• NOTICE OF DISCIPLINARY ACTION

      • #
      • CME 17-0799-BC-2
      • Effective Date
      • 22 February 2019
    • FILE NO.:

      CME 17-0799-BC

      NON-MEMBER:

      LLC Insurance Company Respect

      CME RULE VIOLATIONS:

      Rule 432. General Offenses

      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 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.

      FINDINGS:

      Pursuant to an offer of settlement in which LLC Insurance Company Respect (“LLC Respect”) neither admitted nor denied the rule violations upon which the penalty is based, on February 20, 2019, a Panel of the Chicago Mercantile Exchange (“CME”) Business Conduct Committee (“Panel”) found that on several trade dates in June 2017, an employee of LLC Respect executed transactions on the CME Globex trading platform in the September 2017 E-Mini C2500 futures contracts for LLC Respect’s accounts where there was common beneficial ownership on both sides of the transactions. The LLC Respect employee executed the opposing buy and sell orders with the knowledge and intent that the orders would trade opposite one another. The Panel further found that during this time period, LLC Respect failed to diligently supervise its employees to ensure their conduct was consistent with Exchange Rules.
      The Panel concluded that LLC Respect thereby violated CME Rules 432.W and 534.

      PENALTY:

      In accordance with the settlement offer, the Panel ordered LLC Respect to pay a fine of $40,000.

      EFFECTIVE DATE:

      February 22, 2019