MERRILL LYNCH COMMODITIES, INC.
NYMEX RULE VIOLATION: 432.W. 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.
Pursuant to an offer of settlement Merrill Lynch Commodities, Inc. (“Merrill Lynch” or the “Firm”) presented at a hearing on September 17, 2014, in which Merrill Lynch neither admitted nor denied the rule violation upon which the penalty is based, a Panel of the NYMEX Business Conduct Committee (“BCC”) found that it had jurisdiction over Merrill Lynch pursuant to Exchange Rules 400 and 402 as the conduct occurred while Merrill Lynch was a NYMEX member, and that on trade date April 29, 2013, a trader employed by Merrill Lynch failed to monitor the operation of a Crude Oil auto-spreader utilized by the firm, minimizing the auto-spreader application and failing to monitor the order modification activity. This resulted in the auto spreader streaming price modifications and disclosing prices to the market that were not viable, requiring the Exchange to initiate a port closure on April 29, 2013. Merrill Lynch failed to diligently supervise its trader in a manner sufficient to ensure that the auto- spreader was adequately monitored and maintained.
The Panel found that, as a result, Merrill Lynch violated NYMEX Rule 432.W. (General Offenses – Failure to Supervise).
In accordance with the settlement offer, the Panel ordered Merrill Lynch Commodities, Inc. to pay a fine to the Exchange in the amount of $60,000.
September 19, 2014
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