NOTICE OF DISCIPLINARY ACTION

NON-MEMBER:                   

Phoenix 26 Capital Management L.P.

CME RULE VIOLATIONS:             

RULE 432.  GENERAL OFFENSES (in part)

It shall be an offense:

Q. to commit an act which is detrimental to the interest or welfare of the Exchange or to engage in any conduct which tends to impair the dignity or good name of the Exchange.

FINDINGS:      

Pursuant to an offer of settlement in which Phoenix 26 Capital Management L.P. (“Phoenix”) neither admitted nor denied the rule violation or factual findings upon which the penalty is based, on February 22, 2022, a Panel of the Chicago Mercantile Exchange (“CME”) Business Conduct Committee (“Panel”) found that on December 20, 2019, an automated trading system (“ATS”)—licensed to  Phoenix and designed and operated by a third party—entered multiple orders on behalf of a Phoenix account in the December 2019 Micro E-mini Nasdaq futures market, in a period of low liquidity, and 10 minutes prior to the expiration of the contract. The ATS’s orders could not be filled immediately and instead were modified, resubmitted, and entered through multiple price levels. The ATS failed to identify its own orders in market data, which caused the ATS to enter new orders through multiple price levels. As a result, this activity caused the market to enter a reserved state on multiple occasions. The Panel found that Phoenix thereby violated Rule 432.Q.

PENALTY:                   

In accordance with the settlement offer, the Panel ordered Phoenix to pay a fine of $40,000.

EFFECTIVE DATE:               

February 24, 2022