CONTINENTAL ENERGY GROUP, LLC
EXCHANGE RULES: EXCHANGE RULE 526. BLOCK TRADES
The Exchange shall designate the products in which block trades shall be permitted and determine the minimum quantity thresholds for such transactions. The following shall govern block trades:
F. Unless otherwise agreed to by the principal counterparties to the block trade, the seller, or, in the case of a brokered transaction, the broker handling the block trade, must ensure that each block trade is reported to the Exchange within the time period and in the manner specified by the Exchange. The report must include the contract, contract month, price, quantity of the transaction, the respective clearing members, the time of execution, and, for options, strike price, put or call and expiration month. The Exchange shall promptly publish such information separately from the reports of transactions in the regular market.
MRAN RA1701-5 (in part)
Market participants must exercise diligence in accurately reporting the execution of the block trade. The reporting of inaccurate execution times may result in disciplinary action.
EXCHANGE RULE 432. GENERAL OFFENSES
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 that Continental Energy Group, LLC (“Continental”) presented at a hearing on July 11, 2018, in which Continental neither admitted nor denied the findings or the rule violation upon which the penalty is based, a Panel of the NYMEX Business Conduct Committee (“Panel”) found that during the time period of May 2016 to September 2016, Continental executed multiple block trades in Light Sweet Crude Futures/Options contracts that were not reported to the Exchange within the applicable time limit following execution and also misreported to the Exchange the true and accurate time of execution of multiple block trades. The Panel further found that Continental failed to diligently supervise its employees or agents in its reporting of block trades to the Exchange by failing to have proper training or established procedures to review block trades before and after submission to the Exchange to ensure that Continental’s block trade execution times were accurate.
The Panel concluded that Continental violated Exchange Rules 526.F. (“Block Trades”) and 432.W (“General Offenses—Supervision”).
In accordance with the settlement offer, the Panel ordered Continental to pay a fine to the Exchange in the amount of $70,000.