Traders Settle CME Disciplinary Actions
Individuals and trading firms settled disciplinary actions for CME rule violations.
According to one CME Business Conduct Committee ("Panel") Notice, an individual "entered orders for his personal account before entering larger aggressor orders on behalf of his employer’s account, on the same side of the market." The Panel stated that the execution of the larger aggressor orders resulted in beneficial market movements for the individual’s open positions in the cited futures markets. The Panel found that the individual then liquidated the positions in his personal account, which resulted in a profit to his personal account. To settle the charges, the individual agreed to (i) disgorge profits in the amount of $13,115 and (ii) a permanent suspension from access to any market owned or controlled by CME Group.
According to two other Panel determinations (Notice 1 and Notice 2), two individuals entered orders on the same spread intending to cancel the orders before execution. The Panel stated that the individuals entered a small order on one side of the market, then entered a large order on the opposite side of the market, then canceled the large order after receiving a fill on the small order. The Panel found that the individuals profited in the amount of $846 and $2,049 respectively. To settle the charges, both individuals were ordered to (i) pay a $15,000 fine, (ii) disgorge their profits, (iii) serve a 45-business day suspension and 35-business day suspension, respectively, from access to any CME Group market.
According to another CME Notice, a trade execution firm submitted multiple block trades in various E-Mini S&P 500 options contracts with inaccurate execution times and failed to report block trades within the required time period following execution. The Panel also found that the firm's brokers disclosed nonpublic information regarding consummated block trades prior to the public report of the block trades. (Specifically, the panel said the brokers negotiated block trades with multiple local traders in online video conferences and confirmed the date, execution time, contract month, price and quantity of certain block trades with the local traders who acted as counterparties to the trades.) The Panel said that the brokers also disclosed this information to local traders who were in the online video conference but were not involved in the trades’ negotiation and consummation. The Panel also found that the firm failed to diligently supervise the execution of block trades by its employees to enable brokers to comply with Exchange block trade reporting requirements. The Panel ordered the firm to pay a $170,000 fine.
In settling these matters, the individuals and firms neither admitted nor denied the rule violations or factual findings.