SAGE REFINED PRODUCTS, LTD.
RULE 432. GENERAL OFFENSES (IN PART)
It shall be an offense:
W. for any party to fail to diligently supervise its employees and agents in the conduct of their business relating to the Exchange.
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. The seller must ensure that each block trade is reported to the Exchange within five minutes of the time of execution. 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.
Pursuant to an offer of settlement that Sage Refined Products, Ltd. (“Sage”) presented at a hearing on January 29, 2019, in which Sage neither admitted nor denied the rule violations upon which the penalty is based, a Panel of the NYMEX Business Conduct Committee (“Panel”) found that between July 2017 and December 2017, Sage executed numerous block trades for customers in various NYMEX Energy contracts, including NY Harbor ULSD Futures contracts, that Sage failed to report to the Exchange within the required time period following execution, as well as failed to report accurate trade details for these block trades to the Exchange. The Panel also found that, between July 2018 and August 2018, Sage executed various block trades for customer in various NYMEX Energy contracts, including NY Harbor ULSD Futures contracts, and failed to report accurate trade details for these block trades to the Exchange. The Panel also found that, during these time frames, Sage failed to properly advise its employees as to relevant Exchange rules and Market Regulatory Advisory Notices (“MRANs”), as well as failed to supervise the execution of block trades by its employees to make certain that brokers complied with Exchange block trade reporting requirements.
The Panel concluded that Sage violated Exchange Rules 432.W. (General Offenses – Failure to Supervise) and 526.F. (“Block Trades”).
In accordance with the settlement offer, the Panel ordered Sage to pay a fine to the Exchange in the amount of $135,000.