NOTICE OF DISCIPLINARY ACTION

MEMBER:

OIL BROKERAGE, LTD.

EXCHANGE RULE:

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

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 an 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.

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.

CME GROUP MARKET REGULATION ADVISORY NOTICE RA1806-5:

Block Trade Submission Requirements to CME Clearing

Please note that the execution time of a block trade is the time that the parties agree to the trade. 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 in which Oil Brokerage, Ltd. (“OB”) neither admitted nor denied the findings, conclusions or any rule violations upon which the penalty is based, on November 17, 2021, a Panel of the NYMEX Business Conduct Committee (“Panel”) found that during the time period of March, April, June and October 2020, OB failed to report numerous block trades in various NYMEX energy products to the Exchange within the required time period following execution, and also submitted block trades to the Exchange with misreported execution times.

In addition, OB submitted numerous block trades in NYMEX energy products utilizing a flawed process that was contrary to the manner specified by the Exchange. Specifically, OB executed the block trades in principle by having the counterparties agree to all of the details of a block trade except for the price, which was to be a specially-calculated market price at 4:30 pm local time, and reported the block trade later in the day once the price was determined. OB did not facilitate further block trade negotiations once the price was known to ascertain whether the counterparties were still willing to enter into the block trades at the determined price, and therefore failed to correctly execute, record and report the block trades at issue. Finally, the Panel found that OB failed to properly advise and train its employees as to relevant Exchange Rules and Market Regulation Advisory Notices (“MRANs”) in a manner sufficient to ensure compliance with the same.

The Panel found that as a result of the foregoing, OB violated NYMEX Rules 526 (“Block Trades”), 536.E (Negotiated Trades) and 432.W. (“General Offenses – Failure to Supervise”).

PENALTY:

In accordance with the settlement offer, the Panel ordered OB to pay a fine to the Exchange in the amount of $80,000.