“Strict adherence to the rules on information barriers is vitally important to help ensure a level playing field between trading companies, reduce the potential for market abuse and help ensure the operation of an orderly market,” the bourse said in a circular to its member on Friday April 17.
LME said that CWT failed to identify two companies within its group as “trading companies” and failed to put effective information barriers between itself and the trading companies in its group.
The acts of misconduct were uncovered by the LME and not by CWT, the LME said.
“During the course of its investigation, the LME uncovered no evidence to suggest that the conduct was deliberate, and no evidence to suggest that confidential information was passed between CWT and the trading companies in its group,” the LME said.
CWT Commodities ceo Simon Maddocks said that given the administrative nature of the violations, the company was taken aback by the size of the fine.
"CWT has a record of 20 years of co-operation with the LME and over that period this is the first time it has been investigated. At the start of this eight-month long investigation CWT admitted an administrative error had been made.
“Given that the LME notice acknowledges that the conduct was not deliberate and that no confidential information was passed, we are surprised by the severity of the fine,” Maddocks told Metal Bulletin.
The LME said that CWT has already appointed an assurance provider to undertake a retrospective audit of the information barriers between CWT and one of the trading companies and plans to appoint an assurance provider to undertake a retrospective audit in respect of the other trading company.
The exchange added that no third parties suffered financial loss as a result of CWT’s actions.
LME said “CWT has given an undertaking that it will put in place procedures to ensure that similar conduct will not recur”.
CWT Commodities is a prominent player in LME warehousing operations in Asia, Europe and the Middle East.
The provider of global warehousing solutions for hard and soft commodities is a wholly owned subsidiary of CWT Ltd.