CFTC fines Ceres International Ag Corp $3M for tried manipulation of oats futures costs

The Commodity Futures Buying and selling Fee (CFTC) immediately issued an order concurrently submitting and settling expenses towards Ceres International Ag Corp. for trying to govern the value of the July 2016 and March 2017 oats futures contracts.

Based on the order, senior personnel at Ceres knew about and facilitated the constructing of enormous lengthy positions at or near the spot month speculative limits, holding these lengthy positions into the supply interval, and taking supply of oats, intending each to spice up the value of oat futures in these contracts and to acquire increased high quality oats at decrease supply costs.

The order states Ceres tried to govern the July 2016 and March 2017 oats futures contracts.

In June 2016, a former officer directed the corporate’s oat merchants to flip the corporate’s present quick place within the July 2016 oat futures contract and try to succeed in a protracted place of 600 contracts, or 3 million bushels, the speculative place restrict set by the alternate.

Along with constructing its lengthy futures place, the previous officer directed oats merchants to purchase again transport certificates the corporate beforehand tendered to different market members in a manner that might not “tip [their] hand” about Ceres’s plan to take supply on the expiration of the contract. In reference to this try to have an effect on the July 2016 oats futures contract worth, Ceres took supply of 484 contracts and entered into offsetting transactions of a further 53 contracts.

The order additionally finds Ceres engaged in related exercise in reference to the March 2017 oats futures contract, once more meaning to have an effect on the futures worth. The corporate constructed a protracted place within the March 2017 oats futures contract, held its lengthy place into supply, and took supply of 337 contracts and entered into offsetting transactions of a further 224 contracts, regardless that it had no speedy want for the oats.

The order requires Ceres to pay a $3 million civil financial penalty and to stop and desist from additional violations of the Commodity Alternate Act (CEA), as charged. The order additionally acknowledges Ceres has undertaken vital remedial steps to make sure future compliance with the CEA.