Eldorado Trading Group LLC agreed to pay a fine of US $125,000 to resolve a disciplinary action brought by the New York Mercantile Exchange alleging that, on multiple occasions in December 2016 and January 2017, the firm knowingly placed Trading at Settlement orders in multiple products with incomplete and wrong information in the “sender location” field (Tag 142) to gain queue priority when the TAS market opened, then later modified the problematic data to correct it. NYMEX claimed that this practice continued even after it warned the company to stop the allegedly problematic conduct.
NYMEX also charged Eldorado with failing to supervise its traders, and for not preventing its traders from using Tag 50 identifications that were registered to different traders. (Under CME Group rules, an individual may only use his/her own unique Tag 50 ID.)
In January 2017, NYMEX summarily denied the firm authority to place trading at settlement orders on any CME Group markets; this summary denial was lifted shortly afterwards. (Click here for background on Eldorado’s summary access denial and the lifting of its denial order in the article “CME Group Member’s Summary Suspension Ended” in the February 12, 2017 edition of Bridging the Week.)
Separately, Aspire Commodities LP and Merrill Lynch Commodities Inc. settled NYMEX disciplinary actions alleging violations of the exchange’s position limits by agreeing to pay fines of US $50,000 and $25,000, respectively. Merrill Lynch was also required to disgorge profits of US $11,560.20.
Sean Cooper agreed to pay a fine of US $20,000 to ICE Futures U.S. as a result of his automated trading system malfunction on multiple instances between January 1 and May 31, 2016. The exchange claimed that, as a result of the malfunction, Mr. Cooper’s ATS mistakenly entered and cancelled buy and sell orders at various price levels that moved away from the prevailing best bid and offer on an ongoing basis in financial natural gas markets.
Compliance Weeds: TAS transactions permit trades to be executed at the current day’s settlement price or in designated price increments above or below such price. Related to TAS transactions are Trading at Marker and Basis Trading on Index Close trades. TAM trades are similar to TAS trades and permit trading at a differential to a not-yet-known marker price. TAS and TAM orders may be placed on Globex at limited times only and subject to other conditions (e.g., TAS and TAM transactions may not be used to disrupt orderly trading). Also, traders cannot manipulate or attempt to manipulate a settlement or market price to benefit a pending TAS or TAM order. A BTIC order may be placed at a differential to an eligible futures contract’s current day’s not-yet-known underlying cash index closing price. (Click here for background regarding TAS, TAM and BTIC orders on the CME Group, and here for information regarding TAS trades on IFUS.)