EXCHANGE RULE VIOLATIONS:
432. General Offenses (in part)
It shall be an offense:
L.2. to fail to fully answer all questions or produce all books and records at such hearing or in connection with any investigation, or to make false statements;
Q. to commit an act which is detrimental to the interest or welfare of the Exchange or to engage in any conduct which tends to impair the dignity or good name of the Exchange;
W. for any party to fail to diligently supervise its employees and agents in the conduct of their business relating to the Exchange.
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 on wash trades. Additionally, no person shall knowingly execute or accommodate the execution of such orders by direct or indirect means.
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.
Pursuant to an offer of settlement in which Exante Limited (“Exante”) neither admitted nor denied the rule violations upon which the penalty is based, on June 23, 2020, a Panel of the Chicago Mercantile Exchange Business Conduct Committee (“Panel”) found that during the time period of September 2018 to September 2019, Exante’s customer accounts were improperly set up, which resulted in inaccurately netting customer positions and affected open interest data published by the Exchange. The Panel also found that Exante’s improper account setup resulted in a failure to assign unique Tag50 user IDs to Exante’s employees and clients. Additionally, the Panel found that on November 12, 2018, an employee of Exante entered buy and sell orders in Eurodollar options on futures and knew, or should have known, that the orders would match opposite each other for the purpose of transferring positions from one clearing firm to another clearing firm. Moreover, on more than one occasion, Exante failed to fully answer regulatory requests from Market Regulation, which impeded the Exchange’s investigation into Exante’s conduct. Finally, and as a result of the above, the Panel found that Exante failed to diligently supervise its employees in a manner sufficient to ensure that their conduct was consistent with Exchange rules.
The Panel found that as a result, Exante violated Rules 432.L.2., 432.Q., 432.W., 534 and 576.
In accordance with the settlement offer, the Panel ordered Exante to pay to the Exchange a fine of $350,000.