CME RULE VIOLATIONS:
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 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.
Pursuant to an offer of settlement in which Wayne Lam (“Lam”) neither admitted nor denied the rule violations upon which the penalty is based, on June 8, 2016, a Panel of the Chicago Mercantile Exchange Business Conduct Committee (“BCC” or “Panel”) found that Lam was subject to the BCC’s jurisdiction pursuant to Rules 402 and 418, and that on July 5, September 27, and December 20, 2013, Lam, an employee of Manufacturers Life Reinsurance Limited (“MLRL”), executed several trades on Globex in the E-mini S&P 500 futures markets and the CME foreign exchange (“FX”) markets with the knowledge that the accounts on both sides of the transactions were beneficially owned by MLRL. Lam knew or should have known that the orders were likely to match and would avoid any bona-fide market risk. The purpose of these transactions was to move positions between accounts and should have been effected via a back office transfer.
The Panel concluded that Lam thereby violated CME Rule 534.
In accordance with the settlement offer, the Panel ordered Lam to pay a fine of $25,000.
June 10, 2016
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