• NOTICE OF DISCIPLINARY ACTION

      • #
      • NYMEX 16-0532-BC
      • Effective Date
      • 06 December 2017
    • NON-MEMBER:

      KOREA INVESTMENT & SECURITIES CO., LTD.

      EXCHANGE RULES:

      432. General Offenses

      It shall be an offense:

      W. For any party to fail to diligently supervise its employees and agents in the conduct of their business relating to the Exchange.

      539.C. Pre-Execution Communications Regarding Globex Trades

      Parties may engage in pre-execution communications with regard to transactions executed on the Globex platform where one party (the first party) wishes to be assured that a contra party (the second party) will take the opposite side of the order under the following circumstances:

      ***
      C.3. Permissible Entry Methods for Orders

      ***
      a. Globex Cross (“G-Cross”)

      The first party’s order is entered into the Globex platform first. The second party’s order may not be entered into the Globex platform until a period of 5 seconds has elapsed from the time of entry of the first order.

      576. Identification of Globex Terminal Operators

      Each Globex terminal operator shall be identified to the Exchange, in the manner prescribed by the Exchange, and shall be subject to Exchange rules. If user IDs are required to be registered with the Exchange, it is the duty of the clearing member to ensure that registration is current and accurate at all times. Each individual must use a unique user ID to access Globex. In no event may a person enter an order or permit the entry of an order by an individual using a user ID other than the individual’s own unique user ID.

      FINDINGS:

      Pursuant to an offer of settlement Korea Investment & Securities Co., Ltd. (“KIS”) presented at a hearing on December 4, 2017, in which KIS neither admitted nor denied the rule violations upon which the penalty is based, a Panel of the NYMEX Business Conduct Committee (“BCC Panel”) found that on multiple occasions during the time period of February 1, 2016 to May 31, 2016, KIS traders crossed multiple Crude Oil futures orders on Globex without waiting the requisite five seconds between the placement of their orders following pre-execution communications. KIS failed to properly supervise its traders in that KIS was not familiar with Exchange rules and failed to provide its traders with any compliance training or educational materials regarding Exchange rules. Additionally, KIS failed to ensure that the TAG 50 registration for its traders accessing the Globex system was current, accurate and unique to each individual using Globex in that its traders entered these orders using TAG 50 I.D.s registered to different users.

      The Panel found that as a result of the foregoing, KIS violated Rule 432.W., 539.C., and 576.

      PENALTY:

      In accordance with the settlement offer, the BCC Panel ordered KIS to pay a $65,000 fine.