562. POSITION LIMIT VIOLATIONS
Any positions in excess of those permitted under the rules of the Exchange shall be deemed position limit violations.
Pursuant to an offer of settlement David Kotz (“Kotz”) presented at a hearing on March 18, 2014, in which Kotz neither admitted nor denied the findings or the rule violation upon which the penalty is based, a Panel of the NYMEX Business Conduct Committee (“BCC”) found that it had jurisdiction over Kotz pursuant to NYMEX Rules 400 and 402 as he is a NYMEX member. The Panel also found that on September 27, 2011, Kotz maintained an intraday open futures equivalent position of 1,081 short October 2011 Henry Hub Natural Gas Futures (“Oct11 NatGas”) contracts, consisting of both short outright positions and short Trading at Settlement (“TAS”) positions, which was 81 contracts (8.1%) over the standard expiration month limit of 1,000 contracts in effect for trade dates September 26, 27, and 28, 2011. The Panel also found that the transaction that put Kotz over the position limit was a 300-lot TAS spread trade and that Kotz liquidated this overage, resulting in profits of $11,860.00.
In addition, the Panel found that later on the same day, Kotz executed a short TAS transaction for 100 Oct11 NatGas contracts which resulted in an intraday short position of 1,096 Oct11 NatGas contracts, 96 contracts (9.6%) over the applicable position limit and that he liquidated this overage resulting in profits of $13,190.00.
The Panel found that as a result, Kotz violated Rule 562.
In accordance with the settlement offer, the Panel ordered Kotz to pay a fine to the Exchange in the amount of $15,000 and to disgorge profits in the amount of $25,050.00.
March 20, 2014
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