International derivatives marketplace CME Group has posted a notice of disciplinary action against BNP Paribas Securities Corp.
Pursuant to an offer of settlement in which BNP Paribas Securities Corp (BNPPSC) neither admitted nor denied the rule violations or factual findings upon which the penalty is based, a Panel of the Chicago Board of Trade (CBOT) Business Conduct Committee found that BNPPSC made excess performance bond disbursements when sufficient equity over initial performance bond requirements was not available.
The Panel concluded that BNPPSC thereby violated CBOT Rule 930.F.
In addition, BNPPSC accepted letters of credit as performance bond from customers that were not unconditional or payable on demand. As a result, the performance bond status of the impacted customer accounts was improperly computed and reflected in the firm’s records and reports.
The Panel concluded that BNPPSC thereby violated CBOT Rules 930.C., 970.A.4., 971.A., and 980.B.3.
Finally, BNPPSC contractually agreed to a period of time during which the firm’s full discretion to determine when and under what circumstances positions could be liquidated was restricted.
The Panel concluded that BNPPSC thereby violated CBOT Rule 930.K.
The Panel also found that BNPPSC has since obtained new letters of credit in compliance with Exchange rules to replace the cited letters of credit. In addition, BNPPSC has since amended the relevant customer agreement language, and the cited customer agreements are now in compliance with Exchange rules.
In accordance with the settlement offer, the Panel ordered BNPPSC to pay a $200,000 fine.
