NOTICE OF DISCIPLINARY ACTION

NON-MEMBER:

Xu Peng

CME RULE VIOLATION:                    

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 539. Prearranged, Pre-Negotiated and Noncompetitive Trades Prohibited (in part)

A. General Prohibition

No person shall prearrange or pre-negotiate any purchase or sale or noncompetitively execute any transaction….

FINDINGS:                       

On July 24, 2020, the Chief Regulatory Officer of the CME Group’s Designated Contract Markets charged Xu Peng with violating CME Rule 534 based on allegations that between August 27, 2018, and May 15, 2019, Peng  placed buy and sell orders in the same product and expiration month, where he knew or reasonably should have known that the purpose of the orders was to avoid taking a bona fide market position exposed to market risk in the British Pound, Canadian Dollar, Euro FX, Japanese Yen, New Zealand Dollar, Swiss Franc, and Euro/British Pound futures markets. Additionally, the CRO charged Peng with violating CME Rule 539 based on allegations that between September 14, 2018, and May 14, 2019, Peng prearranged or pre-negotiated the purchase or sale of British Pound, Swiss Franc, Canadian Dollar, and New Zealand futures contracts.

On November 18, 2020, a Hearing Panel Chair of the CME Business Conduct Committee (“BCC”) entered an order finding that Peng failed to answer the charges issued against him. In failing to answer the charge, the Hearing Panel Chair further ordered that Peng was deemed to have admitted the charges issued and waived his right to a hearing on the merits of the charges.

Pursuant to CME Rule 407.C., a penalty hearing was held before a Panel of the BCC (“Panel”) on November 18, 2020. The Panel found Peng guilty of committing the admitted charges.

PENALTY:                         

Based on the record and the Panel’s findings and conclusions, the Panel ordered that Peng pay a fine of $75,000. The Panel also suspended Peng from direct 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 Inc. beginning on the effective date below and continuing for a period of two years after the fine is paid in full.

EFFECTIVE DATE:                               

December 10, 2020