CME fines BNP Paribas for alleged violation of NYMEX rules

International derivatives marketplace CME Group today issued a notice of disciplinary action against BNP Paribas S.A.

Pursuant to an offer of settlement in which BNP Paribas S.A. neither admitted nor denied the Rule violations or factual findings upon which the penalty is based, on June 4, 2024 a Panel of the NYMEX Business Conduct Committee found that on October 12, 2022, BNP Paribas executed a non-bona fide EFRP transaction in the January 2023 Platinum Futures contract.

The Panel found that the EFRP transaction was non-bona fide as it was contingent upon a simultaneous related position transaction and executed in a manner designed to avoid any material market risk associated with the EFRP’s related position components. Specifically, the Panel found that the EFRP transaction was negotiated simultaneously and in conjunction with a cash-market options straddle between BNP Paribas and its counterparty.

Because BNP Paribas’s counterparty’s clearing firm would not permit the counterparty to make or take delivery of the physical commodity underlying the EFRP, the transactions were arranged to offset this component.

The Panel found that as a result of the foregoing, BNP Paribas violated NYMEX Rule 538.C (Related Position).

In accordance with the settlement offer, the Panel ordered BNP Paribas to pay a $20,000 fine.