Intercontinental Exchange (ICE) has published a disciplinary notice against Goldman Sachs & Co. LLC.
On February 21, 2024, a subcommittee of the Exchange’s Business Conduct Committee determined that on July 29, 2022, Goldman Sachs & Co. LLC (GSCO) may have violated Exchange Rule 4.02(c) when an employee received buy and sell orders, simultaneously, to be executed in the same MSCI Emerging Index Futures contract, and failed to inquire about the ownership of the orders to confirm those did not belong to the same Principal.
Upon entry of the orders, these matched opposite one another resulting in a wash trade.
In accordance with the terms of settlement, in which GSCO neither admitted nor denied the alleged rule violations, GSCO agreed to pay a monetary penalty of $10,000.
The relevant rules state:
4.02(c) – Trade Practice Violations
In connection with the placement of any order or execution of any Transaction, it shall be a violation of the Rules for any Person to execute a wash sale, accommodation Trade, fictitious sale or prearranged Trade.
Wash Trade FAQ #3 – Can a market participant who receives simultaneous buy and sell orders for the same Principal accept them? Is there a duty to ask if the orders are for different Principals?
Upon the receipt of simultaneous buy and sell orders, a market participant should determine if such orders are for the same Principal. If the market participant learns that the orders are for an omnibus account, the market participant, then, should determine if the orders are for different Principals whose accounts are within the omnibus account. If the orders are not for different Principals, they may not be accepted. If such orders trade opposite one another and are ultimately for the same Principal, any of the market participants involved that knew or should have known that the activity would result in a wash trade(s) may be in violation of Exchange Rule 4.02(c).
