NOTICE OF DISCIPLINARY ACTION

NON-MEMBER:           

CPT, LP

NYMEX RULE VIOLATIONS:             

Rule 432 (“General Offenses”) (in part)

It shall be an offense:

Q. to commit an act which is detrimental to the interest or welfare of the Exchange or to engage in any conduct which tends to impair the dignity or good name of the Exchange.

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

FINDINGS:                  

Pursuant to an offer of settlement in which CPT, LP (“CPT”), neither admitted nor denied the rule violations upon which the penalty is based, on October 19, 2021, a Panel of the New York Mercantile Exchange Business Conduct Committee (“Panel”) found that on September 15, 2019, an automated trading system (“ATS”) deployed by CPT hit a maximum drawdown limit, automatically triggering the use of a liquidation algorithm designed to reduce CPT’s positions. The liquidation algorithm, acting on latent data, repeatedly over bought and over sold, aggressively trading in multiple Crude Oil, NY Harbor ULSD, and RBOB Gasoline futures markets, resulting in price and volume swings in the subject markets. The Panel further found that CPT did not subject the liquidation algorithm to pre-trade risk, exposure, or position checks prior to the subject activity.

The Panel concluded that CPT thereby violated CME Rules 432.Q. and 432.W.

PENALTY:                  

In accordance with the settlement offer, the Panel ordered CPT to pay a fine of $55,000.

EFFECTIVE DATE:                         

October 21, 2021