NOTICE OF DISCIPLINARY ACTION

FILE NO.:

NYMEX 12-8831-BC

NON-MEMBER:

BRIGHTOIL PETROLEUM INTERNATIONAL PTE. LTD

EXCHANGE RULES:

Rule 432. General Offenses

It shall be an offense:

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

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 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.
 

Rule 539. Prearranged, Pre-Negotiated and Noncompetitive Trades Prohibited

539.A. General Prohibition

No person shall prearrange or pre-negotiate any purchase or sale or noncompetitively execute any transaction, except in accordance with Sections B. and C. below.

539.C. Pre-Execution Communications Regarding Globex Trades

Parties may engage in pre-execution communications with regard to transactions executed on the Globex platform where one party (the first party) wishes to be assured that a contra party (the second party) will take the opposite side of the order under the following circumstances:

3. In the case of futures orders, the first party’s order must be entered into the Globex platform first and the second party’s order may not be entered into the Globex platform until a period of 5 seconds has elapsed from the time of entry of the first order.

576. Identification of Globex Terminal Operators

Each Globex terminal operator shall be identified to the Exchange, in the manner prescribed by the Exchange, and shall be subject to Exchange rules. If user IDs are required to be registered with the Exchange, it is the duty of the clearing member to ensure that registration is current and accurate at all times. Each individual must use a unique user ID to access Globex. In no event may a person enter an order or permit the entry of an order by an individual using a user ID other than the individual’s own unique user ID.

FINDINGS:

Pursuant to an offer of settlement that Brightoil Petroleum International Pte. Ltd (“Brightoil”) presented at a hearing on June 26, 2013, in which Brightoil neither admitted nor denied the factual allegations or rule violations upon which the penalty is based, a Panel of the NYMEX Business Conduct Committee (“Panel”) found that Brightoil voluntarily submitted itself and its affiliate, Convergence Energy Investments Ltd (“Convergence”) to the jurisdiction of the BCC for purposes of settling this matter and that on January 10, 2012, an authorized representative of Brightoil and an authorized representative of Convergence prearranged trades totaling 299 lots of March 2012 Crude Oil futures/RBOB futures crack spreads and 200 lots of April 2012 RBOB futures contracts between Brightoil and Convergence proprietary accounts with common beneficial ownership. The trades were executed on Globex and the buy and sell orders were entered less than five seconds of each other. The Panel further found that on March 22, 2012, an authorized representative of Brightoil and an authorized representative of Convergence prearranged trades totaling 739 lots of June 2012 Heating Oil futures contracts and 749 lots of June 2012 RBOB futures contracts between Brightoil and Convergence proprietary accounts with common beneficial ownership. The trades were executed on Globex and the buy and sell orders were entered less than five seconds of each other. The Panel found that Brightoil failed to ensure that the TAG 50 registration for its traders and Convergence’s traders accessing the Globex system (“Globex”) was current, accurate and unique to each individual using Globex in that multiple traders entered orders using a user ID registered to a unique user and that Brightoil failed to diligently supervise its traders in a manner sufficient to ensure that they were familiar with Exchange rules.

The Panel found that as a result of the foregoing, Brightoil violated Exchange Rules 432.W., 534, 539.A. and C and 576.

PENALTY:

In accordance with the settlement offer, the Panel ordered Brightoil to pay a fine to the Exchange in the amount of $50,000. 

 

EFFECTIVE DATE:

June 28, 2013