COMEX RULE: 413. SUMMARY ACCESS DENIAL ACTIONS (in part)
413.A. Authority to Deny Access
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 August 22, 2016, CME Group’s Market Regulation Department (“Market Regulation”), through its Chief Regulatory Officer, summarily denied Andrey Sakharov (“Sakharov”) direct and indirect access to all CME Group markets by any member or member firm and any non-member firm introducing business to a member firm, including the CME Globex electronic trading platform (“Globex”), 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 Sakharov and/or any accounts in which he has ownership or control over from trading, placing orders, and controlling or directing the trading for any person, entity, or account in any CME Group exchange product.
CME Group’s Chief Regulatory Officer’s summary access denial of Sakharov was based upon a Market Regulation Department investigation, which revealed that on multiple dates beginning on July 1, 2016, Sakharov entered orders on Globex that he did not intend to trade at the time of his order entry. Specifically, Sakharov, while trading an account held in another’s name and without an executed power of attorney, repeatedly placed single orders for small quantities on one side of the August 2016 Gold and Natural Gas futures markets, followed by single orders for large quantities on the opposite side of these markets. Generally, less than 100 milliseconds thereafter, the small-quantity orders traded and the large-quantity orders were canceled.
The investigation further revealed that in addition to the trades he entered on behalf of this account without a power of attorney, Sakharov entered trades for at least four other accounts held in other’s names. Sakharov informed the firm that introduced these accounts to the clearing member firm that while he wanted to have individual access to these accounts, as well as future accounts he planned on opening with the firm, he did not want to be officially associated with the accounts, since he was concerned that he may be banned from trading following this investigation. Additionally, the introducing firm informed Market Regulation that the account in which the above-described Gold and Natural Gas trades occurred was reported to the Cyprus Securities and Exchange Commission following suspicions of money laundering.
The foregoing supports 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 above and continuing through and including October 21, 2016, unless the Chief Regulatory Officer or his delegate provides written Notice that this access denial will be extended for an additional period of time.