• NOTICE OF DISCIPLINARY ACTION

      • #
      • NYMEX 18-0907-BC-2
      • Effective Date
      • 15 February 2019
    • NON-MEMBER:

      Marcelo Diniz

      EXCHANGE RULES: 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 Marcelo Diniz (“Diniz”) presented at a hearing on February 13, 2019, in which Diniz 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 on February 16, 2018 and February 23, 2018, Diniz, with the understanding that his orders would 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 his employer which did in fact match. The Panel further found that Diniz 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 found that as a result of the foregoing, Diniz violated NYMEX Rule 534.

      PENALTY:

      In accordance with the settlement offer, the Panel ordered Diniz to pay a fine to the Exchange in the amount of $10,000 and suspended Diniz’s access to any CME Group trading floor, and direct or indirect access to any CME Group electronic trading or clearing platform, for 5 business days, beginning on the effective date below. The suspension will run from February 15, 2019 through February 22, 2019.