NOTICE OF DISCIPLINARY ACTION

MEMBER:

MICHAEL CATALANO

EXCHANGE RULE VIOLATIONS:

RULE 539 (PREARRANGED, PRE-NEGOTIATED AND NONCOMPETITIVE TRADES PROHIBITED)

539.A. GENERAL PROHIBITION

No person shall prearrange or pre-negotiate any purchase or sale or noncompetitively execute any transaction, except in accordance with Sections B. and C. below.

539.C. PRE-EXECUTION COMMUNICATIONS REGARDING GLOBEX TRADES

Parties may engage in pre-execution communications with regard to transactions executed on the Globex platform where one party (the first party) wishes to be assured that a contra party (the second party) will take the opposite side of the order under the following circumstances:

3. Permissible Entry Methods for Orders

The following order entry methods for futures, options, spreads and combinations vary by product, as set forth in the Rule 539.C. Crossing Protocols Table (“Table”) in the Interpretations Section at the end of Chapter 5.

a. Globex Cross (“G-Cross”)
The first party’s order is entered into the Globex platform first. The second party’s order may not be entered into the Globex platform until a period of 5 seconds has elapsed from the time of entry of the first order.

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. 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 that Michael Catalano (“Catalano”) presented at a hearing on August 13, 2020 in which Catalano neither admitted nor denied the rule violations upon which the penalty is based, a Panel of the COMEX Business Conduct Committee (“Panel”) found that between May 2, 2017 and November 30, 2018, Catalano executed a series of pre-arranged trades in COMEX High-Grade Copper Trading at Settlement futures without exposing the orders subject to pre-execution communication for a minimum of five seconds. Further, the Panel found that Catalano improperly entered orders on Globex using another trader’s unique TAG 50 User ID.

Based on the foregoing, the Panel found that Catalano violated Exchange Rules 539.A. (General Prohibition); 539.C. (Pre-Execution Communications Regarding Globex Trades); and 576 (Identification of Globex Terminal Operators).

PENALTY:

In accordance with the settlement offer, the Panel ordered Catalano to pay a fine to the Exchange in the amount of $50,000.