RULE 533 SIMULTANEOUS BUY & SELL ORDERS FOR DIFFERENT BENEFICIAL OWNERS
On the Globex platform, opposite orders for different beneficial owners that are simultaneously placed by a party with discretion over both accounts may be entered into the Globex platform provided that one order is exposed for a minimum of 5 seconds in the case of futures orders or a minimum of 15 seconds in the case of options orders. An order allowing for price and/or time discretion, if not entered immediately upon receipt, may be knowingly entered opposite another order entered by the same firm only if this other order has been entered immediately upon receipt and has been exposed on the Globex platform for a minimum of 5 seconds for futures orders or a minimum of 15 seconds for options orders.
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 trades or 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 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 operator 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 operator ID to access Globex. In no event may a person enter an order or permit the entry of an order by an individual using an operator ID other than the individual’s own unique operator ID.
On June 3, 2021, the CME Group Chief Regulatory Officer (“CRO”) charged Tujun Hong with violating NYMEX Rules 533, 534, and 576 based on allegations that, between November 22, 2019 and January 2, 2020, Hong, using his own, as well as others, Tag 50 User IDs, executed numerous trades in the Crude Oil futures market between accounts owned by Hong. The Panel also found that on December 2, 2019, Hong entered opposite orders on CME Globex for different beneficial owners in the Crude Oil futures market without first exposing one of the orders to the market for a minimum of five seconds.
On September 13, 2021, a Hearing Panel Chair of the NYMEX Business Conduct Committee (“BCC”) first determined that Hong, having failed to submit a written answer to the charges issued against him, was deemed to have admitted the charges. Hong, therefore, waived his right to a hearing on the merits of the charges. Pursuant to NYMEX Rule 408.F., a BCC Panel then found Hong 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 Hong to pay a fine in the amount of $85,000 ($5,000 of which is allocated to CME 20-1297-BC and $80,000 of which is allocated to NYMEX 20-1297-BC) and serve a five-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.