ANZ Fined for Excessive Speculation

US regulators have imposed a fine on both ANZ and JP Morgan on the grounds of excessive speculation. The two companies have been slapped with about US$1 million.

The case was related to the cottons market in September and October 2010. JP Morgan said it would pay about US$600,000 for exceeding position limits while ANZ agreed to pay US$350,000 for exceeding the limits in wheat futures contract.

According to Nigel Williams, chief risk officer of ANZ, said those breaches of regulations of the US Commodity Futures Trading Commission were inadvertent. The bank also maintained that the breaches were only limited to a small number of transactions.

The development is just the latest sign that the US Commodity Futures Trading Commission is implementing a crackdown on trading limits in the futures markets. So far, the CFTC has slapped about $2 million worth of civil fines to five different cases.

China-based Sheenson Investments has recently agreed to pay about US$500,000 fines for exceeding the federal limits on bets in cotton futures and soybean oil. This also included returning about US$1 million worth of ill-gotten gains.

According to some industry observers, companies sometimes exceed their limits inadvertently. This usually happens during a volatile market.

Citigroup was also recently slapped US$525,000 for exceeding limits in the wheat market.