• NOTICE OF DISCIPLINARY ACTION

      • #
      • COMEX 16-0569-BC-3
      • Effective Date
      • 19 November 2018
    • NON-MEMBER:

      ASHISH SHAH

      EXCHANGE RULES:

      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.

      Rule 539.A. General Prohibition - Prearranged, Pre-Negotiated and Noncompetitive Trades Prohibited (in part)

      No person shall pre-arrange or pre-negotiate any purchase or sale or non-competitively execute any transaction.

      Rule 539.C. Pre-Execution Communications Regarding Globex Trades

      3. Permissible Entry Methods for Orders

      a. Globex Cross

      the first party’s order is entered into the Globex platform first. The second party’s order may not be entered into the Globex platform until a period of 5 seconds has elapsed from the time of entry of the first order.

      FINDINGS:

      Pursuant to an offer of settlement that Ashish Shah (“Shah”) presented at a hearing on November 15, 2018, in which Shah neither admitted nor denied the findings or rule violations upon which the penalty is based, a Panel of the COMEX Business Conduct Committee (“Panel”) found that between February 11, 2016 and July 14, 2016, Shah, while active in various COMEX Gold, Silver, and Copper futures markets, executed a series of trades between two proprietary accounts with common beneficial ownership with the intent that the buy and sell orders for each account match. The Panel further found that while active in those same markets, Shah frequently participated in the execution of pre-arranged trades for accounts with different beneficial ownership in which the buy and sell orders were entered within approximately one second of each other.

      The Panel found that as a result of the foregoing, Shah violated Exchange Rules 534 and 539.C.3.a

      PENALTY:

      In accordance with the settlement offer, and after considering Shah’s financial condition, the Panel ordered Shah to pay a fine to the Exchange in the amount of $5,000. The Panel also suspended Shah from all direct or indirect access to any trading floor or electronic trading or clearing platform owned or operated by CME Group Inc., including Globex, for a period of six months beginning on November 19, 2018.