NOTICE OF DISCIPLINARY ACTION

FILE NO.:

CME 16-0429-BC

NON-MEMBER:

J&P Capital Management Co., Ltd.

CME RULE VIOLATIONS:

Rule 432 (“General Offenses”) (in part)

It shall be an offense:

W. For any party to fail to diligently supervise its employees and agents in the conduct of their business relating to the Exchange.

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 differen 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.

FINDINGS:

Pursuant to an offer of settlement in which J&P Capital Management Co., Ltd. (“J&P Capital”) 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 between December 9, 2015 and February 9, 2016, employees of J&P Capital executed numerous trades on Globex in New Zealand Dollar, British Pound and Nikkei/Yen futures in which J&P Capital maintained ownership and control of the accounts on both sides of the transactions. The matching buy and sell orders were entered by two employees of J&P Capital 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. Such employees now understand that this type of transaction should be effected in a manner permitted by CME rules. The Panel also found that J&P Capital failed to diligently supervise its traders in a manner sufficient to ensure that their conduct was consistent with Exchange rules.

The Panel concluded that J&P Capital thereby violated Exchange Rules 432.W. and 534.

PENALTY:

In accordance with the settlement offer, the Panel ordered J&P Capital to pay a fine of $45,000.

EFFECTIVE DATE:

December 22, 2017