“U.S. futures regulators are looking into whether high-speed traders indulged in “wash trading,” a strategy in which they improperly buy and sell futures contracts without taking a position in the market, The Wall Street Journal reported, citing people familiar with the probes.
The Commodity Futures Trading Commission (CFTC) is investigating suspected wash trades by high-speed firms in futures contracts tied to crude oil, precious metals, agricultural commodities, and the S&P 500, among other underlying instruments, the people told the Journal.
Wash trades are banned under U.S. futures law.
Investigators also are looking at the two primary exchange operators that handle such trades, CME Group and IntercontinentalExchange, the paper reported.
Regulators are concerned the exchange systems are not sophisticated enough to flag or stop wash trades, the people said.
“We actively enforce rules prohibiting wash trading, and we are in the process of developing technology to prevent wash trades as prohibited by CME and CFTC at the trading-engine level,” a CME spokeswoman told the Journal.
CME plans to introduce new technology in the middle of this year, she said….”
