R.J. O’Brien & Associates to pay $110,000 fine for alleged violations of ICE rules
Intercontinental Exchange (ICE) has published a notice of settlement of charges against R.J. O’Brien & Associates LLC (RJO).
On June 7, 2023, a subcommittee of the Exchange’s Business Conduct Committee (BCC) determined that RJO may have violated legacy Exchange Rule 2.22 (currently Rule 2.12) by misreporting open interest in various Henry LD1 Fixed Price Futures contracts between December 2020 and April 2021. The BCC additionally determined that RJO may have violated Exchange Rule 4.01(a) by failing to supervise its employees on accurate open interest reporting.
The relevant Exchange rules state:
- 2.22 (legacy) – Reporting Open Interest to Clearing Organization
Each Clearing Member shall report to the relevant Clearing Organization, on each Exchange Business Day, the open Positions it carries in each Commodity Contract (separately by Customer and proprietary account), including Positions carried for other Clearing Members, in accordance with the Clearing Organization Rules and procedures. The reporting of open Positions in Energy Contracts shall additionally be subject to the requirements of Rule 18.05. On each Exchange Business Day, each Clearing Member shall report to the Clearing Organization any adjustments to be made in the open Positions reported on the previous Business Day, in accordance with the Clearing Organization Rules and procedures. A Clearing Member which has customer or proprietary Positions carried for it by another Clearing Member or by a futures commission merchant which is not a Clearing Member, shall provide to the Clearing Organization such notice and other information as the Clearing Organization may require.
- 4.01(a) – Duty to Supervise
Every Person shall diligently supervise the Exchange-related activities of such Person’s employees and agents. For purposes of this Rule, the term “agent” includes any Exchange- related activities associated with automated trading systems that generate, submit and/or cancel messages without human intervention. Every Person shall also be responsible for the acts and omissions of such employees and agents.
In accordance with the terms of settlement, in which RJO neither admitted nor denied the alleged rule violations, RJO agreed to pay a monetary penalty of $110,000.