ICE slaps BNP, ABN AMRO with rare fines

* Failure to close out expiring positions “appropriately”

* ICE says introducing fixed position limits for gas oil

By David Sheppard and Emma Farge

NEW YORK/LONDON, April 8 (Reuters) – The
InterContinentalExchange (ICE.N: Quote, Profile, Research) fined ABN AMRO and BNP Paribas
(BNPP.PA: Quote, Profile, Research) on Friday for failing to properly close out crude and
gas oil futures positions, only the third and fourth such fines
in the past 4 years.

The small fines, totaling just over $130,000 between the
two banks, followed similar action against JP Morgan (JPM.N: Quote, Profile, Research)
and UBS (UBSN.VX: Quote, Profile, Research) in July and December of last year.

Regulators globally have been seeking to toughen limits on

On Friday, ICE said it would introduce fixed position
limits on its gas oil contract, rather than operating a looser
‘position management’ system. [ID:nLDE7371WC]

Traders said the exchange may want to get ahead of European
regulators as they look to follow the U.S. Commodity Futures
Trading Commission (CFTC) in setting a formal cap on the number
of positions any trader can hold. [ID:nLDE7371WC]

ABN AMRO Clearing Bank N.V. was fined 30,000 pounds
sterling ($49,125) for failing to “appropriately close out
positions in the May 2011 expiry month of the Exchange’s WTI
crude oil contract,” ICE said in a disciplinary notice.

The Dutch clearing bank completed its post-financial crisis
merger with major commodity player Fortis in July 2010.

BNP Paribas was fined 50,000 pounds sterling ($81,850) for
the same offense in the expiring December 2010 ICE gas oil
(LGOc1: Quote, Profile, Research) contract, ICE said.


Prior to last year, ICE had not issued any disciplinary
notices related to its ICE Futures Europe division, which
includes the benchmark Brent and gas oil contracts as well as a
look-like U.S. crude future, since 2007.

Britain’s Financial Services Authority (FSA), which
oversees exchanges in London, has not intervened to close or
reduce trading positions in commodity markets since the start
of 2010, a Reuters Freedom of Information (FOI) request showed
last month. [ID:nLDE72K1WK]

The actions of ABN AMRO and BNP both led to a significant
overstatement of the open interest published for the contract,
according to the disciplinary notices.

ICE said, “the accurate reporting of open interest is a
critical process in maintaining confidence in the Exchange and
its contracts.”

ICE’s West Texas Intermediate (WTI) contract is a
look-a-like of the U.S. benchmark oil contract (CLc1: Quote, Profile, Research) traded in
New York, and has been regulated by the CFTC since 2008 after
complaints there was a ‘London Loophole’ allowing hidden
speculation in the world’s most actively traded oil contract.

Data from the CFTC on Friday showed speculators have
increased net-long positions in the ICE WTI contract close to
an all-time record high in recent days, as prices in New York
jumped to a 2-1/2 year oeak of $113.21 a barrel. [CFTC/]


Click here for ICE WTI graphic:

CFTC graphics package:


The FSA does not publish data on oil contracts traded on
London exchanges.

The ICE gas oil (LGOc1: Quote, Profile, Research) is the flagship European oil
product future and it has seen a huge increase in trading
volume in recent years. In 2010 alone, trading volume rose by
45 percent, according to exchange data.

(Reporting by David Sheppard and Emma Farge; Editing by
David Gregorio)

ICE slaps BNP, ABN AMRO with rare fines