• NOTICE OF DISCIPLINARY ACTION

      • #
      • CME 15-0134-BC
      • Effective Date
      • 27 October 2016
    • NON-MEMBER FIRM:

      HyLife, Ltd.

      CME RULE VIOLATIONS:

      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.

      FINDINGS:

      Pursuant to an offer of settlement in which HyLife, Ltd. (“HyLife”) neither admitted nor denied the rule violation upon which the penalty is based, on October 25, 2016, a Panel of the Chicago Mercantile Exchange Business Conduct Committee (“BCC” or “Panel”) found that HyLife was subject to the BCC’s jurisdiction pursuant to Rules 402 and 418, and that on May 12, 2014, an employee acting on behalf of HyLife working in conjunction with a broker, executed multiple transactions on the CME Globex trading platform in Lean Hogs futures contracts where HyLife owned the accounts on both sides of the transactions. The purpose of these transactions was to move the positions between HyLife accounts.

      The Panel concluded that HyLife thereby violated CME Rule 534.

      PENALTY:

      In accordance with the settlement offer, the Panel ordered HyLife to pay a fine of $35,000.

      EFFECTIVE DATE:

      October 27, 2016