London 16/09/2016 - Mitsui Bussan Commodities Ltd (MBC) has been fined 80,000 pounds after one of its traders failed to act with "due skill, care and diligence" when entering a number of orders, the London Metal Exchange (LME) said in a notice.
The trader erroneously entered an order into LME Select in backwardation when the prevailing market value was in contango. When the trader realized their mistake, he or she intentionally entered five orders in backwardation hoping that they would be traded and then price adjusted.
“One of the subsequent orders traded and was price adjusted in the trader’s favour, resulting in loss to a third party,” said the LME, which added that the trader “disregarded the current market value of the subsequent orders, and used their knowledge of how the LME Error Trade Policy operates to submit orders knowing that they would be price adjusted if traded.”
In accepting the fine, MBU acknowledged their trader did not act with due skill care and diligence and that he or she was seeking to gain financially by deliberately reversing the value of the subsequent orders, the notice said.
However, the LME did note that MBU cooperated fully with the exchange; took swift disciplinary action against their trader; and implemented steps to improve the training and competence. The firm also offered restitution to the third party, it added.