• NOTICE OF DISCIPLINARY ACTION

      • #
      • CME-16-0444-BC-1
      • Effective Date
      • 04 December 2017
    • FILE NO.:

      CME 16-0444-BC

      NON-MEMBER FIRM:

      A&A Trading, Inc.

      CME RULE VIOLATIONS:

      Rule 432 (“General Offenses”) (in part)

      It shall be an offense:

      W.     for a Member 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 trades or 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.

      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.

      FINDINGS:

      Pursuant to an offer of settlement in which A&A Trading, Inc. (“A&A”) neither admitted nor denied the rule violations upon which the penalty is based, on November 30, 2017, a Panel of the Chicago Mercantile Exchange Business Conduct Committee (“Panel”) found that on 12 trade dates between October 2015, and February 2016, A&A employees entered matching buy and sell orders on the CME Globex trading platform in Live Cattle futures contracts for accounts with common beneficial ownership on both sides of the transactions. A&A employees entered the orders with the knowledge and intent that the orders would match opposite one another to freshen customer accounts. The Panel further found that A&A employees failed to use their own unique Tag50 user IDs to enter orders on Globex and that A&A failed to diligently supervise its employees in a manner sufficient to ensure that their conduct was consistent with Exchange rules. The Panel concluded that A&A thereby violated CME Rules 432.W., 534 and 576.

      PENALTY:

      In accordance with the settlement offer, the Panel ordered A&A to pay a fine of $60,000.

      EFFECTIVE DATE:

      December 4, 2017