• NOTICE OF SUMMARY ACCESS DENIAL ACTION

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      • NYMEX 19-1122-4
      • Notice Date
      • 14 November 2019
    • NON-MEMBER:

      THOMAS LIM

      NYMEX RULES: RULE 413 SUMMARY ACCESS DENIAL ACTIONS (in part)

      413.A. Authority to Deny Access

      The Chief Regulatory Officer or his delegate, upon a good faith determination that there are substantial reasons to believe that such immediate action is necessary to protect the best interests of the Exchange, may order that: 1) any party be denied access to any or all CME Group markets; 2) any party be denied access to the Globex platform; 3) any party be denied access to any other electronic trading or clearing platform owned or controlled by CME Group; or (4) any Member be immediately removed from any trading floor owned or controlled by CME Group.

      FINDINGS:

      On November 14, 2019, CME Group’s Market Regulation Department (“Market Regulation”), through its Chief Regulatory Officer, summarily denied Jinlin Tian (“Tian”), 3 Crowns Capital (“3 Crowns”) and 3 Crowns employees or shareholders Damien Yeo (also known as Zi Yuan Yeo) (“Yeo”), Aaron Dao Chang Pang (“Pang”), Thomas Lim (also known as Seng Wah Lim) (“T. Lim”) and Michael Lim (also known as Sze Wee Lim) (“M. Lim”): (1) access to any trading floor owned or controlled by CME Group; and (2) direct and indirect access to any designated contract market, derivatives clearing organization or swap execution facility owned or controlled by CME Group. This summary access denial prohibits Tian, 3 Crowns, Yeo, Pang, T. Lim and M. Lim from directly or indirectly placing orders for, and trading or directing or controlling the trading of, any products on any designated contract market, derivatives clearing organization or swap execution facility owned or controlled by CME Group. It also prohibits such entity and individuals from owning, managing, controlling or having an interest in any products or positions on such platforms. Notwithstanding the foregoing, open positions may be liquidated by the clearing firms on their own or at the request of 3 Crowns.

      The summary access denial of Tian, 3 Crowns, Yeo, Pang, T. Lim and M. Lim is based on the following. In May 2019, Market Regulation initiated a formal investigation after identifying an anomalous pattern of trading activity between 3 Crowns traders and an unaffiliated account owned and traded by Tian who was not employed by 3 Crowns. The frequency and volume of trades, aggressiveness and passivity, time entry differentials, and profitability indicated the transactions may have been executed for non-bona fide purposes. In response to inquiries, 3 Crowns and Tian denied knowledge of one another or having any affiliation. Despite this denial, Market Regulation identified at least one apparent transfer of funds from 3 Crowns to Tian in 3 Crowns’ records.

      During the course of the subsequent investigation, Market Regulation identified other anomalies of 3 Crowns, including having accounts partially funded by traders suspended from CME Group markets, and having affiliations with other firms and individuals that are or were the subject of trade practice investigations.

      Throughout the review and pending investigation, 3 Crowns repeatedly failed or refused to provide complete and accurate information in response to Market Regulation document requests, including requests for communications, information related to affiliated entities and its own structure, and information related to affiliated parties. Certain 3 Crowns employees, including Yeo and T. Lim, provided misleading information during investigative interviews. M. Lim, the majority shareholder of 3 Crowns, provided false testimony regarding his ownership interest in or financing of non-3 Crowns traders or trading entities. Other 3 Crowns employees refused to be interviewed, including Pang who is a former 3 Crowns shareholder, a signatory on 3 Crowns account opening documents, and is still employed by M. Lim. Notably, the NYMEX Business Conduct Committee permanently barred Pang from trading on all CME Group Exchanges on July 16, 2019, in a prior disciplinary matter (NYMEX 16-0524-BC).

      These failures and refusals significantly impaired Market Regulation’s ability to investigate ongoing suspicious conduct. Accordingly, Market Regulation is not confident that Tian, 3 Crowns, Yeo, Pang, T. Lim and M. Lim, can continue to operate or conduct business without jeopardizing the integrity of CME Group markets.

      The foregoing supports a good-faith determination that there are substantial reasons to believe that such immediate action is necessary to protect the best interests of the Exchanges and the marketplace.

      ACCESS DENIAL:

      Pursuant to Rule 413, this access denial will remain in effect for 60 days, commencing on the effective date below and continuing through and including January 16, 2020, unless the Chief Regulatory Officer or his delegate provides written Notice that this access denial will be extended for an additional period of time.

      EFFECTIVE DATE:

      November 18, 2019