Olam to pay penalty in cocoa 'cash and carry' violation settlement
NEW YORK Oct 14 (Reuters) - A division of Olam International Ltd has agreed to pay $100,000 as a penalty to settle potential violations of the ICE Futures U.S. "cash and carry" rule for the September 2011 cocoa futures contract, the exchange said on Monday.
Olam neither admitted nor denied any rule violations and has agreed to pay the penalty and to cease and desist from future violations of the rule, according to an emailed statement from the IntercontinentalExchange.
Olam Americas did not immediately respond to requests for comment.
A subcommittee previously determined that Olam Americas may have violated ICE's "cash and carry" exemption twice in September 2011 just prior to the last trading day for the contract, according to the ICE notice.
The rule helps maintain a market contango, in which the price of a futures contract for a commodity exceeds the spot price, in situations where there are plentiful supplies. When using the exemption, a trader must liquidate all long positions in a spot month when the nearby contract rises to a premium above the second-month contract.
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