CME RULE VIOLATIONS:
CME 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 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 of wash trades.
Pursuant to an offer of settlement in which Kaio Sartori neither admitted nor denied the rule violations upon which the penalty is based, on April 20, 2020, a Panel of the CME Business Conduct Committee (“Panel”) found that on November 9, 2018, Sartori orchestrated three transactions in CME Premium Quoted European Style options on Euro/US Dollar futures where his firm owned the accounts on both sides of the transactions. Specifically, Sartori placed sell orders between the buy/ask spread, and then placed buy orders through another trader that traded opposite his resting orders. The purpose of these transactions was to move positions between his firm’s accounts.
The Panel concluded that Sartori thereby violated CME Rule 534.
In accordance with the settlement offer, the Panel ordered Sartori to pay to the Exchange a fine of $10,000 and suspended him from access to any trading floor owned or controlled by CME Group and from direct and indirect access to any designated contract market, derivatives clearing organization or swap execution facility owned or controlled by CME Group for five business days, beginning on the effective date below and continuing through and including April 28, 2020.
April 22, 2020