CFTC fines Société Générale $450,000 over software bug
Coding error introduced by a software update caused French investment bank (headquarters pictured. Source: Christophe Morin/Bloomberg) to mis-report FX transactions.
The US Commodity Futures Trading Commission (CFTC) has issued a $450,000 fine to French financial firm Société Générale for improper regulatory reporting caused by bug in the code of Société Générale’s FX trading platform. The reporting error led to the French investment bank falling foul of the Commodity Exchange Act (CEA) and CFTC Regulations.
The software problem dates back to July 2014, when the French firm updated its FX trading platform. The coding error resulted in the French firm incorrectly reporting the counterparty in a number of FX swap, FX forward, and and non-deliverable forward transactions, with the final result that no swaps were registered in the CFTC’s swap data repository (SDR).
According to an investigation by the US regulator, Société Générale did not discover the problem until January 2015, and it was fixed by April 2015. Société Générale opened an internal inquiry to identify trades affected by the software bug, and it notified the CFTC in September 2015. The US regulator estimates it registered 51,821 previously unreported transactions in October 2015 from Société Générale. Then between April and May 2016 the French firm made submitted approximately 2,024 non-deliverable forward transactions to the SDR.
Despite the fine, the CFTC did note that Société Générale cooperated with the US regulator’s investigation. It came forward independently with the error, undertook an internal investigation, and corrected the problem.