NOTICE OF DISCIPLINARY ACTION

NON-MEMBER:

Kyungnam Kim

CME RULE VIOLATIONS:

Rule 539.A. General Prohibition (in part)

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

Rule 576. Identification of Globex Terminal Operations

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.

FINDINGS:

On March 16, 2022, the Chief Regulatory Officer charged Kyungnam Kim with violating CME Rule 539.A. and Rule 576 based on allegations that on one or more occasions between January 2019, and September 2020, Kim prearranged or pre-negotiated the purchase or sale of E-Mini NASDAQ 100 futures on Globex. Specifically, Kim engaged in a pattern of trading in pairs wherein a sub-group of passive participants entered orders on either the buy or sell side past the first or second book level of the available market. A separate sub-group of aggressive participants would quickly trade against these resting orders. As a part of this pattern, the passive participant entered smaller orders, typically for one to two contracts, while the aggressive participant entered large orders, usually for 30 contracts, on the opposite side of the market, and traded opposite the passive participant. The aggressive order was typically placed within five seconds of the initial, passive orders placement. Additionally, Kim used another individual’s operator ID to access Globex and enter orders.

On March 15, 2023, a Hearing Panel Chair of the CME Business Conduct Committee (“BCC”) first determined that Kim, having failed to submit a written answer to the charges issued against him was deemed to have admitted the charges. Kim therefore waived his right to a hearing on the merits of the charges. Pursuant to CME Rule 408.F., a BCC Panel then found Kim guilty of committing the admitted charges and held a penalty hearing thereafter.

PENALTY:

Based on the record and the Panel’s findings and conclusions, the Panel ordered that Kim pay a fine in the amount of $55,000 ($35,000 of which is allocated to CME), disgorgement of profits of $17,320 ($11,789.72 of which is allocated to CME), and suspended Kim’s 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 for a period of one year, beginning on the effective date and continuing for one year from the date that the ordered fine and disgorgement of profits are paid.

EFFECTIVE DATE:

April 5, 2023