NOTICE OF DISCIPLINARY ACTION

MEMBER:

EAGLE SEVEN, LLC

EXCHANGE RULE VIOLATION:

RULE 432. GENERAL OFFENSES (in part)

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.

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 on 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 presented at a hearing on April 29, 2020, in which Eagle Seven, LLC (“Eagle Seven”) neither admitted nor denied the rule violations upon which the penalty is based, a Panel of the NYMEX Business Conduct Committee (the “Panel”) found that between August 2 and August 28, 2018, an automated trading system (“ATS”) operated by Eagle Seven executed numerous self-matched trades in European Natural Gas futures contracts. The Panel found that, although Eagle Seven did not intentionally design its ATS to execute self-match transactions, Eagle Seven should have known that orders the ATS entered might match with resting orders on the other side of the market placed by the same ATS. The Panel also found that Eagle Seven failed to properly advise and train its employee as to relevant Exchange rules and Market Regulation Advisory Notices (“MRANs”) regarding wash trading, and failed to employ effective functionality designed to minimize self-matches.

The Panel found that as a result, Eagle Seven violated Rules 432.W. and 534.

PENALTY:

In accordance with the settlement offer, the Panel ordered Eagle Seven to pay a fine to the Exchange in the amount of $35,000.