UNITED STATES OF AMERICA

Before the

COMMODITY FUTURES TRADING COMMISSION

___________________________________

In the Matter of: 

BNP Paribas

Respondent.

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CFTC Docket No. 22-19

ORDER INSTITUTING PROCEEDINGS PURSUANT TO 

SECTION 6(c) AND 6(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 

during the period from at least 2016 through 2021 (the “Relevant Period”), BNP Paribas

(“BNPP” or “Respondent”) violated Sections 2(a)(13), 4r(a)(3), 4s(h)(1), 4s(h)(3), and

4s(h)(1)(B) of the Commodity Exchange Act (the “Act”), 7 U.S.C. §§ 2(a)(13), 6r(a)(3), 

6s(h)(1), 6s(h)(3), and 6s(h)(1)(B) and Regulations 43.3, 45.3, 23.431(d), and 23.602, 17 C.F.R. 

§§ 23.431(d), and 23.602 (2021); 17 C.F.R. § 43.3, 45.3 (2020) (amended 2021) 1 of the

Commission’s Regulations (“Regulations”) promulgated thereunder. Therefore, the Commission

deems it appropriate and in the public interest that public administrative proceedings be, and

hereby are, instituted to determine whether Respondent 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, Respondent 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, Respondent consents to 

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

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

Order.2

1 The Commission amended Parts 43, 45, and 49 on November 25, 2020, with the new regulations becoming 

effective on January 25, 2021. Certain Swap Data Repository and Data Reporting Requirements, 85 FR 75601 (Nov. 

25, 2020). The amendments did not affect the substantive requirements at issue in this order. 

2 Respondent 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 given preclusive effect therein, without further proof. Respondent 

does not consent, however, to the use of this Order, or the findings or conclusions herein, as the sole basis for any 
2 

II. FINDINGS

The Commission finds the following: 

A. SUMMARY

 Over a period of more than five years, from at least 2016 through 2021, BNPP failed to 

correctly report numerous swap transactions consistent with the requirements of the Act and the 

Regulations. In addition, during 2016 to 2017, BNPP adjusted daily mark disclosures to swap 

counterparties on certain swap transactions in a manner that was not consistent with the Act and 

the Regulations. BNPP personnel contemporaneously referred to these adjustments as 

“smoothing.” 

Consequently, during the Relevant Period, BNPP inadequately supervised its swap 

dealer. This failure to supervise the swap dealer resulted in recurrent, multitudinous violations of 

the provisions of the Act and Regulations pertaining to swap reporting and daily mark 

disclosures. 

In accepting Respondent’s Offer of Settlement, the Commission recognizes BNPP’s 

substantial cooperation during 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 BNPP’s 

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

civil monetary penalty.

B. RESPONDENT

BNP Paribas, which was formed in 2000 by a merger between BNP and Paribas, became 

a provisionally registered swap dealer on December 31, 2012. 

C. FACTS 

 1. Swap Reporting Violations 

During the Relevant Period, BNPP did not report millions of swap transactions in a 

manner consistent with the Act and the Regulations. BNPP’s reporting failures during this 

period, which included underreporting, overreporting, and other reporting of swap transactions in 

a manner inconsistent with Commission rules, violated the Act and the Regulations. 

Much of BNPP’s underreporting and overreporting was documented in monthly internal 

reports that were circulated contemporaneously within BNPP, but was not disclosed to the 

Commission. As documented in these reports, and in additional analysis subsequently conducted 

by BNPP during the Division of Enforcement’s investigation, BNPP underreported at least 

 

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. Respondent 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.
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123,315 swaps and overreported at least 261,643 swaps during the Relevant Period. Because 

swap transactions persist over time, and swap dealers normally make multiple reports regarding 

each reportable swap transaction, there were during this period more than 500,000 reports that 

should have been made, but were not made, in connection with the 123,315 underreported 

transactions.

 

The specific causes of BNPP’s failure to report swap transactions that should have been 

reported were varied, but included the failure to report more than 6,000 swap transactions with 

U.S. persons, because the counterparties had been incorrectly classified as non-U.S. persons. As 

a result of this failure, during the Relevant Period, more than 300,000 reports relating to these 

transactions, reports that were required by the Act and the Regulations, were not made by BNPP. 

BNPP also entered into more than 3 million swap transactions during the Relevant Period 

that were reported, but were not reported consistent with Commission rules, because BNPP 

failed to include in its reports for these transactions a required field indicating whether or not the 

transaction was with a non-swap dealer financial entity. This data field is an important one for 

assessing swap dealers’ regulatory compliance.3

 Accordingly, BNPP’s failure to provide this 

field over a period of many years is a breach of the Act and the Regulations. 

From 2016 to 2018, the swap dealer also failed to correctly report thousands of bunched 

trades. Instead of correctly reporting them as allocations of trades, BNPP reported these 

transactions as new trades. 

In addition, from 2016 to 2020, BNPP incorrectly reported certain commodity swaps. 

These trades were reported, but were incorrectly described as equity trades rather than 

commodity trades. In total, approximately 3,000 transactions were incorrectly reported in this 

fashion. 

2. Daily Mark Disclosure Violations

Daily marks, which swap dealers are required to provide on a daily basis to swap 

counterparties, are supposed to be an estimate of the current value of the swap. Daily marks are 

not supposed to incorporate amounts for profit, credit reserve, hedging, funding, liquidity, or any 

other costs or adjustments. 

Contrary to this requirement, during the period 2016 to 2017, BNPP’s adjusted daily

mark disclosures for 82 swap transactions included adjustments, which resulted in approximately 

19,000 adjusted daily mark disclosures being made to the relevant swap counterparties.

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 This 

process was contemporaneously described by BNPP personnel as “smoothing.” The two-fold 

result was that these daily-mark disclosures were: (1) inconsistent with the Act and the 

 

3 See, e.g., Swap confirmation, 17 C.F.R. § 23.501(a)(3)(i) (2021); Swap trading relationship documentation, 17 

C.F.R. § 23.504(b)(4)(i) (2021); End user exemption documentation, 17 C.F.R. § 23.505(a)(3) (2021); Definitions 

applicable to margin requirements, 17 C.F.R. § 23.151 (2021); and Cross-border application of swap dealer 

requirements, 17 C.F.R. § 23.23 (2021). 4 Because daily mark disclosures are normally made on every business day, there usually are many daily mark 

disclosures for each swap. 
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Regulations, and (2) inconsistent with how BNPP calculated daily marks for other counterparties 

(e.g., counterparties that were not given smoothed daily marks). Eventually, BNPP compliance 

personnel concluded that this daily-mark smoothing was inconsistent with Commission rules, 

and the process for generating daily marks, at least for swap transactions subject to the Act and 

the Regulations, was changed. 

3. Failure to Supervise

From at least 2016 until 2021, BNPP did not provide adequate supervision to ensure that 

the swap dealer complied with the Act and the Regulations. As listed above, this failure to 

supervise the swap dealer resulted in millions of violations of provisions of the Act and 

Regulations pertaining to swap reporting and daily mark disclosures. 

Certain swap dealer compliance issues were not identified in a timely fashion by BNPP 

personnel, with the result that these violations persisted for years. On at least one occasion, a 

swap reporting issue was flagged internally by BNPP compliance personnel, but not adequately 

addressed by BNPP at that time, apparently due to concerns that a comprehensive fix would take

significant time and allocation of resources.5

 

4. BNPP’s Cooperation

Throughout the Division’s investigation, BNPP provided substantial cooperation. 

BNPP’s cooperation included conducting a detailed analysis of historical records to assess the 

number of swap reporting violations during the Relevant Period. In addition, BNPP represents it

has taken steps to remediate the swap dealer’s deficiencies and improve its processes going 

forward.

III. LEGAL DISCUSSION

A. BNPP’s Swap Reporting Failures Violated Sections 2(a)(13) and 4r(a)(3) of the Act, 

7 U.S.C. §§ 2(a)(13), 6r(a)(3) and Regulations 43.3 and 45.3, 17 C.F.R. §§ 43.3, 45.3 

(2020) (amended 2021) 

Sections 2(a)(13) and 4r(a)(3) of the Act, 7 U.S.C. §§ 2(a)(13), 6r(a)(3), and Regulations 

43.3 and 45.3, 17 C.F.R. §§ 43.3, 45.3 (2020) (amended 2021) require reporting of reportable 

swap transactions to a registered Swap Data Repository (“SDR”), as soon as technologically 

practicable, after execution. 

These swap data reporting provisions were designed to enhance transparency, promote 

standardization, and reduce systemic risk. The accuracy and completeness of swap reporting are 

critical to the Commission’s mission to protect market participants and to ensure market

integrity. See, e.g., In re NatWest Markets Plc, CFTC No. 18-32, 2018 WL 4502270 (Sept. 14, 

2018) (consent order); In re Citibank, NA., CFTC No. 17-26, 2017 WL 4280594 (Sept. 25, 2017) 

 

5 Other violations at the swap dealer were identified by BNPP personnel and addressed contemporaneously. Not all 

of these violations were disclosed to the Commission.
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(consent order); In re Société Générale S.A., CFTC No. 17-01, 2016 WL 7210405 (Dec. 7, 2016) 

(consent order).

Through its underreporting and overreporting of swap transactions, and its failure to 

report swap transactions consistent with Commission Regulations, BNPP violated Sections 

2(a)(13) and 4r(a)(3) of the Act and Regulations 43.3 and 45.3. 

B. BNPP’s Daily Mark Smoothing Violated Section 4s(h)(1) and (h)(3) of the Act, 7 

U.S.C. § 6s(h)(1) and (h)(3), and Regulation 23.431(d), 17 C.F.R. § 23.431 (2021) 

Section 4s(h)(1) and (h)(3) of the Act, 7 U.S.C. § 6s(h)(1) and (h)(3) (2018), and 

Regulation 23.431(d), 17 C.F.R. § 23.431(d) (2021), require swap dealers to disclose to 

counterparties that are not swap dealers, major swap participants, security-based swap dealers, or 

major security-based swap participants, for uncleared swaps, daily marks reflecting the current 

mid-market mark of the swap. Regulation 23.431(d)(2) specifically states that the daily marks 

disclosed to counterparties of uncleared swaps “shall not include amounts for profit, credit 

reserve, hedging, funding, liquidity, or any other costs or adjustments.”

These daily-mark disclosure requirements aim to ensure that swap counterparties receive 

an accurate and consistent estimate of the swap’s current value. See, e.g., In re Société Générale, 

CFTC No. 21-36, 2021 WL 4501471 (Sep. 29, 2021) (consent order). 

Through its “smoothing” of daily marks provided to certain swap counterparties, BNPP 

violated Section 4s(h)(1) and (h)(3) of the Act and Regulation 23.431(d). 

C. BNPP’s Failure to Supervise Violated Sections 4s(h)(1)(B) of the Act, 7 U.S.C. § 

6s(h)(1)(B) (2018), and Regulation 23.602, 17 C.F.R. § 23.602 (2021) 

Section 4s(h)(1)(B) of the Act, 7 U.S.C. § 6s(h)(1)(B) requires “diligent supervision of 

the business of the registered swap dealer.” 

 Regulation 23.602, 17 C.F.R. § 23.602 (2021) requires that swap dealers “establish and 

maintain a system to supervise, and shall diligently supervise, all activities relating to its business 

performed by its partners, members, officers, employees, and agents (or persons occupying a 

similar status or performing a similar function).”

Under Regulation 23.602, the failure to diligently supervise the swap dealer’s activities, 

as evidenced by repeated violations, or by violations that are not promptly corrected, is sufficient 

to establish a failure to supervise violation. See, e.g., In re Commerzbank AG, CFTC No. 19-03, 

2018 WL 5921385 at *12 (Nov. 8. 2018) (consent order). The operative language of Regulation 

23.602 is similar to the language of the Commission’s longstanding supervision regulation for 

futures and options, Regulation 166.3, 17 C.F.R. § 166.3 (2021). Under Regulation 166.3, when 

the registrant fails to perform its supervisory duties diligently, that fact alone is sufficient to 

establish a violation of the supervision requirement. See, e.g., In re Murlas Commodities, Inc., 

CFTC No. 85-29, 1995 WL 523563, at *9 (Sept. 1, 1995); In re Paragon Futures Ass’n, CFTC 

No. 88-18, 1992 WL 74261, at *14 (Apr. 1, 1992). Evidence of violations that “should be 

detected by a diligent system of supervision, either because of the nature of the violations or 
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because the violations have occurred repeatedly” is probative of a failure to supervise. Paragon 

Futures, 1992 WL 74261, at *14. 

By failing to supervise the activities of its swap dealer, BNPP violated Section 

4s(h)(1)(B) of the Act and Regulation 23.602. 

IV. FINDINGS OF VIOLATIONS

Based on the foregoing, the Commission finds that Respondent violated Sections 

2(a)(13), 4r(a)(3), 4s(h)(1), 4s(h)(3), and 4s(h)(1)(B) of the Act, 7 U.S.C. §§ 2(a)(13), 6r(a)(3), 

6s(h)(1), 6s(h)(3), and 6s(h)(1)(B) (2018) and Regulations 43.3, 45.3, 23.431(d), and 23.602, 17 

C.F.R. §§ 23.431(d), and 23.602 (2021); 17 C.F.R. § 43.3, 45.3 (2020) (amended 2021) of the 

Commission’s Regulations. 

 

V. OFFER OF SETTLEMENT

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

findings and conclusions herein: 

A. Acknowledges receipt of service of this Order; 

B. Admits the jurisdiction of the Commission to all the 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 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, (“SBREFA”), Pub. L. No. 104-121, tit. II, 

 §§ 201-253, 110 Stat 847-74 (codified as amended in scattered sections of 5 

 U.S.C. and 15 U.S.C.), relating to, or arising from, this proceeding; and 
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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 Respondent has consented in the Offer; and 

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 Respondent violated Sections 2(a)(13), 

4r(a)(3), 4s(h)(1), 4s(h)(3), and 4s(h)(1)(B) of the Act, 7 U.S.C. §§ 2(a)(13), 

6r(a)(3), 6s(h)(1), 6s(h)(3), and 6s(h)(1)(B) (2012) and Regulations 43.3, 45.3, 

23.431(d), and 23.602, 17 C.F.R. §§ 23.431(d), and 23.602 (2021); 17 C.F.R. §§ 

43.3, 45.3 (2020) (amended 2021) of the Commission’s Regulations; 

2. Orders Respondent to cease and desist from violating Sections 2(a)(13), 4r(a)(3), 

4s(h)(1), 4s(h)(3), and 4s(h)(1)(B) of the Act, 7 U.S.C. §§ 2(a)(13), 6r(a)(3), 

6s(h)(1), 6s(h)(3), and 6s(h)(1)(B) and Regulations 43.3, 45.3, 23.431(d), and 

23.602, 17 C.F.R. §§ 43.3, 45.3, 23.431(d), and 23.602 (2021) of the 

Commission’s Regulations; 

3. Orders Respondent to pay a civil monetary penalty in the amount of six-million 

dollars ($6,000,000), plus post-judgment interest within ten days of the date of 

entry of this Order; and

4. Orders Respondent and its successors and assigns to comply with the conditions 

and undertakings consented to in the Offer and 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. Respondent shall cease and desist from violating Sections 2(a)(13), 4r(a)(3), 4s(h)(1), 

4s(h)(3), and 4s(h)(1)(B) of the Act, 7 U.S.C. §§ 2(a)(13), 6r(a)(3), 6s(h)(1), 6s(h)(3), and 

6s(h)(1)(B) (2018) and Regulations 43.3, 45.3, 23.431(d), and 23.602, 17 C.F.R. §§ 43.3, 

45.3, 23.431(d), and 23.602 (2021) of the Commission’s Regulations. 

B. Respondent shall pay a civil monetary penalty in the amount of six-million dollars 

($6,000,000) (“CMP Obligation”). If the CMP Obligation is not paid in full within ten 

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

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

using the Treasury Bill rate prevailing on the date of entry of the Order pursuant to 

28 U.S.C. § 1961. 

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

Respondent shall make the payment payable to the Commodity Futures Trading 

Commission, and sent to the address below: 

 

MMAC/ESC/AMK326

Commodity Futures Trading Commission

Division of Enforcement 

6500 S. MacArthur Blvd. 

HQ Room 181 

Oklahoma City, OK 73169 

(405) 954-6569 office

(405) 954-1620 facsimile

Tonia.King@faa.gov 

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

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

with those instructions. Respondent shall accompany payment of the CMP Obligation 

with a cover letter that identifies Respondent and the name and docket number of this 

proceeding. Respondent 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. Respondent and its successors and assigns shall comply with the following conditions 

and undertakings set forth in the Offer: 

1. Public Statements: Respondent agrees that neither it nor any of its successors, 

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 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 

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

proceedings to which the Commission is not a party. Respondent 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. Partial Satisfaction: Respondent understands and agrees that any acceptance by the

Commission of any partial payment of Respondent’s CMP 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.

3. Reports Regarding Swap Dealer Compliance: Respondent agrees to make a written 

report to the Division of Enforcement regarding the swap dealer’s compliance with 

the provisions of the Act and Regulations that are the subject of this order. This report 

will be signed by a Chief Compliance Officer. Respondent will submit this written
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report to the Division within one year of entry of this Order. The report will describe 

the swap dealer’s remediation of its swap reporting and daily-mark disclosure issues, 

and any ongoing material non-compliance. The report will specifically describe, with 

respect to swap reporting and daily-mark disclosures, any material non-compliance

with the Act and Regulations during the preceding year and related remediation. 

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

Obligation as set forth in this Order, Respondent shall provide written notice to the

Commission by certified mail of any change to its telephone number and mailing

address within ten calendar days of the change.

5. Notices to Creditors: Until such time as Respondent satisfies in full its CMP

Obligation, upon the commencement by or against Respondent of insolvency,

receivership or bankruptcy proceedings or any other proceedings for the settlement of

Respondent’s debts, all notices to creditors required to be furnished to the

Commission under Title 11 of the United States Code or other applicable law with

respect to such insolvency, receivership bankruptcy or other proceedings, shall be

sent to the address below:

Secretary of the Commission

Legal Division

Commodity Futures Trading Commission

Three Lafayette Centre

1155 21st Street N.W.

Washington, DC 20581

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

By the Commission.

_________________________________ 

Robert N. Sidman 

Deputy Secretary of the Commission

Commodity Futures Trading Commission

Dated: July 5, 2022