International derivatives marketplace CME Group has posted a notice of disciplinary action against StoneX Financial Inc.
Pursuant to an offer of settlement in which StoneX Financial Inc., a wholly owned subsidiary of StoneX Group, neither admitted nor denied the rule violations or factual findings upon which the penalty is based, a Panel of the New York Mercantile Exchange Business Conduct Committee found that on several occasions between April 2022, and August 2022, as well as in April 2024, StoneX Financial facilitated pre-hedging activity by a wholly owned subsidiary of StoneX Group, as well as failed to make representations and disclosures in the negotiation of the block trades that it did not intend to act as an intermediary.
Specifically, the Panel found that once a StoneX Financial employee received the solicitation from the counterparty to participate in a block trade in various Crude Oil, NY Harbor ULSD, RBOB, and Platinum futures contracts, but prior to the StoneX Group Subsidiary’s consummating the block trade with the counterparty, the StoneX Group Subsidiary executed Globex trades in the same product on the opposite side of the market.
By facilitating the hedge transaction by the StoneX Group Subsidiary, StoneX Financial realized a profit garnered from pre-hedging activity executed on Globex through payment of referral fees on the subsequent execution opposite the counterparty.
The Panel further found that StoneX Financial failed to diligently supervise its employee who engaged in the activity at issue by not providing sufficient compliance training and/or educational materials regarding NYMEX rules, and failed to diligently supervise his trading, to ensure compliance with NYMEX rules regarding block trades.
The Panel concluded that StoneX Financial thereby violated NYMEX Rules 432.W. And 526.
In accordance with the settlement offer, the Panel ordered StoneX Financial to pay a fine in the amount of $125,000 and to disgorge profits in the amount of $449,910.
The effective date of the disciplinary notice is April 21, 2025.
