• NOTICE OF DISCIPLINARY ACTION

      • #
      • COMEX 16-0445-BC
      • Effective Date
      • 03 November 2017
    • NON-MEMBER:

      Xiaofen Li

      EXCHANGE RULE: Rule 576. Identification of Globex Terminal Operators

      Each Globex terminal operator shall be identified to the Exchange, in the manner prescribed by the Exchange, and shall be subject to Exchange rules. If user IDs are required to be registered with the Exchange, it is the duty of the clearing member to ensure that registration is current and accurate at all times. Each individual must use a unique user ID to access Globex. In no event may a person enter an order or permit the entry of an order by an individual using a user ID other than the individual’s own unique user ID.

      CME Group MRAN RA0908-5

      Question #4: If a trader enters manual orders but also as an ATS, can all of the trader’s orders be entered under a single Tag 50 ID?

      Answer: No, there should be separate Tag 50 IDs for the manual orders and for the ATS orders.

      Question #5: Under what circumstances may have a trader use a single Tag 50 ID for the entry of both manual and automated orders?

      Many front-end trading systems supply automated spread functionality which gives traders the ability to automate spread strategies. The exchanges do not require a separate Tag 50 ID for this activity as long as the use of the spreading software is ancillary to the trader’s manual trading. However, if the automated spreading functionality accounts for a majority of the member’s transactions, separate Tag 50 IDs must be assigned to distinguish these transactions from the manually entered orders.

      FINDINGS:

      Pursuant to an offer of settlement that Xiaofen Li (“Li”) presented at a hearing on November 1, 2017, in which Li neither admitted nor denied the findings or the rule violation upon which the penalty is based, a Panel of the Business Conduct Committee (“Panel”) found that throughout March and April, 2016, Li, while trading various COMEX Silver contracts, employed a single Tag 50 ID to place orders via an automated trading system executing a pre-determined strategy, while simultaneously using the same Tag 50 ID to place orders, manually, on the opposite side of the market.

      The Panel found that as a result of the foregoing, Li violated NYMEX Rule 576.

      PENALTY:

      In accordance with the settlement offer, the Panel ordered Li to pay a fine to the Exchange in the amount of $15,000 and to serve a 5 business day suspension from membership privileges, access to any electronic trading or clearing platform owned or controlled by CME Group Inc., including CME Globex. The period of suspension shall run from November 3, 2017 through November 9, 2017.