• NOTICE OF DISCIPLINARY ACTION

      • #
      • NYMEX 18-0907-BC-1
      • Effective Date
      • 15 February 2019
    • MEMBER:

      Banco ABC Brasil S.A.

      EXCHANGE RULES:

      Rule 432. GENERAL OFFENSES

      W. for any party to fail to diligently supervise its employees and agents in the conduct of their business relating to the Exchange.

      Rule 534. – Wash Trades Prohibited

      No person shall place or accept buy and sell orders in the same product and expiration month, and, for a put or call option, the same strike price, where the person knows or reasonably should know that the purpose of the orders is to avoid taking a bona fide market position exposed to market risk (transactions commonly known or referred to as wash sales). Buy and sell orders for different accounts with common beneficial ownership that are entered with the intent to negate market risk or price competition shall also be deemed to violate the prohibition of wash trades. Additionally, no person shall knowingly execute or accommodate the execution of such orders by direct or indirect means.

      FINDINGS:

      Pursuant to an offer of settlement that Banco ABC Brasil S.A. (“Banco ABC”) presented at a hearing on February 13, 2019, in which Banco ABC neither admitted nor denied the findings or the rule violations upon which the penalty is based, a Panel of the NYMEX Business Conduct Committee (“Panel”) found that on February 16, 2018 and February 23, 2018, a Banco ABC trader, with the understanding that his orders execute opposite each other, placed orders in several NYMEX Trading at Settlement (“TAS”) Heating Oil futures markets, for different accounts wholly owned and controlled by Banco ABC which did in fact match. The Panel further found that the trader placed the orders to establish positions within the accounts that hedged the delta risk associated with the accounts Over-the-Counter (“OTC”) option positions. The Panel also found that Banco ABC failed to diligently supervise its trader in a manner sufficient to ensure that the trader executed trades in compliance with Exchange rules.

      The Panel found that as a result of the foregoing, Banco ABC violated Exchange Rules 432.W and 534.

      PENALTY:

      In accordance with the settlement offer, the Panel ordered Banco ABC to pay a fine to the Exchange in the amount of $40,000.