NOTICE OF DISCIPLINARY ACTION

NON-MEMBER:

Hartree Partners Power & Gas Company (UK) Limited

NYMEX RULE VIOLATION:

Rule 534 Wash Trades Prohibited

No person shall place or accept buy and sell orders in the same product and expiration month, and, for a put or call option, the same strike price, where the person knows or reasonably should know that the purpose of the orders is to avoid taking a bona fide market position exposed to market risk (transactions commonly known or referred to as wash trades or wash sales). Buy and sell orders for different accounts with common beneficial ownership that are entered with the intent to negate market risk or price competition shall also be deemed to violate the prohibition on wash trades. Additionally, no person shall knowingly execute or accommodate the execution of such orders by direct or indirect means.

CME Group Market Regulation Advisory Notice RA2008-5

Q19: What is an indirect wash trade?

A19: One or more purchases (sales) opposite a counterparty followed by a sale (purchase) at the same or similar price opposite the same or different counterparties may be deemed an “indirect wash trade” in violation of Rule 534 if the orders are entered with the intent to negate or strictly limit market risk. Such intent exists if the party knew or should have known that the orders would negate or strictly limit market risk.

FINDINGS:

Pursuant to an offer of settlement in which Hartree Partners Power & Gas Company (UK) Limited (“Hartree”) neither admitted nor denied the rule violation or factual findings upon which the penalty is based, on May 15, 2024, a Panel of the NYMEX Business Conduct Committee (“Panel”) found that on April 1, 2022, Hartree simultaneously negotiated the purchase and sale of December 2022 CBL Nature-Based Global Emissions Offset Futures in separate block trades opposite a single counterparty. Hartree understood that the purpose of the block trades was to accommodate the counterparty’s transfer of positions between related accounts. As such, Hartree knew or reasonably should have known that the purpose of the trades was to negate or strictly limit market risk.

The Panel thereby concluded that Hartree violated NYMEX Rule 534.

PENALTY:

In accordance with the settlement offer, the Panel ordered Hartree to pay a fine of $20,000 and disgorge profits in the amount of $3,050.