Morgan Stanley to Pay $50K Fee to NYMEX
Morgan Stanley will pay a $50,000 fine to the New York Mercantile Exchange, which alleged that the bank overstated open interest in oil futures markets last November, NYMEX parent company CME said in a statement on Friday.
Morgan Stanley, which operates a large commodity trading operation, was found to have overstated open interest in the December, 2001 U.S. crude future contract during trading on November 17, 2011, allegedly violating reporting rules to the exchange, CME said.
The fine was part of a settlement agreement in which the bank admitted no wrongdoing, CME said. Morgan Stanley spokeswoman Mary Claire Delaney declined comment.
NYMEX's Business Conduct Committee found that on November 17, Morgan Stanley overstated open interest in December 2011 crude futures by 13,267 contracts, or 51.6 percent, one day prior to the expiration of the futures contract.
NYMEX said the trading violated exchange rule 854, which governs reporting and offsetting trade obligations when a NYMEX clearing member holds concurrent long and short positions.
CME did not say why the bank overstated its open interest in crude.
Morgan Stanley's fine comes a week after NYMEX fined competing investment bank JP Morgan $30,000 for carrying out so-called 'wash trades' on several occasions in 2011 in crude oil and gasoline futures contracts.
In those instances, in an effort to manage position limits, "traders employed by JPM executed block trades between separate legal entities with the same beneficial owner in WTI or Gasoline during the last three days prior to expiration of the particular contract," CME said last week.
In a settlement, JP Morgan agreed to pay the fine but admitted no wrongdoing.