R.J. O’Brien (MENA) Capital Limited to pay $450,000 fine to settle ICE charges
ICE Futures U.S. announces settlement of charges against R.J. O’Brien (MENA) Capital Limited.
On July 20, 2022, a subcommittee of the Exchange’s Business Conduct Committee (BCC) determined that R.J. O’Brien (MENA) Capital Limited may have, in multiple instances between October 2020 and April 2021, violated Exchange Rule 4.02(e) by withholding customer orders and 4.02(h) and 4.04 by engaging in improper pre-hedging.
In each instance, the company, while acting in a broker/agency capacity, received a block trade order from a customer and then sought orders from other persons that were directionally opposite the original customer’s position. Instead of matching the orders, the company withheld the orders for itself and served as the counterparty to its customer and the other person in each of the block trades.
By engaging in this activity, the company pre-hedged the impending block trades it would execute with the customer and the other persons and collected discretionary mark-ups in each block trade that realized profits in the amount of $211,750.
Next, the BCC found that R.J. O’Brien (MENA) Capital Limited may have violated the following Exchange Rules in multiple instances: 4.07(a)(ii)(A) by failing to meet the Exchange’s private negotiation requirement for block trades; 4.07(c) by misreporting the execution time and submitting block trades beyond the 15-minute reporting window; and 6.08(b)(i) by failing to comply with order ticket requirements.
Lastly, the BCC found that the company may have violated Exchange Rule 4.01(b) by failing to establish, administer and enforce supervisory systems, policies and procedures, which are reasonably designed to achieve compliance with the Exchange’s rules on pre-hedging.
In accordance with the terms of settlement, in which R.J. O’Brien (MENA) Capital Limited neither admitted nor denied the alleged rule violations, the company agreed to pay a monetary penalty of $450,000 and disgorge $211,750 in profits.