Merrill Lynch Fined $350,000 Over Cotton Trading Limits

Merrill Lynch Commodities Inc. agreed to pay a $350,000 fine to settle charges that it exceeded speculative position limits in cotton futures, the U.S. Commodity Futures Trading Commission said.

The violations occurred from Jan. 31 to Feb. 3, the CFTC said today in an e-mailed statement. Merrill’s net short positions of 5,502 contracts on Jan. 31 and 6,059 on Feb. 1 surpassed the 5,000-contract limit for all months, the CFTC said. A net short position in March 2011 futures was 227 above the 3,500-contract maximum for any single month.

Cotton futures on ICE Futures U.S. in New York rose 4.3 percent during the four-day period.

“We’re pleased to resolve this matter,” said Bill Halldin, a spokesman for Charlotte, North Carolina-based Bank of America Corp. (BAC), which purchased Merrill Lynch & Co. in 2009. “This was unintentional, and to prevent a recurrence in the future we have strengthened our position-limit monitoring system,” Halldin said in a telephone interview.

To contact the reporter on this story: Joe Richter in New York at jrichter1@bloomberg.net

To contact the editor responsible for this story: Steve Stroth at sstroth@bloomberg.net

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