The London Metal Exchange (LME) announced a significant penalty on Friday. They fined Mizuho Securities USA, a subsidiary of the Japanese conglomerate, (£265,000). This penalty followed an investigation into the firm’s alleged rule violations.
Mizuho Securities USA holds Category 2 membership status with the LME. The firm failed to comply with essential reporting requirements for over two years. Specifically, the unit did not report the over-the-counter (OTC) positions held by two of its affiliates. This violation occurred between September 5, 2022, and December 20, 2024.
Internal Controls Were Found Lacking
Exchange rules strictly require members to submit weekly reports. These reports cover the OTC metals business of their clients, affiliates, or their own firm. This crucial reporting ensures market stability and transparency.
The LME concluded that Mizuho’s failure to submit these required OTC positions was due to “a gap in its internal system and controls.” This lack of oversight breached the firm’s core obligation. They failed to establish and maintain adequate risk management systems.
The LME confirmed Mizuho has since taken comprehensive corrective action to remedy the issue.
Settlement Finalized and Approved
The (265,000) fine is part of an official settlement reached with Mizuho. The LME’s head of market surveillance confirmed the agreement in a notice.
Furthermore, the LME’s enforcement committee has formally approved the terms of this settlement. Mizuho officials chose not to provide any comment regarding the penalty.
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