CME Group Imposed A $60K Fine Against Trader Involved In Disruptive Action
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CME Group, a derivatives marketplace operator located in Chicago, has imposed a $60,000 fine against a trader known as Lei Shu. The company has also permanently suspended this trader from its trading floors.
CME Bans Trader Amid Disruptive Action
CME Group said that Shu was guilty of participating in disruptive practices in the FX futures markets, which was against the rules of the company. The CME Group further said that between March 2 and October 8, 2021, Shu imposed layered orders at the top of the book using several foreign exchange futures markets.
The FX futures markets that the trader in question used include the Australian dollar futures, British pounds futures and the Euro FX futures. The practice used by the trader is when one places orders that are near the best bid and asking price to increase the possibility of the order being fulfilled at the best possible price.
On the other hand, the rule used by CME Group on the matter needs that all the orders be created to execute bona fide transactions. The rule on the illegal disruptive practice requires that all the non-actionable messages be secured in good faith for the right purposes.
The notice released by CME Group further said that, “Shu engaged in a pattern of entering or modifying multiple orders, typically on the same order size in the market at one or multiple price levels on the same side of the book and then cancelling all of the orders within 10 seconds of placement of the first order.”
Shu Violates Market Rules
The derivatives market operator said that it gave the trader an opportunity to defend against this allegation by submitting a written response. Additionally, the Chief Regulatory Officer of CME Group, has also charged Shu in September 2022 with violating the rules about illegal disruptive practices and its failure to explain the issue in the investigative hearing committee.
On April 25, 2023, the Chair of the CME Business Conduct Committee Hearing Panel said that it had reached a decision that Shu admitted to the charges over his failure to respond to the allegations. The trader was therefore determined to be guilty.
The permanent suspension that has also been issued against Shu has also said that he was banned from accessing the designated contract market, a derivatives clearing institution or a swap execution platform that is controlled or owned by the CME Group.
