NOTICE OF DISCIPLINARY ACTION

FILE NO.:

CME 18-0883-BC

NON-MEMBER:

Pierre Tomatis

CME RULE VIOLATIONS:

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.

Q19: What is an indirect wash trade?

A19: One or more purchases (sales) opposite a counterparty followed by a sale (purchase) at the same or similar price opposite the same or different counterparties may be deemed an “indirect wash trade” in violation of Rule 534 if the orders are entered with the intent to negate or strictly limit market risk. Such intent exists if the party knew or should have known that the orders would negate or strictly limit market risk. Additionally, no person is permitted to accept, execute or accommodate the execution of such orders with knowledge of their character.

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:

Pursuant to an offer of settlement in which Pierre Tomatis (“Tomatis”) neither admitted nor denied the rule violations upon which the penalty is based, on

December 19, 2019, a Panel of the CME Business Conduct Committee (“Panel”) found that on several dates between December 19, 2017, and January 2, 2018, Tomatis entered buy or sell orders in multiple 2018 expirations of Japanese Yen futures, Euro/Japanese Yen futures, and Euro/British Pound futures indirectly opposite another trader with whom he jointly owned two accounts using outright and spread instruments. Specifically, Tomatis entered buy (sell) orders and traded opposite one counterparty, then the same counterparty subsequently entered sell (buy) orders at the same price and quantity that matched opposite the trader with whom Tomatis jointly owned accounts. Tomatis communicated with the original counterparty and joint owner of the accounts prior to entering all buy and sell orders in the same instruments, at the same price and quantity. As a result, Tomatis knew, or should have known, that he would trade indirectly opposite the party with whom he jointly owned accounts for the purpose of avoiding market risk. Tomatis also entered orders using the Tag 50 User ID assigned to the trader with whom he jointly owned the two accounts.

The Panel found that as a result of the foregoing, Tomatis violated CME Rules 534, and 576.

PENALTY:

In accordance with the settlement offer, the Panel ordered Tomatis to pay a fine of $20,000 and to serve a three-month suspension from direct and indirect access to any designated contract market, derivatives clearing organization, or swap execution facility owned or controlled by CME Group beginning on the effective date below and continuing through and including March 22, 2020.

EFFECTIVE DATE:

December 23, 2019