International derivatives marketplace CME Group has posted a notice of disciplinary action against Schonfeld Strategic Management LLC.
Pursuant to an offer of settlement in which Schonfeld 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, Schonfeld 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 Schonfeld and its counterparty. Schonfeld’s clearing firm would not permit it to make or take delivery of the physical commodity underlying the EFRP, and the transactions were arranged to offset this component.
The Panel found that as a result of the foregoing, Schonfeld violated NYMEX Rule 538.C (Related Position).
In accordance with the settlement offer, the Panel ordered Schonfeld to pay a fine to the Exchange in the amount of $20,000.
