NOTICE OF DISCIPLINARY ACTION

FILE NO.:

CBOT 17-0629-BC

NON-MEMBER:

Hua Cai

CBOT RULE VIOLATIONS:

Rule 575. A. Disruptive Practices Prohibited (in part)

A. 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;

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.

FINDINGS:

Pursuant to an offer of settlement in which Hua Cai neither admitted nor denied the rule violation upon which the penalty is based, on July 24, 2018, a Panel of the Chicago Board of Trade Business Conduct Committee found that on several occasions between January and December 2016, though concentrated during July and October 2016, Cai engaged in a pattern of activity in which he entered large manual orders in the Soybean, Soybean Oil and Corn futures contracts without the intent to trade those orders. Specifically, the pattern of activity involved Cai entering large orders on one side of the market and canceling those large orders once small resting orders on the other side of the market executed, in whole or in part. Additionally, and unrelated to the aforementioned violative activity, Cai permitted other individuals to enter orders on Globex using Cai’s unique Tag 50 user ID. The Panel concluded that Cai thereby violated CBOT Rules 575.A. and 576.

PENALTY:

In accordance with the settlement offer, the Panel ordered Cai to pay a fine in the amount of $40,000 and to serve a 10-business day suspension from accessing any CME Group Inc. trading floor and 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, July 26, 2018, through August 8, 2018, inclusively.

EFFECTIVE DATE:

July 26, 2018