Abengoa Bioenergy Operations, LLC
CBOT RULE VIOLATION:
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 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.
538.A. Nature of an EFRP (LEGACY)
An EFRP consists of two discrete but related simultaneous transactions. One party to the EFRP must be the buyer of (or the holder of the long market exposure associated with) the related position and the seller of the corresponding Exchange contract. The other party to the EFRP must be the seller of (or the holder of the short market exposure associated with) the related position and the buyer of the corresponding Exchange contract.
538.H. Documentation (LEGACY)
Parties to any EFRP transaction must maintain all documents relevant to the Exchange contract and the cash, OTC swap, OTC option, or other OTC derivative, including all documents customarily generated in accordance with relevant market practices and any documents reflecting payment and transfer of title. Any such documents must be provided to the Exchange upon request, and it shall be the responsibility of the carrying clearing member firm to provide such requested documentation on a timely basis.
Pursuant to an offer of settlement in which Abengoa Bioenergy Operations, LLC (“Abengoa”) neither admitted nor denied the rule violation upon which the penalty is based, on December 17, 2015, a Panel of the Chicago Board of Trade (“CBOT”) Business Conduct Committee (“BCC” or “Panel”) found that Abengoa was subject to the BCC’s jurisdiction pursuant to Rules 402 and 418. The Panel further found that on August 5, 2013, August 8, 2013, and November 25, 2013, Abengoa improperly entered into Exchange for Physical (“EFP”) transactions in the Corn futures market. Specifically, Abengoa entered into EFP transactions where it maintained ownership and control of the accounts, through different subsidiaries, on both sides of the transactions. The EFPs were erroneously executed to offset positions between the two Abengoa subsidiary accounts. The Panel found that Abengoa thereby violated CBOT Rule 534.
Further, on November 25, 2013, Abengoa entered into an EFP transaction that consisted of a simultaneous exchange of a future position without an exchange of a related cash position. Thus, the transaction was not bona fide. The Panel found that Abengoa thereby violated CBOT Legacy Rule 538.A.
Lastly, on August 5, 2013, August 8, 2013, and November 25, 2013, Abengoa entered into EFP transactions that did not contain sufficient documentation of the corresponding cash positions. The Panel found that Abengoa thereby violated CBOT Legacy Rule 538.H.
In accordance with the settlement offer, the Panel ordered Abengoa to pay a fine in the amount of $35,000.
December 21, 2015