International derivatives market The CME Group today issued a notice of disciplinary measures against BNP Paribas SA
Pursuant to a settlement offer in which BNP Paribas SA neither admitted nor denied the violations of the Regulation or the factual findings on 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 trade on the January 2023 Platinum Futures contract.
The team found that the EFRP transaction was not bona fide as it was dependent on a concurrent related position transaction and was executed in a manner designed to avoid any significant market risk associated with the elements of the related EFRP position. Specifically, the Panel found that the EFRP transaction was traded concurrently and in conjunction with cash options between BNP Paribas and its counterparty.
Because BNP Paribas’ counterparty clearing firm would not allow the counterparty to realize or receive the physical asset underlying the EFRP, trades were arranged to offset this.
The Panel found that as a result of the above, BNP Paribas violated NYMEX Rule 538.C (Related Position).
Under the settlement offer, the commission ordered BNP Paribas to pay a $20,000 fine.