NOTICE OF DISCIPLINARY ACTION

NON-MEMBER:

TAG FUTURES LLC

NYMEX RULE VIOLATION:

EXCHANGE RULE 538.C. RELATED POSITION

The related position component of an EFRP must be the cash commodity underlying the Exchange contract or a by-product, a related product or an OTC derivative instrument of such commodity that has a reasonable degree of price correlation to the commodity underlying the Exchange contract. The related position component of an EFRP may not be a futures contract or an option on a futures contract.

Each EFRP requires a bona fide transfer of ownership of the underlying asset between the parties or a bona fide, legally binding contract between the parties consistent with relevant market conventions for the particular related position transaction.

The execution of an EFRP transaction may not be contingent upon the execution of another EFRP or related position transaction between the parties where the transactions result in the offset of the related position without the incurrence of market risk that is material in the context of the related position transactions.

The facilitation of the execution of an EFRP by any party that knows such EFRP is non bona fide shall constitute a violation of this Rule.

EXCHANGE RULE 538.G. EFRPS FOLLOWING THE TERMINATION OF TRADING IN EXCHANGE CONTRACTS

EFRP transactions in certain Exchange contracts may be executed for a defined period of time following the termination of trading in accordance with the applicable product rules governing each Exchange contract. Such transactions may be executed only to liquidate Exchange positions.

200102F. Termination of Trading

No trades in Light Sweet Crude Oil futures in the expiring contract month shall be made after the third business day prior to the twenty-fifth calendar day of the month preceding the delivery month for such expiring contract. If the twenty-fifth calendar day of the month is a nonbusiness day, trading shall cease on the third business day prior to the last business day preceding the twenty-fifth calendar day of the month preceding the delivery month. In the event that the official Exchange holiday schedule changes subsequent to the listing of a Light Sweet Crude Oil futures, the originally listed expiration date shall remain in effect. In the event that the originally listed expiration date is declared a holiday, expiration will move to the business day immediately prior. Any contracts remaining open after the last day of trading must be either:

(a) Settled by delivery which shall take place no earlier than the first calendar day of the delivery month and shall be completed no later than the last calendar day of the delivery month; or

(b) Liquidated by means of a bona fide Exchange for Related Position (“EFRP”) pursuant to Rule 538. An EFRP is permitted in an expired futures contract at any time before 2:00 p.m. on the first business day following termination of trading in the expired futures contract.

An EFRP which establishes a futures position for either the buyer or the seller in an expired futures contract shall not be permitted following the termination of trading of an expired futures contract.

FINDINGS:

Pursuant to an offer of settlement TAG Futures LLC (“TAG”) presented at a hearing on August 13, 2020, in which TAG neither admitted nor denied the rule violations upon which the penalty is based, a Panel of the NYMEX Business Conduct Committee (“Panel”) found that on June 21, 2019, TAG executed one non-bona fide EFRP transaction in the July 2019 Light Sweet Crude Oil (“JUL19 CL”) Future contract that consisted of the simultaneous exchange of futures positions without the exchange of a related cash position, thereby executing a non-bona fide EFP.

Further, TAG entered into a non-liquidating EFRP transaction following expiration of the JUL19 CL contract.

The Panel found that, as a result, TAG violated Exchange Rule 538.C. (EFRP – Related Position) and Exchange Rule 538.G. (EFRP - Termination of Trading).

PENALTY:

In accordance with the settlement offer, the Panel ordered TAG to pay a fine to the Exchange in the amount of $30,000.