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 Jiayi Lu (“Lu”) neither admitted nor denied the rule violations upon which the penalty is based, on December 20, 2017, a Panel of the Chicago Mercantile Exchange Business Conduct Committee (“Panel”) found that on January 19, 2016, Lu, an employee of J&P Capital Management Co., Ltd. (“J&P Capital”), executed numerous transactions on Globex in British Pound futures in which J&P Capital maintained ownership and control of the accounts on both sides of the transactions. Wang entered the matching buy and sell orders with the knowledge and intent that the orders would match opposite one another, and did so for the purpose of liquidating opposing positions to avoid delivery.
The Panel concluded that Lu thereby violated Exchange Rule 534.
In accordance with the settlement offer, the Panel ordered Lu to pay a fine of $10,000. The Panel also suspended Lu from all direct access to any trading floor or electronic trading or clearing platform owned or controlled by CME Group Inc. for a period of ten business days. The suspension will run from December 22, 2017, through and including January 8, 2018.
December 22, 2017