ICE Fines Marex North America $25,000 for Trade Practice Violation

Fazzaco learned that ICE Futures U.S. issued a disciplinary notice that ICE reaches settlement with Marex North America LLC with a penalty of $25,000.

A subcommittee of the Exchange’s Business Conduct Committee (“BCC”) found that on June 5, 2019, Marex North America LLC (“Marex”) may have violated Rule 4.02(l)(1)(D) when its brokers entered and executed large stop-limit orders in the Coffee C futures market on behalf of customers with reckless disregard for the adverse impact of such orders.

Specifically, Marex placed these large stop-limit orders without adequate consideration of the depth in the orderbook, which caused disruptive price movements in the market.

For example, in one instance, Marex entered multiple large stop-limit orders that totaled 4,900 lots when the typical orderbook depth in this market only reflected a small fraction of that volume available. Upon election of these orders, some of them partly traded moving the market multiple prices within the same millisecond while the remaining unfilled volume rested in the market causing a significant orderbook imbalance that may have aided in the continued rapid price movement of the market.

Here are details of the exchange rules:

Rule 4.02(l)(1)(D) - Trade Practice Violations In connection with the placement of any order or execution of any Transaction, it shall be a violation of the Rules for any Person to engage in any other manipulative or disruptive trading practices prohibited by the Act or by the Commission pursuant to Commission regulation, including, but not limited to entering an order or market message, or cause an order or market message to be entered, with reckless disregard for the adverse impact of the order or market message. 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

Fazzaco earlier reported ICE announced record open interest​ of approximately 84.5 million contracts on May 21, 2021, surpassing the previous record set on March 12, 2020.