NOTICE OF DISCIPLINARY ACTION

NON-MEMBER:

Tao Sun

COMEX RULE:

Rule 539. Prearranged, Pre-Negotiated and Noncompetitive Trades Prohibited (In Part)

539.A. General Prohibition

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

FINDINGS:

Pursuant to an offer of settlement in which Tao Sun neither admitted nor denied the rule violations upon which the penalty is based, on September 13, 2021, a Panel of the COMEX Business Conduct Committee (“BCC Panel”) found that on multiple occasions during the time period of December 2018 to March 2019, while negotiating and prior to executing OTC trades with a counterparty, Sun hedged the OTC trades with futures trades on Globex opposite the same counterparty. Specifically, Sun directed the counterparty to enter an order for either Gold or Silver futures at a specific quantity and price on Globex. Sun then traded opposite the counterparty’s Globex order in less than five seconds. Sun was therefore able to minimize the difference in price between his OTC trade and hedge trade, resulting in smaller hedge costs.

The Panel found that as a result of the foregoing, Sun violated Rule 539.A.

PENALTY:

In accordance with the settlement offer, the BCC Panel ordered Sun to pay a $15,000 fine and serve a five-business-day suspension to 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 September 15, 2021 through September 21, 2021, inclusive.