CME Group Inc., which owns the New York Mercantile Exchange (Nymex), has fined Houston-based Whiteside Energy LP $225,000 after one of its traders left an automatic trade execution system (ATES) operating unattended, causing disruption in the natural gas futures market.
The ATES was not shut down and continued to operate unattended in the July 2011 natural gas futures contract (NGN1) between 1:30 p.m. CDT on June 8 and 7:30 a.m. CDT on June 9, 2011. “During a period of approximately two minutes of the total time the ATES was running unattended, the ATES entered buy orders at progressively higher prices and sell orders at progressively lower prices,” CME Group said.
A panel of the Nymex business conduct committee “found that the unintended trading of the unattended ATES contributed to the disruptive price movements in NGN1,” the exchange said.
“In determining the sanction to be assessed against Whiteside, the panel considered that Whiteside lost more than $400,000 as a result of the trading that occurred while the ATES ran unattended…and that it has since adopted additional policies and procedures to ensure that its automatic trade execution systems will not operate without appropriate monitoring.”
The trader who allegedly left the ATES unattended, Steven Vu, was fined $25,000. Neither Vu nor Whiteside Energy have admitted nor denied the findings of the Nymex business conduct committee.
“Vu had worked on developing the ATES for Whiteside; the ATES was tested for over a year prior to its deployment in April 2011. Vu was responsible for turning the ATES on and off, for setting the ATES parameters and for monitoring the ATES,” CME Group said.
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