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Thursday, April 23, 2015

Futures Regulatory Alert #2015 - 2
Wash Trades Prohibited


  • System Impact

Markets Impacted:

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Entering into, or purporting to enter into, transactions to give the appearance that purchases and sales have been made, without incurring market risk or changing the Futures Participant's market position is considered wash trading which is precluded under NFX Rules at Chapter V, Section 1(c) and Chapter V, Section 24(g)(3)(iii).

Parties must intend to execute the wash trade which can be inferred by prearrangement or by evidence that the parties knew or reasonably should have known that the execution would result in a wash trade.

Intentionally entering transactions by parties with the same beneficial ownership or common beneficial ownership without incurring market risk or price competition is considered a wash trade.

Knowingly accommodating the execution of wash trades is a violation of NFX Rules. 

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