• NOTICE OF DISCIPLINARY ACTION

      • #
      • COMEX 16-0569-BC-1
      • Effective Date
      • 10 August 2018
    • NON-MEMBER:

      Abans Middle East DMCC

      EXCHANGE RULES:

      EXCHANGE 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.

      EXCHANGE RULE 534 WASH TRADES PROHIBITED

      No person shall place 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 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.

      EXCHANGE RULE 539 PRE-ARRANGED, PRE-NEGOTIATED, AND NON-COMPETITIVE TRADES PROHIBITED

      No person shall prearrange or pre-negotiate any purchase or sale or non-competitively execute any transaction.

      EXCHANGE RULE 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 Abans Middle East DMCC (“AMED”) presented at a hearing on August 8, 2018, in which AMED neither admitted nor denied the findings or rule violations upon which the penalty is based, a Panel of the COMEX Business Conduct Committee (“Panel”) found that between February 11, 2016, and July 14, 2016, AMED failed to diligently supervise its traders, in violation of Exchange Rule 432.W. (General Offense – Failure to Supervise). Specifically, AMED did not provide its traders with adequate training in Exchange rules nor did it monitor trading activity to ensure that it was in compliance with Exchange rules. AMED’s failure to diligently supervise its traders resulted in the traders executing a series of wash and cross trades in violation of Exchange Rule 534 (Wash Trades Prohibited) and Exchange Rule 539 (Pre-Arranged, Pre-Negotiated, and Non-Competitive Trades Prohibited).

      The Panel further found that AMED failed to sufficiently monitor the use of its traders unique TAG50 IDs.

      The Panel concluded that AMED violated Exchange Rules 432.W, 534, 539, and 576.

      PENALTY:

      In accordance with the settlement offer, the Panel ordered AMED to pay a fine to the Exchange in the amount of $70,000.