• NOTICE OF DISCIPLINARY NOTICE

      • #
      • CBOT 15-0148-BC-2
      • Effective Date
      • 30 May 2017
    • NON-MEMBER:

      Chinaway HK Industrial Limited

      CBOT RULE VIOLATION:

      Rule 432. General Offenses

      It shall be an offense:

      W. for any party to fail to diligently supervise its employees and agents in the conduct of their business relating to the Exchange.

      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:

      On August 29, 2016, a Panel of the Chicago Board of Trade (“CBOT”) Probable Cause Committee (“PCC”) charged non-member firm Chinaway HK Industrial Limited (“Chinaway”) with violating CBOT Rules 432.W. and 534 based on allegations that between January 2015 and May 2015, an employee of Chinaway entered equal and opposing orders on behalf of a single Chinaway account that resulted in the self-match of 21,434 Soybean futures contracts. The Chinaway account appeared as both the buy and sell account, and Chinaway failed to diligently supervise its employee in a manner sufficient to ensure the conduct was consistent with Exchange Rules.

      On February 24, 2017, and in accordance with CBOT Rule 407.C., a Hearing Panel Chair of the CBOT Business Conduct Committee (“BCC”) found that Chinaway failed to answer the charges issued against it. The Hearing Panel Chair accordingly ruled that in failing to answer the charges issued, Chinaway was deemed to have admitted the charges, and through this admission Chinaway waived its right to a hearing on the merits of the charges.

      Pursuant to CME Rule 407.C., a penalty hearing was held before a Panel of the BCC (“Panel”) on May 10, 2017, and found Chinaway guilty of committing the admitted charges.

      PENALTY:

      Based on the record and the Panel’s findings and conclusions, the Panel ordered Chinaway HK Industrial Limited to pay a fine in the amount of $100,000, and to have its access to all CME Group trading floors and direct and indirect access to all electronic trading and clearing platforms owned or controlled by CME Group suspended for a period of five years.

      EFFECTIVE DATE:

      May 30, 2017