The international derivatives market CME Group has published a notice of disciplinary measures against Schonfeld Strategic Management LLC.
Pursuant to a settlement offer in which Schonfeld neither admitted nor denied the Rule violations or the factual findings underlying the penalty, on June 4, 2024, a panel of the NYMEX Business Conduct Committee found that on October 12, 2022, Schonfeld performed a non-bona fide EFRP trade in 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 with and in conjunction with cash options between Schonfeld and its counterparty. Schonfeld’s clearing firm would not allow it to realize or receive the physical asset underlying the EFRP and the trades were arranged to compensate for this.
The panel found that as a result of the above, Schonfeld violated NYMEX Rule 538.C (Related Position).
According to the settlement offer, the commission ordered Schonfeld to pay a fine of $20,000 to the exchange.