NOTICE OF DISCIPLINARY ACTION

NON-MEMBER:

Alexandre Denlinger

CME RULE VIOLATIONS:

432. General Offenses (in part)

It shall be an offense:

B.1. to engage, or attempt to engage, in fraud or bad faith;

H. to…intentionally or recklessly use or employ, or attempt to use or employ, any manipulative device, scheme, or artifice to defraud; or to purchase or sell, or offer to purchase or sell Exchange futures or options contracts, or any underlying commodities or securities, for the purpose of upsetting the equilibrium of the market or creating a condition in which prices do not or will not reflect fair market values;

T. to engage in dishonorable or uncommercial conduct.

FINDINGS:

Pursuant to an offer of settlement in which Alexandre Denlinger neither admitted nor denied the rule violations or factual findings upon which the penalty is based, on November 5, 2021, a Panel of the CME Business Conduct Committee (“Panel”), found that on numerous occasions between March 1, 2017, and March 31, 2018, Denlinger entered numerous orders in E-mini S&P 500, E-mini NASDAQ, and E-Mini Russell 2000 Index futures contracts in the final seconds leading up to the expiration of corresponding binary options contracts on another exchange. Knowing that these binary options settled based upon the last 25 trades in the underlying CME futures markets prior to the options’ expiration, Denlinger executed a series of one-lot trades for the related underlying futures contracts shortly before the options’ expiration and at prices that, when factored into the binary options exchange’s settlement protocol, favored Denlinger’s previously established binary options positions. The Panel found that Denlinger traded on CME markets to create a condition in which prices did not reflect fair market value.

The Panel concluded that Denlinger thereby violated CME Rules 432.B.1., 432.H., and 432.T.

PENALTY:

In accordance with the settlement offer and after taking Denlinger’s financial condition into consideration when it levied the sanction, the Panel ordered Denlinger to pay a fine in the amount of $6,000 and to serve a six-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 November 9, 2021, through and including November 9, 2027.