“NFX also provided volume-based payments to DMM program participants; this component of the DMM program paid certain market participants based on the amount of trades each of these participants executed on the NFX exchange. NFX did not properly establish, monitor, or enforce this component of the DMM program and did not disclose it to the Commission or the public, as required by the Act and Commission Regulations.”

💡 NFX secretly paid traders based on volume while telling everyone the program only offered fixed stipends.

“NFX rule submissions to the Commission regarding NFX incentive programs omitted or explicitly denied the existence of a volume-based incentive as part of the DMM program. NFX reasonably should have known such omissions and denials were false and misleading at the time NFX made these submissions to the Commission.”

💡 NFX didn’t just hide the program, it actively lied about it in official filings to the CFTC.

“DMO staff specifically questioned these NFX employees about whether NFX’s DMM program paid participants for trade volume. In response, these NFX employees repeatedly stated that there was no volume-based component to the DMM program, including by representing to Commission staff that ‘our incentive programs are not volume based at all.'”

💡 When directly questioned during an official investigation, NFX employees gave false answers to CFTC staff.

“NFX did not disclose the existence of the volume-based component of the DMM program to its internal legal and compliance personnel or its regulatory service provider.”

💡 NFX hid the secret payments even from its own compliance staff, ensuring they couldn’t report it.

“In December 2015, NFX’s regulatory service provider recommended that NFX reach out to three market makers on the NFX exchange regarding certain September 2015 trading activity in a particular contract. NFX did not act on this recommendation, nor is there any record of NFX documenting its decision not to act on it.”

💡 When warned about suspicious trading by participants in the secret payment program, NFX simply ignored it.

“Without admitting or denying any of the findings or conclusions herein, Respondent consents to the entry of this Order Instituting Proceedings Pursuant to Section 6(c) and (d) of the Commodity Exchange Act, Making Findings, and Imposing Remedial Sanctions.”

💡 NFX settled by paying money but never had to admit it broke the law or deceived regulators.

“Over the course of the Relevant Period, NFX made multiple submissions about the DMM program to the Commission. However, none of those submissions disclosed the volume-based component of the DMM program consistent with the requirements of the Act and Commission Regulations.”

💡 This wasn’t a one-time error but a pattern of concealment over three years and multiple filings.

“Although NFX was aware of the topics that would be covered during the RER interviews, NFX did not take appropriate steps to ensure that its employees were knowledgeable as to those topics. Accordingly, the NFX employees who were interviewed had never been advised of and were not aware of the volume-based payments to certain DMM program participants.”

💡 NFX knew regulators would ask about incentive programs but deliberately left its own employees uninformed so they would give false answers.

“By failing to publish information about the volume-based payments on NFX’s website (either in the form of separate rules or amendments to existing rules), the information that was published on NFX’s website was rendered incomplete, inaccurate, and omitted material information.”

💡 What NFX did publish became a lie by omission, misleading everyone who relied on the website for accurate information.

“As set forth herein, these false and misleading statements are material because they concerned important aspects of the Commission’s oversight of the DCM.”

💡 The CFTC found that NFX’s lies weren’t minor details but went to the heart of how the exchange was supposed to be regulated.

“Secret, undisclosed payment structures undermine fairness, giving certain participants advantages others are unaware of. This secrecy violated the principle.”

💡 Some traders competed with a hidden handicap while others received secret payments, destroying the level playing field.

“Orders Respondent to pay a civil monetary penalty in the amount of twenty-two million dollars ($22,000,000), plus any post-judgment interest within thirty days of the date of entry of this Order.”

💡 NFX must pay $22 million for three years of deception, though no individual faces personal consequences.