The CME Group has announced a disciplinary action against Schonfeld Strategic Management LLC, as per a notice recently posted by the international derivatives marketplace.
Following a settlement offer in which Schonfeld did not admit nor deny the alleged Rule violations or the factual findings that led to the penalty, a panel from the NYMEX Business Conduct Committee has determined that Schonfeld engaged in a non-bona fide Exchange for Related Position (EFRP) transaction on October 12, 2022, involving the January 2023 Platinum Futures contract.
The Panel concluded that the EFRP transaction was non-bona fide, as it was contingent upon a simultaneous related position transaction and executed in a way that aimed to circumvent any significant market risk tied to the EFRP’s related position components.
More precisely, the investigation revealed that the EFRP transaction was negotiated in tandem with a cash-market options straddle between Schonfeld and its counterparty. Furthermore, Schonfeld’s clearing firm prohibited it from making or taking delivery of the physical commodity underlying the EFRP, leading to the arrangement of transactions to offset this component.
Consequently, the Panel found that Schonfeld violated NYMEX Rule 538.C concerning Related Positions.
As part of the settlement, Schonfeld has been ordered to pay a fine of $20,000 to the Exchange.
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