NOTICE OF DISCIPLINARY ACTION

FILE NO.:

NYMEX 12-8831-BC

NON-MEMBER:

HENRY TAM

EXCHANGE RULES:

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.

  

FINDINGS:

Pursuant to an offer of settlement that Henry Tam (“Tam”) presented at a hearing on June 26, 2013, in which Tam 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 Tam voluntarily submitted himself to the jurisdiction of the BCC for purposes of settling this matter and that on January 10, 2012, Tam was an authorized representative of Convergence Energy Investments Ltd (“Convergence”), an affiliate of Brightoil Petroleum International Pte. Ltd (“Brightoil”) and along with an authorized representative of Brightoil, 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 also found that on March 22, 2012, Tam was an authorized representative of Convergence and along with an authorized representative of Brightoil, 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 as a result of the foregoing, Tam violated Exchange Rules 534 and 539.A. and C.

 

PENALTY:

In accordance with the settlement offer, the Panel ordered Tam to pay a fine to the Exchange in the amount of $15,000. The Panel also suspended Tam from all direct or indirect access to any trading floor or electronic trading or clearing platform owned or operated by CME Group Inc., including Globex, for a period of 5 business days. The suspension will run from June 28, 2013 to July 5, 2013, inclusive.

 

EFFECTIVE DATE:

June 28, 2013