Haitong International Futures Limited
CBOT RULE VIOLATIONS:
Rule 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.
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 trades or 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.
Rule 576 Identification of Globex Terminal Operators
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 user 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 user ID to access Globex. In no event may a person enter an order or permit the entry of an order by an individual using a user ID other than the individual’s own unique user ID.
Pursuant to an offer of settlement in which Haitong International Futures Limited (“Haitong”) neither admitted nor denied the rule violations upon which the penalty is based, on December 17, 2015, a Panel of the Chicago Board of Trade Business Conduct Committee (“BCC” or “Panel”) found that Haitong was subject to the BCC’s jurisdiction pursuant to Rules 402 and 418. The Panel also found that on multiple dates between December 2012 and June 2014, Haitong traders executed numerous transactions for their client over several days in the E-mini Dow calendar spread wherein orders for Haitong accounts self-matched. The matching buy and sell orders were entered with the knowledge and intent that the orders would match opposite one another. The purpose of these transactions was to roll positions from one contract month to the next. The Panel also found that Haitong failed to diligently supervise its traders in a manner sufficient to ensure that their conduct was consistent with Exchange rules. Additionally, during this time period, Haitong failed to assign unique Tag50 user IDs to its employees. Following this occurrence, Haitong undertook remedial measures and training. The Panel concluded that Haitong thereby violated CBOT Rules 432.W., 534, and 576.
In accordance with the settlement offer, the Panel ordered Haitong to pay a fine of $90,000.
December 21, 2015