August 15, 2019

CME Group Issues Fines and Suspension for Trade Practice Violations

CME issued fines and suspensions against two brokers and a futures brokerage firm for separate trade practice violations.

In separate actions, CME fined and suspended two floor brokers (see here and here) for using non-public order information to execute trades on Globex in August 2016 and September 2016 Euro FX options strategies. According to CME, the brokers used non-public order information from their respective customers, without prior consent, to execute several trades, and then used the average price of the fills to price block trades for such customers. As a result, their respective firms obtained a "portion of riskless profit." CME noted that, after it contacted the firms regarding the matter, the profits were returned. CME ordered one of the brokers, Hicham Boularbah, to pay $60,000 and the other broker, Hamza Slaoui, to pay $40,000.

In another action, R. J. O'Brien & Associates, LLC ("R. J. O'Brien"), a futures commission merchant, settled CME charges without admitting or denying violations after an employee pre-hedged block trades in Euro FX options strategies by placing orders on Globex on the other side of the market in the same product. Additionally, CME found that (i) the alleged employee failed to report two of the block trades and (ii) two other employees executed trades using each other's User IDs. R. J. O'Brien agreed to pay $80,000 and disgorge $110,050.

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