EXCHANGE RULES: RULE 432. GENERAL OFFENSES (IN PART)
It shall be an offense:
G. To prearrange the execution of transactions in Exchange products for the purpose of transferring equity between accounts.
RULE 534. WASH TRADES PROHIBITED
No person shall place or accept buy and sell orders in the same product and expiration month, and, for a put or call option, the same strike price, where the person knows or reasonably should know that the purpose of the orders is to avoid taking a bona fide market position exposed to market risk (transactions commonly known or referred to as wash sales). Buy and sell orders for different accounts with common beneficial ownership that are entered with the intent to negate market risk or price competition shall also be deemed to violate the prohibition on wash trades. Additionally, no person shall knowingly execute or accommodate the execution of such orders by direct or indirect means.
Pursuant to an offer of settlement that Chenhui Wang (“Wang”) presented at a hearing on September 21, 2016, in which Wang neither admitted nor denied the factual allegations or rule violation upon which the penalty is based, a Panel of the NYMEX Business Conduct Committee (“Panel”) found that it had jurisdiction over Wang, pursuant to Exchange Rules 402 and 418 and that on multiple trade dates from December 18, 2014 through January 28, 2015, Wang entered a series of wash trades in Crude Oil options between different accounts owned and controlled by Wang for the purpose of transferring funds between these accounts.
The Panel concluded that Wang violated NYMEX Rules 432.G. and 534.
In accordance with the settlement offer, the Panel ordered Wang to pay a fine to the Exchange in the amount of $20,000 and to serve a 10 business day suspension of direct or indirect access to any CME Group Inc. trading floor or electronic trading or clearing platform owned or operated by CME Group Inc., including CME Globex. The suspension shall run from September 23, 2016 through, and including, October 6, 2016.
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