NOTICE OF DISCIPLINARY ACTION

NON-MEMBER:

TULLETT PREBON (EUROPE) LTD.

NYMEX RULES:

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.

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. Unless otherwise agreed to by the principal counterparties to the block trade, the seller, or, in the case of a brokered transaction, the broker handling the block trade, must ensure that each block trade is reported to the Exchange within the time period and in the manner specified by the Exchange. 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.

RULE 536.E. NEGOTIATED TRADES (IN PART)

At the time of execution, every order received from a customer for execution pursuant to Rule 526…must be in the form of a written or electronic record and include any electronic timestamp reflecting the date and time such order was received and must identify the specific account(s) for which the order was placed. Such record shall also include an electronic timestamp reflecting the date and time such order was modified, returned, confirmed, or cancelled.

MARKET REGULATION ADVISORY NOTICE RA1814-5, SECTION 11
A broker negotiating a block trade on behalf of a customer may disclose the identity of the customer to potential counterparties, including the counterparty with which the block trade is consummated, only with the permission of the customer.

FINDINGS:

Pursuant to an offer of settlement that Tullett Prebon (Europe) Ltd. (“TP Europe”) presented at a hearing on December 10, 2020, in which TP Europe 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 April 2019 and October 2019, as well as August 2020, TP Europe executed numerous block trades for customers in various NYMEX Energy futures contracts that TP Europe 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 further found that, on multiple occasions during this timeframe, while negotiating a block trade, brokers employed by TP Europe disclosed non-public information to potential counterparties, specifically the identity of potential and actual counterparties. The Panel also found that, during this time frame, TP Europe failed to maintain certain required records, including trade communications, relating to these block trades, as well as failed to diligently supervise the execution of block trades by its employees to enable compliance with Exchange block trade reporting requirements.

The Panel concluded that TP Europe violated Exchange Rules 432.W. (General Offenses – Failure to Supervise), 526.F. (“Block Trades”), 536.E. (“Negotiated Trades”), and MRAN RA1814-5 (“Use of Nonpublic Information Regarding Block Trades”).

PENALTY:

In accordance with the settlement offer, the Panel ordered TP Europe to pay a fine to the Exchange in the amount of $72,500.