NOTICE OF DISCIPLINARY ACTION

NON-MEMBER:

Shay Capital LLC

CME 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 Shay Capital LLC neither admitted nor denied the rule violations or factual findings upon which the penalty is based, on October 25, 2022, a Panel of the Chicago Mercantile Exchange (“CME”) Business Conduct Committee (“Panel”) found that on multiple occasions between January 1, 2020, and August 31, 2020, a trader employed by Shay entered buy and sell orders in various E-mini S&P 500 futures that matched between two Shay accounts with common beneficial ownership. Shay’s trader reasonably should have known that the execution of the orders would result in a prohibited wash result. The purpose of the orders was to hedge overnight exposure. The Panel also found that Shay failed to diligently supervise its employee through appropriate training to prevent violations of Exchange rules pertaining to wash trades.

The Panel concluded that Shay thereby violated CME Rules 432.W. and 534.

PENALTY:

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