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Legislators are concerned about possible insider trading.
Senator Warren calls for a more thorough investigation into administration officials.
CME Group states that it is monitoring transactions and calls for a comprehensive review.
(Updates remarks prepared by CFTC chairman; responses from CME Group and ICE, paragraphs 2-3, 8-9) by Anirban Sen, Chris Prentice, and Anusha Shah
The U.S. Commodity Futures Trading Commission is reviewing a series of transactions on oil futures contracts placed shortly before major shifts in President Donald Trump’s Iran war policy, a person familiar with the matter said on Wednesday.
CFTC Chairman Michael Selig said in prepared remarks for delivery to Congress on Thursday that the agency will pursue wrongdoers, but the testimony did not address a specific investigation, and an agency spokesman declined to comment.
“I want to be very clear: if you engage in fraud, manipulation, or insider trading on any of our markets: we will find you and you will face the full force of the law,” Selig said in remarks consulted by Reuters.
The CFTC investigation focuses on oil futures trading on platforms owned by CME Group (CME.O) and Intercontinental Exchange (ICE.N), with investigators looking into at least two cases of oil trades made on March 23 and April 7, the source said.
Timely transactions could have generated millions of dollars in profits, causing concern among lawmakers and legal experts who believe that decisions related to war and diplomacy can create opportunities for abuse on volatile and opaque derivative markets.
Investors placed approximately $950 million worth of bets on oil prices just hours before the U.S. and Iran announced a ceasefire last week. On March 23, the oil market saw similarly timely transactions.
Data requested from exchanges includes the so-called “Tag 50” identifications of the entities behind the transactions.
“At CME Group, we rigorously monitor our markets and work closely with the CFTC to oversee trading activities,” a CME spokesperson said in a statement, adding that any market behavior review should include all sites, including futures markets listing related products with little to no visibility.
ICE declined to comment on the matter.
The White House warned staff against abusive leverage use to place bets on futures markets in the context of the Iran war.
The CFTC’s enforcement director said last month that the agency was aware of speculation about insider trading on markets regulated by the CFTC and was “monitoring” the situation.
In a statement, Democratic Senator Elizabeth Warren of Massachusetts, a prominent watchdog and critic of the CFTC, said the agency’s investigation was just the beginning, and regulators should do more to investigate potential insider trading by administration officials.
The White House did not immediately respond to a request for comment on Ms. Warren’s statement.
