NOTICE OF DISCIPLINARY ACTION

NON-MEMBER:

Kai Kai Hu

EXCHANGE RULES:

Rule 575.A. Disruptive Practices Prohibited

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:

On December 5, 2018, a Panel of the Commodity Exchange (“COMEX”) Probable Cause Committee (“PCC”) charged non-member, Kai Kai Hu (“Hu”) with violating Exchange Rules 575.A. and 576, for entering orders, either directly or through his agents, with the intent, at the time of order entry, to cancel the orders before execution while active several COMEX precious metal markets between November 2016 and February 2017 while also allowing several individuals to use his unique user TAG50 ID to enter orders and execute trades.

On January 24, 2019, a Hearing Panel Chair of the COMEX Business Conduct Committee (“BCC”) entered an order finding that Hu failed to answer the charges against him. The Hearing Panel Chair further ordered that Hu was deemed to have admitted the charges issued and waived his right to a hearing on the merits of the charges.

On February 13, 2019, a penalty hearing was held before a panel of the COMEX BCC (“BCC Panel”) which found that Hu had committed the violations charged.

PENALTY:

In accordance with Exchange Rule 402.B. (Sanctions), the BCC Panel ordered Hu to (1) pay a $75,000 fine to the Exchange in connection with this case and companion case NYMEX 17-0648 ($37,500 of which is allocated to COMEX) and (2) be permanently banned from (a) applying for Membership at any CME Group exchange; (b) direct or indirect access to any trading or clearing platform owned or controlled by the CME Group, Inc. exchange, including CME Globex.