Notice of Disciplinary Action

NON-MEMBER:

Dichao Xie

CME RULE VIOLATIONS:

Rule 432. General Offenses (In Part)

It shall be an offense:

G. to pre-arrange the execution of transactions in Exchange products for the purpose of transferring equity between accounts.

Rule 539.A. Prearranged, Pre-Negotiated and Noncompetitive Trades Prohibited (in part)

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

FINDINGS:

Pursuant to an offer of settlement in which Dichao Xie neither admitted nor denied the rule violations or factual findings upon which the penalty is based, on August 23, 2023, a Panel of the Chicago Mercantile Exchange (“CME”) Business Conduct Committee (“Panel”) found that on numerous occasions from December 2021 through March 2022, Xie traded his personal account opposite his employer’s account while using two Operator IDs for his employer’s account and one Operator ID for his personal account. Xie prearranged the execution of transactions in various Feeder Cattle futures and options for the purpose of transferring equity between accounts, a violation of CME Rule 432.G., and prearranged and noncompetitively executed transactions in Feeder Cattle futures and options, including by means of indirect round-turns, a violation of CME Rule 539.A. More specifically, in each instance Xie executed trades between his personal account and his employer’s account in order to initiate a new position or liquidate a position he previously initiated opposite his employer or one or more unrelated market participants. In total, his employer’s account realized an overall net loss of $206,775 because of Xie’s activity.

The Panel concluded that as a result of the foregoing, Xie violated CME Rules 432.G. and 539.A.

PENALTY:

In accordance with the settlement offer, the Panel ordered Xie to pay a fine of $75,000, restitution in the amount of $206,775, and suspended his 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 restitution are paid.