• NOTICE OF SUMMARY ACCESS DENIAL

      • #
      • CME-18-0856
      • Effective Date
      • 21 May 2018
    • FILE NO.:

      CME 18-0856

      NON-MEMBER:

      HANA FINANCIAL INVESTMENT

      CME RULES: 413. SUMMARY ACCESS DENIAL ACTIONS (in part)

      413.A. Authority to Deny Access

      The Chief Regulatory Officer or his delegate, upon a good faith determination that there are substantial reasons to believe that such immediate action is necessary to protect the best interests of the Exchange, may order that: 1) any party be denied access to any or all CME Group markets; 2) any party be denied access to the Globex platform; 3) any party be denied access to any other electronic trading or clearing platform owned or controlled by CME Group; or (4) any Member be immediately removed from any trading floor owned or controlled by CME Group.

      FINDINGS:

      On May 21, 2018, CME Group’s Market Regulation Department (“Market Regulation”), through its Chief Regulatory Officer, summarily denied Hana Financial Investment (“Hana”) direct and indirect access to all CME Group markets, including the CME Globex electronic trading platform (“Globex”), any other electronic trading or clearing platform owned or controlled by CME Group, and all trading floors owned or controlled by CME Group. The summary access denial prohibits Hana, and anyone through Hana accounts, from trading, placing orders, and controlling or directing the trading for any person, entity, or account in any CME Group exchange product. Notwithstanding the foregoing, open positions at Hana’s clearing firms may be liquidated by the clearing firms upon the request of Hana or Hana’s customers.

      The summary access denial of Hana is based on the following. Throughout the course of multiple investigations involving Hana’s customer accounts from at least May 2017 through the present, Hana provided Market Regulation incomplete, inaccurate, false, and misleading information related to account ownership, authorized traders for accounts, audit trail data, and account statements. Hana’s actions substantially obstructed several Market Regulation investigations related to spoofing, disruptive trading, and money pass activity in various exchange products.

      Market Regulation further observed that in various exchange products Hana, which holds omnibus accounts at several Clearing Member Firms, improperly and inaccurately netted positions between separate customer accounts that were independently owned and controlled, and subsequently reported those net positions to its Clearing Member Firms on a daily basis. This practice likely caused its Clearing Member Firms to fail to satisfy their obligations to reflect in their records the gross long and short positions held in omnibus accounts, pursuant to Rule 960. The Clearing Member Firms correspondingly reported to the exchange inaccurate daily long and short positions, which likely impacted open interest reporting. Given Hana’s prior failures in accurately identifying account owners and authorized traders for accounts, Market Regulation is not confident Hana can continue to operate or conduct business without jeopardizing the integrity of CME Group markets.

      The foregoing supports a good-faith determination that there are substantial reasons to believe that such immediate action is necessary to protect the best interests of the Exchanges and the marketplace.

      ACCESS DENIAL:

      Pursuant to Rule 413, this access denial will remain in effect for 60 days, commencing on the effective date below and continuing through and including July 20, 2018, unless the Chief Regulatory Officer or his delegate provides written Notice that this access denial will be extended for an additional period of time.

      EFFECTIVE DATE:

      May 21, 2018