NOTICE OF DISCIPLINARY ACTION

FILE NO.:

CME 18-0883-BC

NON-MEMBER:

Charlotte Saint-Paul

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.

FINDINGS:

Pursuant to an offer of settlement in which Charlotte Saint-Paul (“Saint-Paul”) 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, Saint-Paul accommodated the execution of indirect wash trades by entering matching buy and sell orders in multiple 2018 expirations of Japanese Yen futures, Euro/Japanese Yen futures, and Euro/British Pound futures opposite two other market participants who jointly owned two accounts using outright and spread instruments. Specifically, Saint-Paul entered buy (sell) orders at the same price and quantity and traded opposite one counterparty, then subsequently entered sell (buy) orders that matched opposite the second counterparty while knowing that both counterparties jointly owned accounts. Saint-Paul communicated with the two other parties prior to entering all matching buy and sell orders in the same instruments, at the same price and quantity. Thus, Saint-Paul acted as a conduit to knowingly accommodate indirect wash trades for the purpose of avoiding market risk.

The Panel found that as a result of the foregoing, Saint-Paul violated CME Rule 534.

PENALTY:

In accordance with the settlement offer, the Panel ordered Saint-Paul to pay a fine of $20,000 and to serve a two-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 February 22, 2020.

EFFECTIVE DATE:

December 23, 2019