the concept of .A pair of interesting disciplinary actions were posted in the same inquiry yesterday by the CME. A firm was over the spot month limits in soybeans "at more than one clearing member firm. " The position was held over night for multiple days. The overage was in "two different reportable accounts controlled by the customer".
The broker, Goldman Sachs, was fined for "failed to liquidate its pro-rata share of the customer’s position in excess of limits or otherwise ensure that its customer was in compliance with the limits within a reasonable period of time." Goldman had been notified of the overage by the Market Regulation Department and failed to respond. Goldman was fined $15K and the notice is here
Separately but in a linked notice, the customer was found to be 15 contracts (0.19% of the total position) over the position limit in the associated accounts. The notice does not indicate when the customer received notice of the overage. The CME imposed at $25K fine and a $9,720 disgorgement of profits. The notice is here.
During compliance assessments by DCM, we always look to discuss the concept of position aggregation under US exchange rules. This helps to establish the needs for position limits surveillance. There is also a linked concept of allowed disaggregation - an option for establishing with the exchange a right to not have separated accounts linked for position limits. This requires analysis and a filing with the exchange but, as shown here, it can reduce potential compliance exposure as well as reducing position surveillance complexity. It is good practice to examine what accounts are owned by your company, affiliates, and subsidiaries and to consider aggregation requirements and disaggregation options.