NOTICE OF DISCIPLINARY ACTION

NON-MEMBER:

XIAO HU LIU

CME RULES:

Rule 432.C General Offense

It shall be an offense to engage in dishonest conduct.

Rule 432.G. General Offenses

It shall be an offense to prearrange the execution of transactions in Exchange products for the purpose of transferring equity between accounts.

Rule 432.L.3. General Offenses

It shall be an offense:

L. 3. to fail to produce any books or records requested by duly authorized Exchange staff, in the format and medium specified in the request, within 10 days after such request is made or such shorter period of time as determined by the Market Regulation Department in exigent circumstances.

FINDINGS:

On December 22, 2022, the Chief Regulatory Officer of CME Group’s Market Regulation Department issued charges against Liu for violating Rules 432.C., 432.G., and 432.L.3., based on allegations that from July 7 2021, through July 9, 2021, Liu prearranged the execution of transactions in June 2022 Nikkei/USD and June 2023 Nikkei/USD futures markets for the purpose of transferring equity from a trader’s account to Liu’s account, using account login information that he had stolen from that trader. Liu also failed to produce records requested by Exchange staff.

On October 11, 2023, a Hearing Panel Chair of the CME Business Conduct Committee (“BCC”) first determined that Liu, having failed to submit a written answer to the charges issued against him, was deemed to have admitted the charges. Liu therefore waived his right to a hearing on the merits of the charges. Pursuant to Rule 408.F., a BCC Panel then found Liu 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 Liu to pay a fine in the amount of $150,000 in connection with this case and companion case CBOT 21-1502 ($25,000 allocated to CME) and permanently suspended Liu from direct 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.