022. The provisions of Regulation 43.3 

at issue in this action, specifically the then current Regulation 43.3(b)(1) and (e)(1), were amended at that time. 

Substantively, the obligations of SEFs, such as BGCD, under these amended provisions remained the same, and in 

the instance of Regulation 43.3(e) (related to correction of errors), became more precise. Thus, although the prior 

version of this Regulation was implicated in this action, current Regulation 43.3(a)(2) and (e) continues to prohibit 

the same underlying conduct charged in this action. For simplicity, where not otherwise indicated, citations to 

Regulation 43.3 and its subparts refer to obligations under both prior Regulation 43.3 (amended), 17 C.F.R. 43.3 

(2020) (amended 2021) and current Regulation 43.3 (2021). 
2 

Instituting Proceedings Pursuant to Section 6b of the Commodity Exchange Act, Making 

Findings, and Imposing Remedial Sanctions (“Order”), and acknowledges service of this Order.2

II. FINDINGS 

The Commission finds the following: 

A. SUMMARY 

Reporting is at the heart of the Commission’s market and financial surveillance 

programs, which are critical to the Commission’s mission to protect market participants and 

promote market integrity. Accurate swap data is essential to the effective fulfillment of the 

regulatory functions of the Commission, including meaningful surveillance and enforcement 

programs. Moreover, the availability and accuracy of publicly published swap data is key to 

ensuring transparency into swap transactions, volumes, and pricing on a timely basis. 

As a registered swap execution facility (“SEF”), BGCD is required to comply with 

certain reporting and publication requirements related to the swap transactions it executes. 

During the Relevant Period, as the result of fourteen separate reporting systems issues, BGCD 

collectively failed to report or accurately report or publish thousands of transactions executed on 

the SEF over hundreds of trading days. It also failed in at least two instances to timely correct 

reporting errors. This conduct violated Sections 2(a)(13) and 5h(f)(9)-(10) of the Act, 7 U.S.C. 

§§ 2(a)(13), 7b-3(f)(9)-(10); and, Regulations 16.01, 37.900, 37.901, 37.1000, and 43.3, 

17 C.F.R. §§ 16.01, 37.900, 37.901, 37.1000 (2021) and 43.3 (2020) (amended 2021). 

In accepting Respondent’s Offer, the Commission acknowledges BGCD’s cooperation 

with the Division of Enforcement’s (the “Division”) investigation of this matter and BGCD’s 

representations concerning remediation. 

B. RESPONDENT 

BGC Derivative Markets, L.P. is a Delaware limited liability partnership, with its 

principal place of business in New York, New York. BGCD provisionally registered as a SEF 

with the Commission on September 19, 2013. On January 22, 2016, BGCD was granted full 

SEF registration status.

C. FACTS 

During the Relevant Period, BGCD failed to report or accurately report thousands of 

swap transactions executed on the SEF. BGCD’s reporting errors stemmed from at least 

 

2

 BGCD 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. BGCD 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. BGCD does not consent to the use 

of the Offer or of this Order, or the findings or conclusions in this Order, by any other party in any other proceeding.
3 

fourteen distinct systems issues. As a result of eleven of those systems issues, BGCD failed to 

report or accurately report nearly 12,500 swap transactions to the Commission and/or publish 

them on its public website as required under Part 16 of the Regulations, 17 C.F.R. pt. 16 (2021). 

As a result of three other systems issues, BGCD failed to report real-time transaction and pricing 

data for over 3,500 transactions to a swap data repository (“SDR”) as required under Part 43 of 

the Regulations, 17 C.F.R. pt. 43 (2021), and, for a subset of these transactions, also failed to 

submit corrected data to the SDR until weeks after discovering the error. In aggregate, these 

fourteen incidents led to BGCD’s failure to report or accurately report (including both under and 

over reporting) over 16,000 swap transactions in various products (Interest Rate, FX, Credit, and 

Equities), on hundreds of trading dates. 

During much of the Relevant Period, BGCD had inadequate processes and procedures for 

reporting swap transactions and identifying reporting issues as they arose. Specifically, BGCD 

had no system in place to validate that reportable transactions occurring on the SEF were 

complete and accurately included in its real-time and end of day (“EOD”) reporting to its SDR, 

the Commission, and on its website. As a result, BGCD did not timely identify the majority of 

these incidents. Over half of these reporting incidents were unknown to BGCD for eight months 

or more, and for two of these incidents, BGCD did not detect them for over four years. BGCD 

learned of many of the reporting incidents only as the result of an inquiry from a third party or in 

the course of responding to requests in connection with the Division’s investigation. 

BGCD was also slow to address the deficiencies in its processes and procedures for 

reporting swap transactions and identifying and correcting reporting issues. By at least March 

2020, BGCD’s compliance department had identified the need for a reconciliation process to 

confirm that all transactions on the SEF were being reported, and even recommended to BGCD’s 

Board of Directors, as part of the 2019 Annual Chief Compliance Officer’s Compliance Report, 

that a reconciliation process be established. However, BGCD did not implement a 

reconciliation process until April 2021. By this time, BGCD was aware both of additional swap 

reporting errors and that its swap reporting was the subject of a Division investigation. 

BGCD represents that in April 2021 it implemented reconciliation tools to allow it to 

identify and begin correcting reporting errors on no longer than a T+1 basis for all Interest Rate 

products executed on the SEF, and that these tools have now been expanded to Credit swaps 

executed on the SEF. BGCD further represents that it has corrected its past reporting to the 

Commission or the SDR, as applicable, and that it has either corrected or removed any erroneous 

published data from its website related to these incidents. 

III. LEGAL DISCUSSION 

A. BGCD Failed to Report and Accurately Report Swap Data to the Commission 

and/or to the Public in Violation of Regulation 16.01. 

BGCD violated Regulation 16.01, 17 C.F.R.§ 16.01 (2021), when it failed to report or 

accurately report swap data to the Commission and to the public. Part 16 of the Regulations sets 

forth the information that SEFs and other reporting markets are required to record and report to 

the Commission on a daily basis. See 17 C.F.R. pt. 16 (2021). For swaps, required reporting 

includes such items as the total trading volume by product type and term life of the swap and 
4 

various prices. See Regulation 16.01(a)(1)(iii) and (2)(iv) and (b). “The accuracy and 

completeness of swap reporting are critical to the Commission’s mission to protect market 

participants and to ensure market integrity.” Commodity Futures Trading Comm’n v. Deutsche 

Bank AG, 2020 WL 4611985, at *8 (S.D.N.Y. June 17, 2020) (consent order) (citation omitted); 

see also In re ICE Futures U.S., Inc., CFTC No. 15-17, 2015 WL 1276463, *5 (March 16, 2015) 

(consent order) (recognizing that accuracy and completeness of Part 16 reports are critical to this 

mission). 

In addition to reporting this information to the Commission, SEFs and other reporting 

markets are required daily to publish this same information for the prior day’s trading activity in 

a manner that is accessible to the general public. See Regulation 16.01(e). Market transparency 

cannot exist if the information provided to the public is inaccurate. It is inherent in the reporting 

requirements that the reports provided to the Commission and the public be accurate and 

complete. See In re ICE Futures U.S., Inc., CFTC No. 15-17, 2015 WL 1276463, *5 (March 16, 

2015) (consent order); In re JP Morgan Securities LLC, CFTC No. 14-19 (July 29, 2014) 

(consent order). 

BGCD violated Regulation 16.01 when it failed to report or accurately report thousands 

of swap transactions to the Commission and/or to the public on its public website during the 

Relevant Period. 

B. BGCD Failed to Report and Timely Correct Swap Data to an SDR in Violation of 

Section 2(a)(13) of the Act and Regulation 43.3. 

The Act requires all swaps (whether cleared or uncleared) to be reported to a registered 

SDR and establishes specific requirements for real-time public reporting of swap transaction 

data. See Section 2(a)(13), 7 U.S.C. § 2(a)(13). Pursuant to these requirements and as provided 

for under the Act, in 2012, the Commission adopted implementing regulations requiring that all 

publicly reportable swap transactions be reported to a registered SDR. See generally prior 

Regulation 43.3(since amended), 17 C.F.R. § 43.3 (2020) (amended 2021). A SEF complied 

(and still complies) with its real-time public reporting requirements under the Act for swaps that 

are executed on or pursuant to the rules of the SEF by transmitting transaction and pricing data to 

an SDR “as soon as technologically practicable” following execution. See Regulation 43.3(a)(2), 

17 C.F.R. § 43.3(a)(2) (2021) and Regulation 43.3(b)(1), 17 C.F.R. § 43.3(b)(1) (2020) 

(amended 2021). BGCD violated Section 2(a)(13) of the Act and Regulation 43.3 when it failed 

to report real-time swap transaction data for thousands of swaps to an SDR during the Relevant 

Period. 

During the Relevant Period, the Regulations also provided, that in the event an error or 

omission occurs in connection with a prior report of real-time swap transaction data to an SDR, 

corrected data is to be “promptly” provided to the SDR. See prior Regulation 43.3(e)(1) (since 

amended), 17 C.F.R. § 43.3(e)(1) (2020) (amended 2021). Current Regulation 43.3(e)(1) 

provides a more precise timeline for corrections, requiring a SEF to “correct any error as soon as 

technologically practicable after discovery of the error” and that “[i]n all cases, errors shall be 

corrected within seven business days after discovery.” BGCD did not provide corrected 
5 

information to the SDR for weeks and, in one instance, for over a month, after the errors were 

discovered. BGCD violated Regulation 43.3 by failing to timely correct its reporting to the SDR. 

C. BGCD’s Conduct Violated SEF Core Principles 9 and 10. 

Section 5h of the Act, 7 U.S.C. § 7b-3, creates a regulatory regime for SEFs that is 

implemented by the Commission’s Part 37 Regulations, 17 C.F.R. pt. 37 (2021) (collectively, 

“SEF Core Principles”). As a condition of registration, SEFs are required to comply with the 

SEF Core Principles. Section 5h(f)(1) of the Act, 7 U.S.C. § 7b-3(f)(1). 

SEF Core Principles 9 and 10 set forth a SEF’s reporting and publication obligations. See 

Section 5h(f)(9) & (10) of the Act, 7 U.S.C. § 7b-3(f)(9)-(10). Specifically, SEF Core Principle 

9 requires SEFs to “make public timely information on price, trading volume, and other trading 

data on swaps” as prescribed by the Commission and to have “the capacity to electronically 

capture and transmit trade information with respect to transactions executed on the facility.” 

Section 5h(f)(9), 7 U.S.C. § 7b-3(f)(9); Regulation 37.900, 17 C.F.R. § 37.900 (2021). The 

Commission has prescribed that for swaps traded on or through a SEF, a SEF must report the 

specified swap data required under Part 43 and meet the requirements of Part 16. See Regulation 

37.901, 17 C.F.R. § 37.901 (2021). Among other things, SEF Core Principle 10 requires that 

SEFs report to the Commission such information as the Commission determines is necessary or 

appropriate for the Commission to perform its duties under the Act. See Regulation 37.1000, 

17 C.F.R. § 37.1000 (2021). BGCD’s significant reporting and publication failures and 

inadequate processes and procedures for reporting swap transactions constitute a violation of 

these Core Principles. 

BGCD experienced fourteen different systems issues that resulted in a failure to report or 

inaccurate reporting of swaps executed on the SEF to the Commission and/or to the public. 

More than half of these incidents were not discovered for eight months or more, with two 

incidents going undetected (and uncorrected) for more than four years. Further, BGCD’s 

persistent and recurring issues with its reporting systems evidence deficiencies in BGCD’s 

capacity to capture and transmit accurate and complete trade information to the public and to the 

Commission. BGCD was aware that it lacked a process for reconciling its reports with the SEF’s 

trading activity but failed to timely implement a reconciliation process or other policies and 

procedures to significantly reduce, if not eliminate these reporting and publication errors. 

Consequently, BGCD violated SEF Core Principles 9 and 10. 

IV. FINDINGS OF VIOLATIONS 

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

violated Sections 2(a)(13) and 5h(f)(9)-(10) of the Act, 7 U.S.C. §§ 2(a)(13), 7b-3(f)(9)-(10); 

and, Regulations 16.01, 37.900, 37.901, 37.1000, and 43.3, 17 C.F.R. §§ 16.01, 37.900, 37.901, 

37.1000 (2021), and 43.3 (2020) (amended 2021). 
6 

V. OFFER OF SETTLEMENT 

BGCD has submitted the Offer, in which it, without admitting or denying the findings 

and conclusions herein: 

A. Acknowledges service of the Order;

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

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

Commission based on violation of or enforcement of the 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, and 28 U.S.C. § 2412, and/or the rules promulgated 

by the Commission in conformity therewith, Part 148 of the Regulations, 

17 C.F.R. pt. 148 (2021), 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, §§ 201-53, 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. Any claims of Double Jeopardy based on 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 BGCD has consented in the 

Offer; and 
7 

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 BGCD violated Sections 2(a)(13) 

and 5h(f)(9)-(10) of the Act, 7 U.S.C. §§ 2(a)(13), 7b-3(f)(9)-(10); and, 

Regulations 16.01, 37.900, 37.901, 37.1000, and 43.3, 17 C.F.R. §§ 16.01, 

37.900, 37.901, 37.1000 (2021), and 43.3 (2020) (amended 2021); 

2. Orders BGCD to cease and desist from violating Sections 2(a)(13) and 

5h(f)(9)-(10) of the Act and Regulations 16.01, 37.900, 37.901, 37.1000, 

and 43.3; 

3. Orders BGCD to pay a civil monetary penalty in the amount of one 

million nine hundred thousand dollars ($1,900,000), plus any postjudgment interest; and 

4. Orders BGCD 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; and 

F. Represents that it has: 

1. Corrected its reporting to the Commission or SDR, as applicable, and that 

it has corrected or removed any inaccurate reports published on the SEF 

website related to these violations; and 

2. Implemented a post-execution reconciliation process for Interest Rate and 

Credit swaps traded on the SEF that: (1) reconciles on a daily basis all 

transactions executed on the SEF with all transactions reported under Part 

16 and Part 43; and (2) allows BGCD to identify and begin correcting any 

reporting discrepancies identified by this reconciliation process on no 

longer than a T+1 basis (“Reconciliation Process”). 

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

VI. ORDER 

Accordingly, IT IS HEREBY ORDERED THAT: 

A. BGCD shall cease and desist from violating Sections 2(a)(13) and 5h(f)(9)-(10) of 

the Act, 7 U.S.C. §§ 2(a)(13), 7b-3(f)(9)-(10), and Regulations 16.01, 37.900, 

37.901, 37.1000, and 43.3, 17 C.F.R. §§ 16.01, 37.900, 37.901, 37.1000, 43.3 

(2021). 

B. BGCD shall pay a civil monetary penalty in the amount of one million nine 

hundred thousand dollars ($1,900,000) (“CMP Obligation”), within ten (10) days of 

the date of the entry of this Order. If the CMP Obligation is not paid in full within 
8 

ten (10) days of the date of the entry of this Order, then post-judgment interest shall 

accrue on the unpaid portion of 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 the entry of this Order pursuant to 28 U.S.C. § 1961. 

BGCD 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: 

MMAC/ESC/AMK326 

Commodity Futures Trading Commission 

6500 S. MacArthur Blvd. 

HQ Room 266 

Oklahoma City, OK 73169 

9-AMC-AR-CFTC@faa.gov 

If payment is to be made by electronic transfer, BGCD shall contact Tonia King or 

her successor at the above email address to receive payment instructions and shall 

fully comply with those instructions. BGCD shall accompany payment of the CMP 

Obligation with a cover letter that identifies BGCD and the name and docket number 

of this proceeding. BGCD 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, NW, Washington, D.C. 

20581. 

C. BGCD and its successors and assigns shall comply with the following conditions and 

undertakings set forth in the Offer: 

1. Public Statements: BGCD 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 denying, directly or indirectly, any 

findings or conclusions in the Order or creating, or tending to create, the 

impression that the Order is without a factual basis; provided, however, that 

nothing in this provision shall affect BGCD’s: (i) testimonial obligations; or 

(ii) right to take legal positions in other proceedings to which the Commission 

is not a party. BGCD 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. Remediation and Reporting to the Commission: BGCD represents and agrees 

that: 

a. BGCD will establish and maintain, including through any subsequent 

re-architecture or update of its systems, a Reconciliation Process for 
9 

all asset classes of products traded on the SEF and will maintain 

records of the reconciliations; 

b. Within thirty (30) days of the entry of the Order, BGCD shall develop 

and implement written processes and procedures related to the 

Reconciliation Process, which shall include, but not be limited to, 

processes and procedures for the review, escalation, performance of 

root cause analyses, and remediation related to any reporting 

discrepancies; 

c. BGCD shall cause to be conducted a review of its swaps reporting 

program for completeness and effectiveness, which review will be 

performed by an internal audit group of an affiliate company. This 

review shall be completed and a report (“Internal Audit Report”) 

provided to BGCD within one hundred and eighty (180) days of the 

entry of the Order; and 

d. Three hundred and sixty-five (365) days after the entry of the Order, 

BGCD shall submit a written report to the Commission, through the 

Division of Enforcement, reporting on the effectiveness of the 

Reconciliation Process and BGCD’s compliance with the provisions of 

the Act and Regulations that are the subject of the Order (the 

“Report”). The Report should include: (1) a detailed summary of the 

Reconciliation Process, including any changes or modifications to the 

process since entry of the Order; (2) a copy of BGCD’s then current 

written policies and procedures related to the Reconciliation Process; 

(3) identification of any material non-compliance events related to Part 

16 and Part 43 reporting and publication by the SEF since entry of the 

Order, providing details of each such event (e.g. scope, causation, and 

remediation); (4) a copy of the Internal Audit Report and any other 

reviews undertaken by BGCD since entry of the Order related to the 

Reconciliation Process; and (5) a certification by BGCD’s Chief 

Compliance Officer and BGCD’s Chief Executive Officer that the 

Report is accurate and complete and that the Reconciliation Process 

and BGCD’s compliance program are reasonably designed to detect 

and prevent violations of the Act and Regulations that are the subject 

of this Order. 

3. Partial Satisfaction: BGCD understands and agrees that any acceptance by the 

Commission of any partial payment of BGCD’s CMP Obligation shall not be 

deemed a waiver of its obligation to make further payments pursuant to the 

Order, or a waiver of the Commission’s right to seek to compel payment of 

any remaining balance. 

4. Change of Address/Phone: Until such time as BGCD satisfies in full its CMP 

Obligation as set forth in the Order, BGCD shall provide written notice to the 
Commission by certified mail of any change to its telephone number and 

mailing address within ten (10) calendar days of the change. 

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

By the Commission. 

~h%U4-

Christopher J. Kirkpatrick 

Secretary of the Commission 

Commodity Futures Trading Commission 

Dated: September 30, 2022 

10