• NOTICE OF DISCIPLINARY ACTION

      • #
      • COMEX 20-1333-BC
      • Effective Date
      • 19 November 2021
    • NON-MEMBER:

      GFI SECURITIES LLC

      COMEX 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.

      CME GROUP MARKET REGULATION ADVISORY NOTICE RA2002-5

      7. BLOCK TRADE SUBMISSION

      Please note that the execution time of a block trade is the time that the trade is consummated, which is the time that the parties agree to the trade in principle. In that regard, spread block trades are deemed consummated at the time the parties agree to the differential or combination price, not the time the leg prices are determined. Market participants must accurately report the execution time of the block trade. The reporting of inaccurate execution times may result in disciplinary action.

      FINDINGS:

      Pursuant to an offer of settlement that GFI Securities LLC presented at a hearing on November 17, 2021, in which GFI neither admitted nor denied the rule violations upon which the penalty is based, a Panel of the COMEX Business Conduct Committee (“Panel”) found that between January 2020, and April 2020, GFI executed numerous block trades for customers in various COMEX Gold futures contracts that GFI 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 also found that during this time frame GFI failed to diligently supervise the execution of block trades by its employees to make certain that brokers complied with Exchange block trade reporting requirements.

      The Panel concluded that GFI violated Exchange Rules 432.W. (General Offenses – Failure to Supervise), 526 (“Block Trades”), 526.F. (“Block Trades”) and Market Regulation Advisory Notice (“MRAN”) RA2002-5 (“Block Trade Submission”).

      PENALTY:

      In accordance with the settlement offer, the Panel ordered GFI to pay a fine to the Exchange in the amount of $75,000.