Marc Christopher Michelotti
CME RULE VIOLATIONS:
Rule 575.A. Disruptive Practices Prohibited
No person shall enter or cause to be entered an order with the intent, at the time of order entry, to cancel the order before execution or to modify the order to avoid execution.
Pursuant to an offer of settlement in which Marc Christopher Michelotti (“Michelotti”) neither admitted nor denied the rule violations upon which the penalty is based, on December 20, 2017, a Panel of the CME Business Conduct Committee (“Panel”) found that on numerous occasions between January 2015 and December 2015, Michelotti engaged in a pattern of activity in which he entered and cancelled orders in the Lumber futures markets without the intent to trade. Specifically, the Panel found that Michelotti attempted to better the existing bid or offer by entering multiple 1-lot orders at various prices on one side of the market which had the effect of narrowing the bid/ask spread and created the appearance of an imbalance in buy/sell pressure. As Michelotti narrowed the bid-ask spread, market participants would then join or better Michelotti’s order. Michelotti would then enter an aggressive order on the opposite side of the market that resulted in an execution of that most recent order against other market participants. After receiving a fill on this bid/offer, Michelotti then cancelled all the resting orders he had previously entered on the opposite side of the order book. Michelotti would then repeat the process on the other side of the market.
The Panel found that as a result of the foregoing, Michelotti violated CME Rule 575.A.
In accordance with the settlement offer, the Panel ordered Michelotti to pay a fine of $25,000 and to serve a four-week suspension of any access to any CME Group Inc. trading floor and of direct and indirect access to all electronic trading and clearing platforms owned or controlled by CME Group, Inc., including CME Globex. The suspension shall run from December 22, 2017, through January 19, 2018.
December 22, 2017
Please see the related disciplinary release in companion cases CBOT 15-0238-BC and NYMEX 15-0238-BC.