The U.S. Commodity Futures Trading Commission (CFTC) fined Capital Market Services, LLC (CMS), the parent company of CMS Forex a civil monetary penalty of $275,000 for failing to comply with the minimum capital requirements for Futures Commission Merchant (FCM) and Retail Foreign Exchange Dealer (RFED).
Whilst it recognized the company’s corrective actions it took after the anomalies were discovered and cooperation accorded to the commission, it urged it to avoid violating the CFTC regulations and Commodity Exchange Act in future, according to a press release posted on its website.
In its ruling, CFTC said that its regulations require an FCM to maintain adjusted net capital (ANC) that is at least $1 million. Between January 2009 and mid-December 2010, CMS was subject to National Futures Association FDM Financial requirements that required it to have a minimum ANC of between $15 million to $21 million.
The CFTC rules also subject an RFED to a minimum ANC of $20 million in addition to five percent of its cumulative retail forex obligation exceeding $10 million. As an RFED, CMS was required to have an ANC of about $21 million.
However, CMS failed to maintain its required capital levels in more than 17 separate months between March 2009 and October 2012, with end-month calculations indicating that CMS was short of more than $13 million worth of capital at one point.
CMS, which registered with CFTC in January 2002 as an FCM, was also registered as an RFED from September 2009 to mid-December 2010. It also did business as an FDM from January 2009 to mid-December 2010.
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