• #
      • CME-17-0709-BC
      • Effective Date
      • 27 September 2018
    • FILE NO.:                               

      CME 17-0709-BC


      Davis Ramsey


      432. General Offenses (in part)

      It shall be an offense:

      B.1.    to engage, or attempt to engage, in fraud or bad faith;

      H.    to … intentionally or recklessly use or employ, or attempt to use or employ, any manipulative device, scheme, or artifice to defraud; or to purchase or sell, or offer to purchase or sell Exchange futures or options contracts, or any underlying commodities or securities, for the purpose of upsetting the equilibrium of the market or creating a condition in which prices do not or will not reflect fair market values;


      Pursuant to an offer of settlement in which Davis Ramsey (“Ramsey”) neither admitted nor denied the rule violations upon which the penalty is based, on September 18, 2018, a Panel of the CME Business Conduct Committee (“Panel”) found that on numerous occasions between August 1, 2016, and May 10, 2017, Ramsey entered numerous orders in E-mini S&P 500 and E-mini NASDAQ futures contracts not in good faith, but for the purpose of affecting the settlement prices of contracts traded on another exchange. Specifically, Ramsey first established positions in binary options contracts traded on the North American Derivative Exchange (“NADEX”). Knowing that these binary options settled based upon the last 25 trades in the underlying CME futures markets prior to the options’ expiration, Ramsey subsequently executed a series of one-lot trades for the related underlying futures contracts shortly before the options’ expiration and at prices that, when factored into NADEX’s settlement protocol for binary options, favored Ramsey’s binary options positions. Further, while Ramsey’s CME futures trades were unprofitable in nearly every instance described above, the profits he received due to the effected binary options settlements significantly exceeded these losses. Therefore, the Panel found that Ramsey traded on CME markets in the final minute leading up to the NADEX binary options’ expiration for the purpose of manipulating the settlement prices of NADEX’s binary options. The Panel concluded that Ramsey thereby violated Exchange Rules 432.B.1. and 432.H.


      In accordance with the settlement offer, the Panel ordered Ramsey to pay a fine in the amount of $135,000 and to serve a five-year suspension from accessing any CME Group Inc. trading floor and all direct and indirect access to all electronic trading and clearing platforms owned or controlled by CME Group Inc. The suspension shall run from September 27, 2018, through September 26, 2023, inclusive. In levying the penalty, the Panel considered the Commodity Futures Trading Commission’s and NADEX’s related disciplinary actions and sanctions.


      September 27, 2018