The U.S. Commodity Futures Trading Commission (CFTC) today simultaneously issued an order to file charges and reach a settlement against Advantage Futures LLC, a registered futures commission merchant, alleging that Advantage Futures LLC failed to exercise due diligence in supervising the processing of commodity equity accounts over a four-year period, resulting in incomplete and inadequate oversight of customers' disruptive trading activities, in violation of CFTC regulations.。

The order requires Advantage to pay a $395,000 civil penalty and cease and desist from violating its oversight requirements.。

Under the order, Advantage's policies and procedures clearly state that sophisticated transaction analysis software will be used to monitor its cleared customer transactions for out-of-order transactions.。However, during the relevant period, Advantage did not fully comply with its policies and procedures and failed to process and monitor three separate sets of customer order and execution data at three separate times.。

According to the order, Advantage's monitoring provider failed to process data from an exchange futures contract between July 2018 and December 2020.。This failure occurred because Advantage's vendor dropped one of the data sources after testing was completed and monitoring went live。Advantage did not ensure that its suppliers received and processed all of its customers "transactional data, which resulted in some of its customers" product transactions not being monitored for nearly two and a half years.。

The order also found that Advantage's monitoring provider did not receive data from another exchange between June 2019 and June 2022.。When Advantage switched to a new clearing broker in June 2019, Advantage, through its monitoring provider, failed to connect the data feed from the previous clearing broker to its new clearing broker.。

In addition, the order found that Advantage failed to send its monitoring provider order and trade data for some of its customers' total trades on two other exchanges between July 2018 and June 2022, which hampered the monitoring of that trading activity.。

The order found that Advantage's lapses resulted in more than 12.8 million cleared contracts not being processed or monitored between July 2018 and June 2022.。This accounted for nearly 1% of Advantage customers' trading volume during the four-year period..5%。

Advantage said it has taken steps to ensure it receives and monitors trade and order data from its clearing exchanges in the future.。These include retaining new monitoring vendors, reprocessing and reviewing data that is not reviewed in real time, hiring additional staff focused on transaction monitoring, and implementing controls to ensure connectivity to exchange data feeds。