The international derivatives marketplace has recently taken disciplinary action against an individual for engaging in disruptive trading practices. This action stems from an investigation by the NYMEX Business Conduct Committee, which found that the trader entered orders with the intent to mislead other market participants on two separate occasions in 2023.
Specifically, on April 25 and May 3, the trader entered non-genuine orders in the Henry Hub Natural Gas Financial Calendar Spread Options market. The intent was to cancel these orders before they could be executed, thereby creating a false impression of market activity. As negotiations occurred for a block trade through a broker, the trader simultaneously placed improved price orders on the trading platform on Globex. This strategy was intended to secure a better price for the block trade by manipulating the trading environment.
As the counterparty to the block trade adjusted its offer closer to the trader’s previously submitted price on Globex, the trader proceeded to execute the deal at this more advantageous price. After finalizing the block trade, the trader canceled the orders that had been resting on Globex.
The business conduct panel found that this manipulation resulted in a significant financial loss for the counterparty involved, amounting to $40,000. Consequently, the trader was determined to have violated specific NYMEX rules concerning market integrity and fair trading practices.
In terms of penalties, the trader was subjected to a fine of $60,000, a restitution payment equaling the incurred losses of $40,000, and a 20-business-day suspension from any trading floor owned or controlled by the organization. The suspension commenced on January 24, 2025, and will continue until February 21, 2025.
Such actions emphasize the marketplace’s commitment to upholding ethical trading practices and taking measures against those who attempt to manipulate market dynamics for personal gain. These penalties serve not only as a consequence for the individual involved but also as a warning to all market participants regarding the importance of compliance with established trading rules.