CME, CBOT and NYMEX Sanction Traders for Spoofing

The Business Conduct Committees of the Chicago Mercantile Exchange, Chicago Board of Trade and the New York Mercantile Exchange (respectively, the "CME BCC," "CBOT BCC," and "NYMEX BCC") fined and suspended two traders in separate actions for disruptive trading practices ("spoofing").

In separate disciplinary actions:

• the CME BCC found that a trader entered orders in two separate markets (the Australian Dollar and E-Mini S&P 500 markets) "with the intent…to cancel the orders before execution or to modify the orders to avoid execution." The BCC found that once a "smaller resting order" was executed, the trader would cancel a larger order on the opposite side of the market. As a result of this conduct, the CME BCC found that the trader violated CME Rule 575 ("Disruptive Practices Prohibited") and imposed on the trader (i) a $20,000 fine, (ii) a $20,825 disgorgement penalty and (iii) a 40-business day suspension from access to trading floors.
• the CBOT and NYMEX BCC found that a trader, in an attempt to deceive market participants, entered "layered orders on both [the buy-side and the sell-side]" of several futures markets (see Notices here and here). The BCCs found that the trader also modified the orders "to create a disproportionate quantity of contracts on one side of the best bid and offer[ed] in the affected market[s]," and "with the intent to mislead other market participants." As a result, the BCCs found that the trader violated CBOT and NYMEX Rules 575.B ("Disruptive Practices Prohibited") and 432.L.1 ("General Offenses"). As a penalty, both BCCs also (i) permanently suspended the trader from all trading floors and (ii) imposed a $120,000 fine.