CME RULE: 413. SUMMARY ACCESS DENIAL ACTIONS (in part)
A. 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.
On April 30, 2015, CME Group’s Market Regulation Department (“Market Regulation Department”), through its Chief Regulatory Officer, summarily denied Heet Khara (“Khara”) direct and indirect access to all CME Group markets, the CME Globex electronic trading platform, 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 trading, placing orders, and controlling or directing the trading for any person or entity in any CME Group exchange product. The summary access denial further prohibits the affiliation or business dealing with any member or member firm of CME, CBOT, NYMEX, or COMEX.
CME Group’s Chief Regulatory Officer’s summary access denial of Khara was based upon the findings of an investigation conducted by the Market Regulation Department, which revealed that on multiple trade dates during the time period of February 1, 2015 through April 28, 2015, Khara engaged in a pattern of activity in which he repeatedly entered orders or layered multiple orders for Gold and Silver futures contracts without the intent to trade. Specifically, Khara entered these orders or layered multiple orders to encourage market participants to trade opposite his smaller orders resting on the opposite side of the book. After receiving a fill on his smaller orders, Khara would then cancel the resting order or layered multiple orders that he had entered on the opposite side of the order book.
This conduct was identified by the Exchange in February 2015. The Exchange notified Khara’s FCM which immediately advised Khara that the Exchange was investigating his trading as potentially disruptive. Khara closed his account at that FCM and opened an account at a different FCM and began engaging in the same disruptive trading activity. The most recent of such activity occurred on April 28, 2015. Further, it appears that on multiple occasions Khara coordinated efforts to engage in disruptive activity with Nasim Salim (“Salim”), who is also the subject of a summary access denial action and who had introduced Khara to Khara’s first FCM. In an example from April 28, 2015, Salim entered small-lot orders on one side of the market in Gold futures, after which Khara entered large orders on the opposite side. When Salim’s small orders were filled, Khara canceled the large orders. Following correspondence from the Exchange on April 29, 2015 to Khara, he immediately requested that the second FCM close his account and refund his money.
The foregoing conduct, as well as Khara’s failure to cooperate with the Exchange, present 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.
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 June 29, 2015, unless the Chief Regulatory Officer or his delegate provides written notice that this access denial will be extended for an additional period of time.
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