On March 16, 2015, the Commodity Futures Trading Commission (CFTC) announced that it had entered into an administrative settlement with ICE Futures U.S., Inc. (ICE), a subsidiary of Intercontinental Exchange, Inc., to resolve charges that ICE violated a number of data reporting requirements regarding certain energy futures products over a 20-month period. As part of the settlement, ICE agreed to pay a civil monetary penalty of $3 million and to implement various compliance-related directives. Although the CFTC routinely files and settles charges against persons and firms registered in the commodities industry, charges are rarely brought against designated contract markets.

Required Reporting by Exchanges

ICE, like all designated contract markets (i.e., exchanges) in the commodities industry, is required under Part 16 of the CFTC’s regulations to submit a variety of reports each day to the CFTC. As just a few examples, ICE must submit the number of open futures or options positions for each of its clearing members, the total volume of trading in each futures contract traded on the exchange, and information about the prices of each futures or options contract traded on the exchange. ICE must also submit transaction-level data reflecting all transactions each day in each futures or options contract, regardless of size.

Natural Gas Prices Inaccurately Reported

The CFTC’s order found that ICE had submitted erroneous and incomplete reports each day for the 325 reporting days from October 2012 to May 2014, despite repeated notifications by the CFTC about inaccurate and missing data. For example, the CFTC’s order found that ICE inaccurately reported settlement prices from October-November 2012 in the natural gas futures market that were 1,000 times larger than the actual settlement prices. The CFTC’s order noted that the errors only affected data reported to the CFTC, not data reported on ICE’s website. The CFTC’s order further noted that errors such as these occurred while ICE was in the process of significantly upgrading its technology, but that some of the problems continued even after the upgrade was complete. Although ICE eventually fully cooperated with the CFTC, the order noted that ICE did not respond in a timely or sufficient manner to CFTC inquiries.

Settlement Agreement

As part of the settlement, ICE agreed to create and staff a new Chief Data Officer position, along with at least three quality assurance staff beyond those currently employed. ICE also agreed to undertake a review of its data submissions to the CFTC over the past year (since February 17, 2014) and to prepare a report of its findings by September 2015. Finally, ICE agreed to begin reconciling its reports on a daily basis (starting in July) to identify future errors, and to keep a log of any errors to be provided to the CFTC upon request.

Further information about ICE’s administrative settlement with the CFTC can be found on the CFTC’s website, see http://www.cftc.gov/PressRoom/PressReleases/pr7136-15.