CME Group Issues Disciplinary Actions

Exchanges affiliated with the CME Group, including the New York Mercantile Exchange ("NYMEX") and Commodities Exchange Inc. ("COMEX"), announced multiple disciplinary actions in which monetary fines ranging from $7,500 to $1.75 million were imposed.

NYMEX found that Advantage Futures, LLC, on the last trading date for the physically settled August 2014 Crude Oil futures contract, failed to ensure that an open position held on its books in the physically delivered Crude Oil futures contract was liquidated in an orderly manner prior to the expiration of trading, thereby violating NYMEX Rule 716 ("Duties of Clearing Members").

NYMEX also found that Canadian Imperial Bank of Commerce brokered and entered into two exchange for related positions transactions ("EFRPs") which did not contain documentation of the related OTC transaction and were therefore not bona fide EFRPs, thereby violating NYMEX Rule 538.H ("Documentation").

Similarly, NYMEX found that Marex Spectron Asia Pte Ltd. executed an EFRP transaction that did not contain proper documentation and therefore was not a bona fide EFRP, also violating NYMEX Rule 538.H.

Separately, NYMEX found that Marex Spectron International Limited executed block trades for customers that were not reported to NYMEX within the applicable time limit following execution, and also misreported exchange for swap transactions as block trades to NYMEX, violating NYMEX Rule 526 ("Block Trades") and Legacy Rule 538.G ("Exchange for Related Positions").

NYMEX also found that Newedge USA LLC employees received orders from customers which were executed as EFRPs instead of on Globex, as was expected by the customers. Additionally, NYMEX found that there was inadequate documentation of the OTC leg of the EFRP transactions and that the trades were not designated by Newedge on the customer account statements as EFRPs due to an operational error, therefore making the EFRPs not bona fide. These actions violated NYMEX Rules 432 and 529 and Legacy Rule 538.

COMEX found that UBS AG entered into an EFRP transaction that did not contain documentation of the corresponding cash position, and therefore was not a bona fide EFRP, violating Legacy Rule 538.H. Additionally, COMEX found that Jefferies Bache Financial Services Inc. exceeded the expiration month position limit in the July 2014 Copper Futures contract, as well as exceeded position limits on an intraday basis on multiple occasions in July 2014, violating NYMEX Rule 562 ("Position Limited Violations").

See: CME Disciplinary Actions – Advantage Futures LLC; Canadian Imperial Bank of Commerce; Marex Spectron Asia Pte Ltd.; Marex Spectron International Limited; Newedge USA LCC; UBS AG; Jefferies Bache Financial Services Inc.