NOTICE OF DISCIPLINARY ACTION

NON-MEMBER:

WAI CHEONG ARTHUR CHAN

RULE VIOLATION:

COMEX 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.

COMEX 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.

FINDINGS:

On November 16, 2020, the CME Group Chief Regulatory Officer (“CRO”) charged Wai Cheong Arthur Chan (“Chan”) with violating COMEX Rules 534 and 576 based on allegations that Chan entered orders on Globex between accounts owned by his employer for the purpose of reducing margin risk in one of the accounts between October 23, 2019 and October 30, 2019 and allowed his employees to enter these orders on Globex using his Tag 50 User ID.

On March 16, 2021, a Hearing Panel Chair of the COMEX Business Conduct Committee (“BCC”) first determined that Chan, having failed to submit a written answer to the charges issued against him, was deemed to have admitted the charges. Chan, therefore, waived his right to a hearing on the merits of the charges. Pursuant to COMEX Rule 408.F., a BCC Panel then found Chan guilty of committing the admitted charges and held a penalty hearing thereafter.

PENALTY:

Based on the record and the Panel’s findings and conclusions, the Panel ordered Chan to pay a fine in the amount of $50,000 and serve a two year suspension 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. The suspension shall run from April 7, 2021 through April 7, 2023, inclusive.