The following was originally published on Trading Technologies' Trade Talk blog. Protect Your Profits and Avoid Criminal Liability in 2020 with TT® Score By: Jay Biondo, Sales Specialist - Surveillance 2019 was a banner year for regulators in the futures industry. The CFTC obtained monetary relief of more than $1.3 billion from 69 enforcement actions, a 39% increase from the previous year and the fourth-highest total in CFTC history, agency officials said in its annual enforcement report. This included the largest total monetary relief ($67.4 million dollars) ever ordered in a spoofing case (see CFTC Orders Proprietary Trading Firm to Pay Record $67.4 Million for Engaging in a Manipulative and Deceptive Scheme and Spoofing). The CFTC also filed a record 16 cases in parallel with criminal authorities in fiscal 2019, including the first case to ever be brought under the RICO Act, where multiple traders were alleged to have engaged in a collusive scheme to spoof the markets over the course of several years (see United States of America v. Gregg Smith, Michael Nowak, and Christopher Jordan). Self-regulatory organizations (SROs) like the CME and ICE were also very active in 2019. For example, the CME took emergency action to reign in runaway trading algorithms by implementing an automatic $10,000 surcharge per trade date that will be applied to Globex firms that submit a raw message count >60,000 messages and a Volume Ratio >50:1 in Product Group GE (Eurodollar futures and spreads) (see CME Globex Messaging Efficiency Program Section 9). In addition, ICE Futures US (IFUS) announced that effective January 1, 2020, all firms accessing the exchange must develop, implement and enforce supervisory systems, policies and procedures reasonably designed to effectuate compliance with exchange rules (see Submission No. 19-378 Re: Amendment to Rule 4.01 – Duty to Supervise; Submission Pursuant to Section 5c(C)(1) of the Act and Regulation 40.6(a)). Furthermore, IFUS made it clear that these measures will apply to all persons trading on IFUS whether registered with the CFTC or not, and that the exchange may bring disciplinary actions against any firm solely for violating its supervision rule; a violation of another substantive provision is not required. Based on these developments, it is imperative that all industry participants (regardless of size) take proactive steps in 2020 to ensure that they are effectively supervising all of their futures trading activity. For some participants, this will mean adopting a trade surveillance system for the first time, and for others, it will mean either supplementing or replacing their current legacy trade surveillance system to ensure that they are using the best tools available. The good news is that TT Score is uniquely positioned to help all market participants (from individual traders all the way up to the largest firms), automate their compliance processes and avoid monetary and criminal regulatory penalties such as those described above. For example, the CFTC has placed an enormous emphasis on penalizing spoofing activity by individual traders or groups of traders, and TT Score currently offers the industry’s only Spoofing model that is powered by cutting-edge machine-learning technology. For more information about this model, see Spoofing. It is important to highlight that the TT Score team is also in the final stages of testing a new Collusive Spoofing model, which will leverage the same machine-learning technology to identify instances where two or more traders are potentially engaging in a collusive scheme to spoof the markets. TT Score can also help users avoid the CME’s new automatic $10,000 surcharge with its Abusive Messaging model. The Abusive Messaging model identifies when a trader is engaging in intentional quote stuffing behavior, as well as instances where an algorithm is malfunctioning and has entered into a “looping” state. For more information on this model, see Abusive Messaging. Finally, the amended IFUS rule 4.01 not only mandates that firms have a trade surveillance in place, but that they also evidence their reviews and maintain them electronically or in writing. Once again, TT Score ensures compliance with this mandate by offering a fully integrated case management system. For more information about Investigations, see Recording Reviews And Opening Investigations. So schedule a demo today to see all of TT Score’s models and features in action, and get a sneak peek at TT Score’s new Collusive Spoofing model as well!