• #
      • CME 13-9620-BC
      • Effective Date
      • 10 June 2016

      Manufacturers Life Reinsurance Limited


      Rule 432. General Offences

      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 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.


      Pursuant to an offer of settlement in which Manufacturers Life Reinsurance Limited (“MLRL”) neither admitted nor denied the rule violations upon which the penalty is based, on June 8, 2016, a Panel of the Chicago Mercantile Exchange Business Conduct Committee (“BCC” or “Panel”) found that MLRL was subject to the BCC’s jurisdiction pursuant to Rules 402 and 418, and that that on July 5, September 27, and December 20, 2013, traders for MLRL executed several transactions on Globex in the E-mini S&P 500 futures markets and the CME foreign exchange (“FX”) markets where the accounts on both sides of the transactions were beneficially owned by MLRL. The purpose of these transactions was to move the positions between MLRL accounts. The Panel also found that MLRL failed to diligently supervise its traders in a manner sufficient to ensure that their conduct was consistent with Exchange rules.

      The Panel concluded that MLRL thereby violated CME Rules 432.W. and 534.


      In accordance with the settlement offer, the Panel ordered MLRL to pay a fine of $85,000.


      June 10, 2016