NOTICE OF DISCIPLINARY ACTION

MEMBER:

JPMORGAN CHASE BANK, N.A.

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.

FINDINGS:

Pursuant to an offer of settlement JPMorgan Chase Bank, N.A. (“JPMorgan”) presented at a hearing on June 12, 2018, in which JPMorgan neither admitted nor denied the rule violation upon which the penalty is based, a Panel of the New York Mercantile Exchange Business Conduct Committee (“Panel”) found that due, in part, to a systems mapping issue in its position limits monitoring system (“PL monitoring system”) in early May 2017, JPMorgan’s June 2017 Henry Hub Natural Gas (“Jun17 NG”) position was not accounted for in its PL monitoring system. While JPMorgan used various systems and related controls to manage its overall trading risk, it relied primarily on its PL monitoring system for position limit monitoring of CME Group futures contracts. The Panel found that as a result of an account mapping error related to its PL monitoring system software upgrade, Jun17 NG futures positions were not reflected on the PL monitoring system report going into the spot period which began on May 23, 2017. JPMorgan was unaware of the error until the Exchange contacted JPMorgan on the morning of May 26, 2017, the last trade date for the Jun17 NG contract.

The Jun17 NG position limit started at the close of business on May 23, 2017 and continued for trade dates May 24, 2017, May 25, 2017 and May 26, 2017. The Panel found that JPMorgan exceeded the standard position limit of 1,000 Jun17 NG futures contracts for the entire three-day spot period. Specifically, JPMorgan exceeded the position limit by 823 lots (82.30%) on May 24, 2017, 773 lots (77.30%) on May 25, 2017 and 773 lots (77.30%) on May 26, 2017.

JPMorgan’s 1,773 lots of Jun17 NG futures contract carried into the last trade date constituted 28% of open interest in that contract.

The Panel found that as a result, JPMorgan violated Rule 562.

PENALTY:

In accordance with the settlement offer, the Panel ordered JPMorgan to pay a fine to the Exchange in the amount of $125,000.