This month, CME Group announced fines totaling $1.75 million against derivatives broker Newedge USA for violations of exchange rules in certain metal markets over the course of two years. Newedge agreed to the fine pursuant to an offer of settlement in which Newedge neither admitted nor denied the rule violations upon which the penalty was based. Specifically, Panels for both the NYMEX Business Conduct Committee and the COMEX Business Conduct Committee found that Newedge violated exchange Rule 432, Rule 529, Legacy Rule 538.A, Legacy Rule 538.G, and Legacy Rule 538.H., while a clearing member of the exchange.
According to the disciplinary action notices released by the exchange, on multiple occasions over a two year period, employees working for Newedge, but trading accounts of a Newedge affiliate, executed EFRPs as a counterparty with its customers that were not bona fide. While trading in Gold and Silver futures, Newedge employees received orders from customers, including market and limit orders, which were executed as EFRPs instead of directly on Globex as was expected by the customers. In executing the EFRPs, Newedge typically entered them with a liquidity provider and then entered a separate EFRP at a marked-up price with the customer. The Panel found that at times the price of the EFRP with the customer was simply set by Newedge and was therefore not negotiated in those instances. In addition, the Panel found that for the OTC leg of the EFRP transactions, Newedge had inadequate documentation. Further, in many instances Newedge did not designate the trades on the customer account statements as EFRPs because of an operational error. Of the $1.75 million fine, $650,000 was allocated to NYMEX and $1,100,000 was allocated to COMEX. (more…)
On February 26 and 27, 2015, Bracewell & Giuliani LLP acted as a sponsor of Platts’ 14th Annual LNG Conference in Houston, TX. Bracewell attorneys both attended and presented at the conference, discussing new and ongoing regulatory challenges facing the industry. Follow us on Twitter @bgenergy and @bgllp
Last week, the Supreme Court of Ohio ruled that certain oil and gas-related ordinances of the city of Munroe Falls are preempted by the state’s oil and gas law. State ex rel. Morrison v. Beck Energy Corp., Slip Opinion No. 2015-Ohio-485. The decision is the latest in an ongoing battle being waged over the authority of local governments to zone or regulate the operations of oil and gas companies. Often, the success or failure of a local government’s ordinance depends on whether it aims to “regulate” oil and gas operations or simply control their location according to traditional zoning principles.
While a win for industry in this case, the Supreme Court’s holding in State ex rel. Morrison v. Beck Energy Corp. was limited to the ordinances at issue in the case and does not go as far as recent rulings in Pennsylvania and New York that were focused on zoning authority. Previously, in July 2012, the Pennsylvania Supreme Court struck down as unconstitutional certain sections of the recently passed “Act 13” that would have removed a municipality’s ability to zone out oil and gas drilling in Pennsylvania. Huntley & Huntley, Inc. v. Oakmont Borough Council, 600 Pa. 207, 964 A.2d 855 (2009). Then, in August 2014, the New York State Court of Appeals held that municipalities can effectively “zone out” oil and gas operations by passing zoning ordinances that ban oil and gas production activities. Wallach v. Dryden, 23 N.Y.3d 728, 992 N.Y.S.2d 710 (2014). (more…)
On February 15, 2015, the Federal Aviation Administration (“FAA”) announced the release of a Notice of Proposed Rulemaking focused on the Operation and Certification of Small Unmanned Aircraft Systems (“UAS”) or “drones” within the United States. The release of the UAS NPRM is a step in the right direction that many in the industry have been waiting for since the FAA first chartered the small UAS Aviation Rulemaking Committee (“ARC”) in 2008.
While some industries may find aspects of the proposal restrictive, many are pleased with the FAA’s initial UAS regulatory effort, which is focused on small UAS or those that weigh less than 55 lbs. The UAS NPRM will at least remove some uncertainty for industry and could trigger more investment in UAS technology. However, the process from release of the UAS NPRM to when a final rule takes effect could take years. Companies looking to operate UAS in the interim are left to navigate one of many current certification processes, which are limited to specific purposes and still involve a bit of uncertainty.
In the meantime, companies interested in deploying their UAS technology as well as industries that see an expanded role for the use of UAS (e.g., energy, agriculture, entertainment) should consider commenting on the FAA’s proposal, which will set the stage for future of UAS regulation. There will be an opportunity to comment for a 60-day period once the UAS ANPR is published in the Federal Register. (more…)
They say “A pessimist finds a problem in every opportunity and an optimist finds an opportunity in every problem”. The recent sharp downturn in the oil price has certainly hurt many parts of the oil and gas sector – and some of the sectors that go with it – and, let’s be honest, there has been no dearth of pessimists. But with every situation of rapid change there will be winners and losers and in the E&P space now the situation will be no different. One of the intriguing things when you examine the debt markets for independent in the US and EMEA is how little they have in common. Some of you may have read our magnum opus “Reserve Based Finance: A tale of two markets” which looks, some would say in excruciating detail, at the differences between the US and International RBL markets. (more…)
Egypt’s renewable Feed In Tariff (FiT) continues to take shape, albeit at a slightly reduced speed than expected earlier. Happily, the additional time appears to be being used to respond to constructive comments from developers and other stakeholders. It is also expected that some clarifications will be issued in writing. Developers are reporting that up to now many details are only emerging verbally in face to face meetings, which many have found somewhat frustrating. (more…)