Brian Eric Rachwalski
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 Brian Eric Rachwalski (“Rachwalski”) neither admitted nor denied the rule violations upon which the penalty is based, on July 22, 2015, a Panel of the Chicago Mercantile Exchange Business Conduct Committee (“Panel”) found that it had jurisdiction over Rachwalski pursuant to Rules 400 and 402, as the conduct occurred while Rachwalski was an employee of a CME clearing member firm. The Panel further found that on September 26, 2013, and September 27, 2013, Rachwalski submitted several, large-quantity opposing customer orders, some of which were submitted to the pit brokers as All-or-None order types, for accounts with common beneficial ownership in the Eurodollar futures market via open outcry. Rachwalski knew that the orders submitted via open outcry were for accounts with common beneficial ownership and mistakenly believed the orders could trade opposite each other as long as they were placed into the pit and bid and offered by the pit broker three times.
The Panel further found that on September 27, 2013, Rachwalski submitted several opposing customer orders for accounts with common beneficial ownership in the Eurodollar futures market via the CME Globex electronic trading platform. Rachwalski knew that the orders submitted via Globex were for accounts with common beneficial ownership and mistakenly believed the orders could trade opposite each other as long as one order was exposed for a minimum of 5 seconds. In submitting the opposing buy and sell orders for execution in these manners, Rachwalski knew that the orders could trade opposite each other and avoid taking a bona fide market position exposed to market risk. The Panel concluded that Rachwalski thereby violated CME Rule 534.
In accordance with the settlement offer, the Panel ordered Rachwalski to pay a fine in the amount of $25,000, and to have his access to all CME Group trading floors and direct and indirect access to all electronic trading and clearing platforms owned or controlled by CME Group suspended for a period of ten business days. The suspension shall run from August 3, 2015, through August 14, 2015, inclusively.
July 24, 2015
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