BARCLAYS BANK PLC
NYMEX RULE 432: GENERAL OFFENSES (in part)
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;
NYMEX 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 (transactions 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 Barclays Bank PLC (“BBPLC”) presented at a hearing on August 13, 2014, in which BBPLC 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 it had jurisdiction over BBPLC as an affiliate of NYMEX member, Barclays Capital Inc. (“Barclays”). The BCC Panel found that on multiple dates between March 2010 and December 2011, a trader employed by Barclays Capital Energy Inc. (“BCEI”), a subsidiary of BBPLC, executed a series of block trades in the Heating Oil contract between BBPLC and BCEI, accounts both owned by BBPLC, for the purpose of transferring positions between those two accounts. The BCC Panel found that although this trader was trading on behalf of BCEI, BBPLC’s trading platform, BARX, was only capable of booking trades under one entity, and the trader’s platform was configured to book trades under BBPLC. Therefore, in order to roll positions into the BCEI account from the BBPLC account, the trader executed wash block trades between the accounts. This trader was the sole decision maker of these wash block trades. The BCC Panel further found that BBPLC failed to diligently supervise its compliance personnel in a manner sufficient to ensure that they provided accurate guidance to the trader under Exchange rules with respect to the execution of these trades.
The BCC Panel found that as a result, BBPLC violated NYMEX Rules 432.W and 534.
In accordance with the settlement offer, the BCC Panel ordered BBPLC to pay a fine to the Exchange in the amount of $90,000.
August 15, 2014
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