ICE Futures U.S. has published a notice of settlement of charges against Goldman Sachs International (GSI).

On June 29, 2022, a subcommittee of the Exchange’s Business Conduct Committee (BCC) determined that Goldman Sachs International may have violated Exchange Rule 4.04 in several instances between May 2020 and July 2020 by engaging in improper pre-hedging.

In each instance, GSI transacted a block trade against a customer after having received the customer order from GSI’s sales desk which had an existing agency (broker/customer) relationship with the customer. Prior to consummating each block trade opposite the customer, however, traders on GSI’s proprietary execution desk solicited and/or requested pricing for separate trades for the firm’s account on the block market and executed trades in the Central Limit Orderbook, which offset the risk of the customer order.

GSI was able to realize profits in the amount of $1,319,249.80 by engaging in this activity.

The BCC further found that GSI may have violated Exchange Rule 4.01(a) by failing to diligently supervise the activities of its employees with regard to the Exchange’s rules on pre-hedging.

In accordance with the terms of settlement, in which GSI neither admitted nor denied the alleged rule violations, GSI agreed to pay a monetary penalty of $125,000 and disgorge $1,319,249.80 in profits.