U.S. Futures Exchanges Disciplinary Actions Report - July 2017

NYMEX NYMEX 15-0305-BC Position Limits Violation of Rule 562 – Position Limit Violations On August 9, 2016, a Probable Cause Committee (“PCC”) panel charged a non-member entity with violating NYMEX Rule 562, based on allegations that on November 23, 2015, the non-member entity held a long position of 1,225 December 2015 Natural Gas Futures contracts, which was 22.5% above the standard monthly position limit that was in effect. On November 23, 2016, the Business Conduct Committee (“BCC”) entered an order finding that the non-member entity failed to answer the charge and thus was deemed to have...

Financial Transmission Rights Guidelines – Mexico

On July 28, 2017, the Mexican Ministry of Energy (Secretaria de Energia or SENER) published the final guidelines for the Financial Transmission Rights (“FTR”) Auctions (the “Guidelines”), which will govern the auction process for Mexico’s newly created FTR market. The final Guidelines or Manual de Subastas de Derechos Financieros de Transmisión are the end result of months of public commentary and several interim drafts. Below are a few key points to note: 1. The FTR auctions will be conducted in two phases. The FTR auctions will be conducted in two phases as described below: Phase One . In...

FERC Staff Issues New Guidelines on Cultural Resources

On July 31, 2017, the Federal Energy Regulatory Commission (“FERC”) staff issued new Guidelines for Reporting on Cultural Resources Investigations for Natural Gas Projects. The new guidelines include changes of potential interest and significance to developers (“project sponsors”). In addition to changes in the organization of reports and documents, the guidelines define more detailed expectations for project sponsors, particularly concerning engagement with tribes. It remains to be seen whether the changes lead to improved dialogue with tribes on cultural resources, or more divergence in...

CFTC Fines and Imposes Permanent Ban on Trader Accused of Spoofing

On July 26, 2017, the U.S. Commodity Futures Trading Commission (“CFTC”) issued an order approving a settlement resolving allegations that Simon Posen of New York violated the CFTC’s prohibition on spoofing by entering bids or offers with “the intent to cancel the bid or offer before execution.” [1] Posen’s transactions occurred in gold, silver, and copper futures contracts (on the Commodity Exchange, Inc.) and crude oil futures contracts (on the New York Mercantile Exchange). Mr. Posen was not, at the time, employed by any corporate entity. According to the order, Mr. Posen engaged in...

Dallas Court of Appeals Reverses Partnership Verdict: Preliminary Agreements Precluded Partnership

On Tuesday, July 18, 2017, the Dallas Court of Appeals reversed a $535 million judgment against Enterprise Products Partners, L.P. (Enterprise), finding that unfulfilled conditions precedent in Enterprise’s written agreements with Energy Transfer Partners, L.P. (ETP) precluded the formation of a partnership between the parties. The jury verdict had generated concerns in the business community that parties could unwittingly form a partnership and be subject to the attendant fiduciary duties. The court of appeals’ decision signals that the risk of an inadvertent partnership can be minimized...

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