CME RULE VIOLATIONS:
Rule 534. Wash Trades Prohibited (In part)
No person shall place … buy and sell orders in the same product and expiration month … 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 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.
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.
On August 7, 2020, the Chicago Mercantile Exchange (“CME”) Chief Regulatory Officer issued charges against non-member Jin Li (“Li”) for violating CME Rules 534 and 576 based on allegations that on one or more occasions between August 29, 2018, and March 8, 2019, Li placed matching buy and sell orders in the same product and expiration month in various CME FX futures markets and he knew or reasonably should have known that the purpose of the orders was to avoid taking bona fide market positions exposed to market risk. During the same timeframe, Li permitted the entry of an order by another person using his unique Tag50 User ID.
On February 4, 2021, a Hearing Panel Chair of the CME Business Conduct Committee (“BCC”) first determined that Li, having failed to submit a written answer to the charges issued against him, was deemed to have admitted the charges. Li, therefore, waived his right to a hearing on the merits of the charges. Pursuant to CME Rule 408.F., a BCC Panel then found Li guilty of committing the admitted charges and held a penalty hearing thereafter.
Based on the record and the Panel’s findings and conclusions, the Panel ordered Li to pay a fine in the amount of $40,000, and suspended Li 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 two years, beginning on the effective date below and continuing for two years from the date that the ordered fine is paid.
February 26, 2021