NOTICE OF DISCIPLINARY ACTION

NON-MEMBER:

Arthur Liming

CBOT RULE VIOLATION:

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.

Market Regulation Advisory Notice CME Group RA2008-5 (In Part)

Q5: In the event buy and sell orders for accounts with common beneficial ownership are simultaneously entered for a legitimate purpose, how should such orders be executed to comply with Rule 534?

A5: In the electronic venue, one of the orders should be entered on the electronic trading platform and executed in full prior to the entry of the second order. This will ensure that the orders are not executed opposite each other and will provide a clear audit trail with respect to the entry and execution of the orders. In this circumstance, a written and timestamped record must be made of any order that is not entered on the electronic platform immediately upon receipt.

FINDINGS:

Pursuant to an offer of settlement in which Arthur Liming neither admitted nor denied the rule violations or factual findings upon which the penalty is based, on October 5, 2023, a Panel of the Chicago Board of Trade (“CBOT”) Business Conduct Committee (“Panel”) found that on multiple occasions between February 9, 2021, and September 13, 2021, Liming placed buy and sell orders in Corn TAS and Corn futures contracts that matched between accounts with common beneficial ownership. The Panel found that Liming executed these trades on behalf of independently managed business units with common beneficial ownership. In some instances, Liming entered buy and sell orders for accounts belonging to the same independently managed business unit. Here, the Panel found that Liming should reasonably have known that the execution of the orders would achieve a wash result.

In the other instances in which Liming entered orders for accounts with beneficial ownership, the buy orders that Liming entered were on behalf of an independently managed business unit different than the business unit for which he entered the sell orders. In those instances the Panel also found that, in entering the second set of orders prior to execution in full of the first set of orders, Liming reasonably should have known that the execution of the orders would achieve a wash result.

The Panel concluded that Liming violated CBOT Rule 534.

PENALTY:

In accordance with the settlement offer, the Panel ordered Liming to pay a $15,000 fine and suspended him from access to any trading floor owned or controlled by CME Group and from all direct and indirect access to any designated contract market, derivatives clearing organization, or swap execution facility owned or controlled by CME Group Inc. for 20 business-days. The suspension shall begin on the effective date below and continue through and include trade date November 3, 2023.

EFFECTIVE DATE:

October 9, 2023