MBF TRADING LLC
NYMEX RULE VIOLATION: 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 MBF Trading LLC (“MBF”) presented at a hearing on December 16, 2014, in which MBF neither admitted nor denied the rule violation or the findings or conclusions therein upon which the penalty is based, a Panel of the NYMEX Business Conduct Committee (“BCC”) found that MBF, a member of the Exchange, was subject to the jurisdiction of the BCC, pursuant to Exchange Rules 400 and 402 and that on trade date September 25, 2012, MBF maintained an intraday open futures equivalent position of 2,219 short October 2012 Henry Hub Natural Gas Futures (“OCT12 NatGas”), which was 719 contracts, or 47.93%, in excess of the appropriate exemption level in effect for trade date September 25, 2012 (“Exemption Level”). MBF then brought its position in compliance with the Exemption Level. Subsequently, on trade date September 25, 2014, MBF increased its position and exceeded the Exemption Level a second time, reaching a position of 1,776 short OCT12 NatGas contracts, which was 276 contracts, or 18.4%, in excess of the Exemption Level. MBF then brought its position in compliance with the Exemption Level. In both instances, MBF liquidated its overage position in a non-disruptive manner, resulting in a profit.
The Panel found that as a result, MBF violated Rule 562.
In accordance with the settlement offer, the Panel ordered MBF to pay a fine to the Exchange in the amount of $25,000 and disgorge $125,000.
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