ICE Futures U.S. fined EOX Holdings LLC US $200,000 for various infractions related to its handling of block trades from July 2013 through February 2014. Among other violations, IFUS alleged that EOX (1) on multiple occasions submitted block trades to the exchange that were below minimum quantity thresholds and reported trades outside required time periods (i.e., 15 minutes for energy futures and options); (2) on multiple occasions did not comply with recordkeeping requirements for customer orders; and (3) failed to supervise certain employees. EOX consented to the fine without admitting or denying any of the rule violations. On March 30,2015, CME Group fined EOX US $40,000 for executing eight EFRP transactions between July and November 2011 and incorrectly reporting them as block trades. The firm also allegedly failed to maintain CME Group required records to support such transactions. (Click here for details in "Problematic EFRPs and Wash Trades Sanctioned by CME Group and ICE Futures U.S." in the April 5, 2015 edition of Bridging the Week.)

Compliance Weeds: Block trades on ICE Futures U.S. are strictly proscribed (click here to access IFUS Rule 4.07) as clarified, most recently, by an April 24, 2014 FAQ (click here to access). Among other requirements, block trades are subject to minimum thresholds and may only be entered into by so-called eligible contract participants and certain commodity trading advisors; must be executed at prices that are fair and reasonable; are subject to certain recordkeeping requirements; and must be reported within certain time frames. Block trades may only be executed between affiliated entities that have a separate and independent reason to enter into a trade and that are decided by separate and independent decision makers. Parties may not disclose the terms of a block trade to non-involved persons prior to a trade being publicly disclosed. IFUS has a separate prohibition against parties engaging in pre-execution discussions, and taking advantage of such information by trading. (Click here to access IFUS Pre-Execution Communication FAQ, question 3; clickhere to access “ICE Futures Fines Bank, FCM and Employee US $490,000 for Block Trade Mishandling” in the March 3, 2014 edition of Bridging the Week.)