CME fines dealer for violating wash trades prohibition

Worldwide derivatives market CME Group has imposed a high-quality of $15,000 on Lewis Langston for violating wash merchants prohibition.

Pursuant to a proposal of settlement through which Lewis Langston neither admitted nor denied the Rule violations or factual findings upon which the penalty relies, a Panel of the COMEX Enterprise Conduct Committee discovered that on June 30, July 6, and July 7, 2021, Langston and one other dealer positioned opposing orders in COMEX Copper Futures Calendar Spreads for accounts with frequent useful possession for the aim of transferring positions between accounts, leading to these orders buying and selling reverse each other.

Langston and the opposite dealer positioned the opposing purchase and promote orders with the information and intent that the orders would commerce reverse one another, and fairly ought to have identified that the aim of the orders was to keep away from taking a bona fide market place uncovered to market danger.

The Panel discovered that because of the foregoing, Langston violated COMEX Rule 534.

The related Change rule states:

• RULE 534. WASH TRADES PROHIBITED

No individual shall place or settle for purchase and promote orders in the identical product and expiration month, and, for a put or name possibility, the identical strike worth, the place the individual is aware of or moderately ought to know that the aim of the orders is to keep away from taking a bona fide market place uncovered to market danger (transactions generally identified or known as wash gross sales). Purchase and promote orders for various accounts with frequent useful possession which might be entered with the intent to negate market danger or worth competitors shall even be deemed to violate the prohibition on wash trades. Moreover, no individual shall knowingly execute or accommodate the execution of such orders by direct or oblique means.

In accordance with the settlement provide, the Panel ordered Langston pay a high-quality to the Change within the quantity of $15,000 and serve a five-business-day suspension from entry to any buying and selling ground owned or managed by CME Group and from direct and oblique entry to any designated contract market, derivatives clearing group or swap execution facility owned or managed by CME Group.

The suspension will run from July 28, 2023 by, and together with August 3, 2023.