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CME fines hedge traders for disruptive Globex futures trading
CME said the traders’ spread setups led to favourable over-allocations or under-allocations, with penalties totaling $346,000 plus disgorgement of $247,048.12 in trading profits.
CME Group has fined two hedge fund traders and suspended one of them from accessing its markets after a disciplinary panel found their trading on CME’s Globex platform produced advantageous allocations of futures contracts, Hedgeweek reported.
The exchange said Bernie Yu and Jeffrey Liu were involved in activity between 3 November and 5 December 2023, including repeatedly creating and executing User Defined Spreads tied to E-mini S&P 500 options and futures, using order combinations of quantities and delta levels that resulted in over-allocations or under-allocations.
CME also found that Yu placed orders using the operator ID assigned to Liu, and that the activity breached CME Rules 575.D and 576 on disruptive trading practices and market conduct requirements.
Under the settlement, Yu was fined $55,000 and Liu was fined $45,000, and the pair were held jointly responsible for disgorging $247,048.12 in trading profits. Yu also received a one month suspension from access to CME trading floors and from direct or indirect access to CME-controlled designated contract markets and related derivatives market infrastructure.
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