CME RULE VIOLATION:
432. GENERAL OFFENSES (in part)
It shall be an offense:
Q. to commit an act which is detrimental to the interest or welfare of the Exchange or to engage in any conduct which tends to impair the dignity or good name of the Exchange.
T. to engage in dishonorable or uncommercial conduct.
Pursuant to an offer of settlement in which Danny Giamalis (“Giamalis”) neither admitted nor denied the rule violations upon which the penalty is based, on September 18, 2014, a Panel of the CME Business Conduct Committee (“BCC” or “Panel”) found that it had jurisdiction over Giamalis pursuant to CME Rules 400 and 402 as the conduct occurred while Giamalis was a CME member. The Panel also found that on several trade dates in July 2010, Giamalis engaged in a pattern of activity wherein he entered large orders in the Nikkei 225 Dollar Futures (“Nikkei Dollar”) market and the Nikkei 225 Yen Futures (“Nikkei Yen”) market without the intent to trade. The Panel specifically found that Giamalis established a long (short) position in the Nikkei Dollar and Nikkei Yen on the CME Globex electronic trading platform (“Globex”). Giamalis subsequently entered multiple large-lot buy (sell) orders at or near the best bid (offer) and passive liquidating orders to sell (buy) on Globex. Giamalis entered these large orders for the purpose of obtaining fills on his smaller liquidating orders already resting on the other side of the order book. When the passive liquidating orders were filled, Giamalis then fully canceled the large orders he placed on the other side of the market.
In determining Giamalis’s intent to trade the large orders that were fully canceled, the Panel took into consideration the significant imbalance these orders created between the volume on the bid and offer, the percentage of large orders canceled, and the exposure time of the fully canceled orders.
The Panel concluded that Giamalis thereby violated CME Rules 432.Q. and 432.T.
In accordance with the settlement offer and after taking Giamalis’s financial condition into consideration when it levied the sanction, the Panel barred Giamalis from accessing any CME Group Inc. trading floor, and direct and indirect access to all electronic trading and clearing platforms owned or controlled by CME Group Inc. for two months, beginning on the effective date below and continuing through and including November 22, 2014. The Panel also barred Giamalis from trading for a personal trading account on any CME Group Inc. trading platform for an additional two months, beginning on the effective date below and continuing through and including January 22, 2015.
September 22, 2014
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