HSBC Fined $25,000 by CME Over Position Liquidation Rules

BySamson Ononeme

Jun 10, 2024 , ,
HSBC Securities (USA) Inc. has been fined $25,000 by CME Group's Clearing House Risk Committee for violating rules around liquidating customer positions

Key Insights

  • HSBC Securities (USA) Inc. fined $25,000 by CME Group’s Clearing House Risk Committee (CHRC)
  • HSBC violated CME Rule 930.K.1 by restricting its discretion on when to liquidate customer positions
  • HSBC has since amended customer agreements to comply with CME rules on position liquidation

CHICAGO (MarketsXplora) – Adding to a series of recent regulatory penalties, HSBC Securities (USA) Inc has been fined $25,000 by the CME Group’s Clearing House Risk Committee (CHRC) for violating rules around when customer positions can be liquidated, the derivatives exchange said on Friday.

The U.S. unit of HSBC was disciplined for contractually agreeing to restrictions on its discretion over the timing and circumstances for liquidating customer positions, which the CHRC found violated CME Rule 930.K.1. HSBC neither admitted nor denied the rule breach.

The CME said HSBC has since amended the customer agreements to comply with exchange rules on permissible liquidation practices.

As part of a settlement, HSBC agreed to pay the $25,000 penalty imposed by the CHRC on June 6. The disciplinary action took effect on June 7.

An HSBC spokeswoman declined to comment on the matter.

The relatively small fine comes after Britain’s Financial Conduct Authority fined HSBC Β£6.28 million ($7.9 million) in March for failures in how it treated hundreds of thousands of retail customers in debt, as previously reported by MarketsXplora.

Separately, HSBC’s Australian unit paid A$33,000 ($22,165) in penalties in April after the competition watchdog alleged it breached Consumer Data Right rules.

The CME disciplinary case relates to protecting customer funds and ensuring transparency around when brokers can close positions after account funds are depleted.

While modest, the $25,000 fine marks another regulatory blot for HSBC, a major global player across derivatives markets including those run by the CME.

Samson Ononeme

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