Ronin Capital LLC
CME RULE VIOLATIONS:
Rule 432. General Offenses
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 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.
Pursuant to an offer of settlement in which Ronin Capital LLC (“Ronin”) neither admitted nor denied the rule violations upon which the penalty is based, on September 24, 2020, a Panel of the Chicago Mercantile Exchange (“CME”) Business Conduct Committee (“Panel”) found that on June 4, 2019, a Ronin trader executed All-or-None transactions in CME covered December 2019 Eurodollar 9762 put options opposite an affiliate account with common beneficial ownership. Specifically, a Ronin trader placed buy orders opposite sell orders entered in an affiliate account and knew or reasonably should have known the orders would match opposite one another for the purpose of alleviating margin pressure while avoiding market risk. The Panel further found that, at the time of the transactions, Ronin failed to diligently supervise its traders in a manner sufficient to ensure that their conduct was consistent with Exchange rules.
The Panel concluded that Ronin thereby violated CME Rules 432.W and 534.
In accordance with the settlement offer, the Panel ordered Ronin to pay a fine of $85,000.
September 28, 2020