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 trades or 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.
Rule 576 Identification of Globex Terminal Operators
Each Globex terminal operator shall be identified to the Exchange, in the manner prescribed by the Exchange, and shall be subject to Exchange rules. If user IDS are required to be registered with the Exchange, it is the duty of the clearing member to ensure that registration is current and accurate at all times. Each individual must use a unique user ID to access Globex. In no event may a person enter an order or permit the entry of an order by an individual using a user ID other than the individual’s own unique user ID.
Pursuant to an offer of settlement in which Raymond Simpson (“Simpson”) neither admitted nor denied the rule violations upon which the penalty is based, on February 21, 2018, a Panel of the Chicago Mercantile Exchange Business Conduct Committee (“BCC” or “Panel”) found that on multiple dates between October 2015, and February 2016, Simpson executed numerous transactions in October and December 2015, and February 2016 Live Cattle futures contracts for accounts over which he maintained control where there was common beneficial ownership on both sides of the transactions. Simpson placed the opposing buy and sell orders with the knowledge and intent that the orders would trade opposite one another. The purpose of these transactions was to freshen positions. Additionally, during this time period, Simpson allowed another individual to use his Tag50 User ID to enter orders in an account over which Simpson had control. The Panel concluded that Simpson thereby violated CME Rules 534 and 576.
In accordance with the settlement offer, the Panel ordered Simpson to pay a fine of $25,000, and to have his access to all CME Group trading floors and direct and indirect access and to all electronic trading and clearing platforms owned or controlled by CME Group suspended for 15 business days, beginning on the effective date below and continuing through and including March 20, 2018.
February 23, 2018