NOTICE OF DISCIPLINARY ACTION

NON-MEMBER:

JINGYOU INTERNATIONAL TECHNOLOGY LTD.

COMEX RULES:

539. Prearranged, Pre-Negotiated and Noncompetitive Trades Prohibited
(In Part)

539.A. General Prohibition

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

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.

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.

FINDINGS:

Pursuant to an offer of settlement in which Jingyou International Technology Ltd. neither admitted nor denied the rule violations upon which the penalty is based, on November 15, 2023, a Panel of the COMEX Business Conduct Committee (“Panel”) found that between July 27, 2021, and September 7, 2021, a Jingyou trader placed buy and sell orders in the same product and expiration month in the Aluminum futures market on behalf of an account owned by Jingyou in order to test the firm’s trading system to ensure trades were being properly allocated. The trader knew or reasonably should have known that the purpose of the orders was to avoid taking a bona fide market position exposed to market risk.

The Panel further found that on September 27, 2021, and September 28, 2021, Jingyou employees prearranged transactions in the Aluminum futures calendar spread market between an account owned by Jingyou and an account owned by a Jingyou employee. The purpose of these trades was to also test the firm’s trading and allocation system. The volume from the prearranged trades contributed to the firm reaching the requisite volume threshold in the Exchange’s Aluminum market maker program and thereby receive a $4,000 stipend.

The Panel also found that between July 2021, and September 2021, Jingyou failed to diligently supervise its employees by not providing sufficient compliance training or educational materials regarding COMEX rules and failed to diligently supervise its employees’ trading to ensure compliance with COMEX rules regarding wash trades and noncompetitive trading.

PENALTY:

In accordance with the settlement offer, the Panel ordered Jingyou to pay a fine in the amount of $25,000 and to pay $4,000 in disgorgement.