Two respondents agreed to settle charges brought by the Chicago Board of Trade related to alleged disruptive trading practices.
In one case, Andrew Anaszewicz, a member, agreed to pay a fine of US $50,000, disgorge profits of almost US $5,300 and serve a four-week all CME Group exchanges’ trading suspension for purportedly engaging in spoofing-type conduct on “multiple dates” from September 2015 through April 2016. According to CBOT, during the relevant time, Mr. Anaszewicz would layer orders on one side of one or more various treasury futures markets “without the intent to trade” and subsequently place a smaller order on the same side of the same market or a correlated market. As soon as the smaller order traded, Mr. Anaszewicz cancelled the larger orders, charged CBOT.
Separately, Vinko Sajn, a non-member, was charged by the CBOT with entering multiple user-defined spreads in covered soybean options on two dates in October 2015, to avoid futures contract allocations that a trader would ordinarily receive from holding the options. CBOT charged this behavior was intended to deceive or unfairly disadvantage other market participants, contrary to CBOT rule. To resolve this matter, Mr. Sajn agreed to pay a fine of US $5,000 and serve a 30‑business day all CME Group Exchanges trading prohibition.
Finally, Robert Parks, a member acting as a desk clerk, agreed to pay a fine of US $20,000 and serve a 15-business day all CME Group Exchanges trading suspension for authorizing a floor broker to take into the floor broker’s error account 50 contracts of trades initially executed for a customer when Mr. Parks realized the broker had executed 435 buy contracts at various prices when the customer order was solely for 385 buy contracts. Mr. Parks allegedly authorized the floor broker to take the 50 contracts with the lowest prices, thus keeping those lower priced fills from the customer.
Compliance Weeds: Entering a user-defined spread for the purpose of disadvantaging other market participants can be a violation of general prohibitions against market disruption. (Click here to access CME Group Rule 575D; click here to access the CME Group MRAN regarding disruptive practices, Q/A 22.) In the CBOT disciplinary action against Mr. Sajn, the exchange claimed that the respondent entered a user-defined covered option spread with the intent to avoid allocation of futures contracts that should have been tied to the covered options instruments. He did this, implied CBOT, in order to obtain more favorable prices for the options instruments than were available in the marketplace. Even though CME Group’s Globex System utilizes reasonability checks aimed to prevent this conduct from occurring, its system does not prevent all incidents.