The first charge stems from the fact that CMS operated from November 2009 until December 2010 with no back-up facility for its trading servers. The second charge arose because CMS failed to notify the NFA about platform failures within 24 hours, as mandated by the NFA. In the following five instances, it failed to give notice to its customers or NFA:
- June 20, 2010: The VT platform was unavailable for seven hours and all customers who utilized the VT platform were either unable to log on or were kicked out of the VT system. (CMS never ran a query to determine the exact number of affected customers.)
- November 26, 2009: The VT platform was unavailable for just over two hours and approximately 200 customers were either unable to log on or were kicked out of the VT system.
- January 24, 2010: The VT platform was unavailable for just under two hours and 700 customers were either unable to log on or were kicked out of the VT system.
- April 18, 2010: The VT platform was unavailable for 34 minutes and 550 customers were either unable to log on or were kicked out of the VT system.
- April 23, 2010: The VT platform was unavailable for eighteen minutes and 280 customers were either unable to log on or were kicked out of the VT system.
July 14, Chicago – National Futures Association (NFA) has imposed a monetary sanction of $75,000 against Capital Market Services LLC (CMS), a Futures Commission Merchant located in New York, New York. The Decision, issued by NFA’s Business Conduct Committee, is based on an NFA Complaint filed in May 2011 and a settlement offer submitted by CMS.
The Complaint alleged that CMS failed to implement adequate business continuity and disaster recovery plans and that CMS failed to report all system outages experienced by the firm to its customers and NFA. These outages left customers unable to enter new orders or manage their existing orders. In addition, the Complaint charged CMS with failing to adequately supervise the use of its electronic trading platforms.
The complete text of the Complaint and Decision can be found on NFA’s website (www.nfa.futures.org).
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