Individual and Firm Settle Wash Trade Charges

An individual and a trading firm settled separate disciplinary actions for violating CME and NYMEX "wash trade" rules.

According to a NYMEX Business Conduct Committee Notice (see Notice 1) ("Panel"), an individual "placed or accepted buy and sell orders" on crude oil futures markets. The Panel found that the individual "knew or reasonably should have known that the purpose of the orders was to avoid taking a bona fide market position exposed to market risk." The Panel determined that the individual violated Rule 408.F. and 534, pertaining to the admissibility of conduct and "wash trades." To settle the charges, the Panel ordered the individual to (i) pay a $50,000 fine and (ii) serve a five-year suspension from direct access to any CME-owned or controlled trading floor.

According to another Panel determination (see Notice 2), a trading firm entered opposing buy and sell orders for the same account in various crypto futures contracts. The Panel said that the firm "[in]sufficiently investigat[ed] and monitor[ed] for the self-match activity" despite being notified of the concern. As a result, the Panel determined that the firm violated CME Rule 432.W. and 534, pertaining to both "wash trades" and failure to supervise business conducted in relation to the Exchange. To settle the charges, the Panel ordered the individual to pay a $50,000 fine.