MERRILL LYNCH COMMODITIES (EUROPE) LIMITED
Rule 432. General Offenses
It shall be an offense:
W. for a Member to fail to diligently supervise its employees and agents in the conduct of their business relating to the Exchange.
Rule 534. Wash Trades Prohibited
No person shall place or accept buy and sell orders in the same product and expiration month, and, for a put or call option, the same strike price, where the person knows or reasonably should know that the purpose of the orders is to avoid taking a bona fide market position exposed to market risk (transaction commonly known or referred to as wash sales). Buy and sell orders for different accounts with common beneficial ownership that are entered with the intent to negate market risk or price competition shall also be deemed to violate the prohibition on wash trades. Additionally, no person shall knowingly execute or accommodate the execution of such orders by direct or indirect means.
Pursuant to an offer of settlement that Merrill Lynch Commodities (Europe) Limited (“MLCE”) presented at a hearing on February 5, 2014, in which MLCE neither admitted nor denied the rule violations upon which the penalty is based, a Panel of the COMEX Business Conduct Committee (“Panel”) found that MLCE is subject to the jurisdiction of the Exchange because it is an affiliate of a COMEX member and that on certain dates in April 2012, a trader employed by MLCE entered a series of buy and sell orders in various Gold options and Copper futures contracts between accounts with the same beneficial owner. The Panel also found that MLCE failed to diligently supervise its trader in the conduct of his business with the Exchange.
The Panel found that as a result of the foregoing, MLCE violated Exchange Rules 432.W. and 534.
In accordance with the settlement offer, the Panel ordered MLCE to pay a fine to the Exchange in the amount of $15,000.
February 7, 2014
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