UOB BULLION AND FUTURES LTD.
CME RULE VIOLATIONS:
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;
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.
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.
Pursuant to an offer of settlement UOB Bullion and Futures Ltd. (“UOBBF”) presented at a hearing on February 11, 2014, in which UOBBF neither admitted nor denied the rule violations upon which the penalty is based, a Panel of the CME Business Conduct Committee (“BCC”) found that UOBBF voluntarily submitted itself to the jurisdiction of the BCC for purposes of settling this matter and that between December 2011 and March 2012, UOBBF executed five wash trades, for the purpose of unwinding short positions carried at ADM Investor Services International Limited (“ADM”), and corresponding long positions carried at J.P. Morgan Securities Limited (“JP Morgan”). In each instance, the order quantities matched with buy/sell entry time differentials close in proximity and, in most instances, the orders were placed in between the current best bid and ask price. Additionally, during this time period, UOBBF failed to properly register Tag 50s utilized by its trading desk, as well as failed to properly supervise the trading activity of its employees and the use of Tag 50s by individuals other than the individual to whom a Tag 50 was registered.
The Panel found that as a result, UOBBF violated Rules 432.W., 534 and 576.
In accordance with the settlement offer, the Panel ordered UOBBF to pay a fine to the Exchange in the amount of $80,000.
February 13, 2014
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