• NOTICE OF DISCIPLINARY ACTION

      • #
      • CBOT 20-1287-BC
      • Effective Date
      • 28 July 2021
    • NON-MEMBER:          

      Mercantile Exchange of Vietnam Corporation

      CBOT RULE VIOLATIONS:   

      Rule 432 (“General Offenses”)(in part)

      It shall be an offense:

      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 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.

      FINDINGS:         

      Pursuant to an offer of settlement in which Mercantile Exchange of Vietnam (“MXVC”) neither admitted nor denied the rule violations or factual findings upon which the penalty is based, on July 26, 2021, a Panel of the Chicago Board of Trade (“CBOT”) Business Conduct Committee (“Panel”) found that on January 13, 2020, MXVC, while acting as an intermediary for its customers who cannot access a foreign exchange directly, executed transactions in various Agriculture futures products between two accounts with common beneficial ownership. MXVC executed the opposing buy and sell orders with the knowledge and intent that the orders would trade opposite one another. The purpose of these transactions was to transfer positions between accounts. The Panel also found that MXVC failed to provide compliance training to its employees to ensure their conduct was consistent with Exchange Rules. The Panel concluded that MXVC thereby violated CBOT Rules 432.W. and 534.

      PENALTY:          

      In accordance with the settlement offer, the Panel ordered MXVC to pay a $30,000 fine.

      EFFECTIVE DATE:                

      July 28, 2021