• NOTICE OF DISCIPLINARY ACTION

      • #
      • NYMEX 15-0115
      • Effective Date
      • 19 July 2019
    • FILE NO.:

      NYMEX 15-0115-BC

      NON-MEMBER:

      Weifeng Wang

      NYMEX RULE VIOLATIONS:

      (LEGACY) Rule 526 Block Trades (in part)

      The Exchange shall designate the products in which block trades shall be permitted and determine the minimum quantity thresholds for such transactions.

      NYMEX Market Regulation Advisory Notice RA 1506-5 (in relevant part)

      11. Use of Nonpublic Information Regarding Block Trades (in part)

      Pre-hedging or anticipatory hedging of any portion of a block trade in the same product or a closely-related product based upon a solicitation to participate in a block trade is not permitted. A closely related product is a product that is highly correlated to, serves as a substitute for, or is the functional economic equivalent of the product being traded as a block.

      Counterparties to a block trade are permitted to initiate trades to hedge or offset the risk associated with the block trade following the consummation of the block trade, including during the period preceding the public report of the block trade by the Exchange.

      Except as provided above, parties privy to nonpublic information attendant to a block trade are prohibited from trading in the same product or a closely-related product for the purpose of taking advantage of such information prior to the public report of the block trade by the Exchange. This prohibition is not intended to preclude such parties from continuing to transact in the marketplace in the context of their normal business; rather, it precludes parties in possession of actionable nonpublic information regarding an imminent block trade or report of a block trade from specifically using such information to their advantage. Information regarding a block trade is considered to be nonpublic until such time that the block trade details have been disseminated to the marketplace by the Exchange or the information can otherwise be demonstrated to have become stale or obsolete.

      FINDINGS:

      Pursuant to an offer of settlement in which Weifeng “Oliver” Wang (“Wang”) neither admitted nor denied the rule violations upon which the penalty is based, on July 17, 2019, a Panel of the New York Mercantile Exchange Business Conduct Committee (“Panel”) found that on multiple occasions between June 2015 and October 2015, while employed as a trader for a firm, Wang, after receiving the solicitation of a block trade but prior to consummating the blocK trade with the customer, either executed a separate block trade with a liquidity provider or executed a trade on CME Globex in the same product and on the same side of the market as the customer’s proposed block trade in order to hedge the block trade ultimately executed opposite the customer. By entering into the hedge transaction and establishing the price of the hedge transaction prior to consummating the customer block trade, Wang was able to guarantee his employer a profit on the subsequent execution opposite the customer.

      The Panel concluded that as a result of the foregoing, Wang violated (Legacy) NYMEX Rule 526.

      PENALTY:

      In accordance with the settlement offer, the Panel ordered Wang to pay a fine in the amount of $19,000, and suspended his access to all CME Group trading floors and direct and indirect access to all electronic trading and clearing platforms owned or controlled by CME Group Inc. for 5 business days. The suspension shall run from July 19, 2019, through July 25, 2019, inclusively.

      EFFECTIVE DATE:

      July 19, 2019