Chicago-based
derivatives marketplace operator, CME Group, has slammed a $60,000 fine on Lei
Shu and permanently suspended the trader from its trading floors. The firm
found Shu guilty of engaging in disruptive practices in its FX futures
markets, thereby contravening its rules.
According
to CME Group, between March 2 and October 8, 2021, Shu layered orders near the
top of the book in various foreign exchange futures markets, including
Australian dollar futures, British pounds futures and Euro FX futures. In the
derivatives industry, this practice describes the act of placing orders close
to the best bid and asking prices in an attempt to improve the chances of
having an order filled at a favorable price.
On the
contrary, CME Group’s rule in this regard requires that all orders must be
entered for the purpose of executing bona fide transactions. The rule on prohibited disruptive practices also demands that all non-actionable messages
must be entered in good faith for legitimate purposes.
“Shu
engaged in a pattern of entering or modifying multiple orders, typically of 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,” CME Group explained in a notice.
To defend against the allegation, the derivatives market operator said the trader was invited to submit
a written response, but he did not respond. As a result, CME Groups’
Chief Regulatory Officer charged Shu in September last year charged the trader with violating its rules related to illegal disruptive practices and failure to appear before an investigative hearing committee.
Furthermore, on April
25, 2023, the Chair of the CME’s Business Conduct Committee’s Hearing Panel reached the decision that Shu, as a result of his refusal to answer to the allegation, admitted to the charges. The trader
was then subsequently determined to be guilty.
The
permanent suspension issued against Shu also means that he is banned from
accessing any designated contract market, derivatives clearing organization or
swap execution facility owned or controlled by CME Group.
Chicago-based
derivatives marketplace operator, CME Group, has slammed a $60,000 fine on Lei
Shu and permanently suspended the trader from its trading floors. The firm
found Shu guilty of engaging in disruptive practices in its FX futures
markets, thereby contravening its rules.
According
to CME Group, between March 2 and October 8, 2021, Shu layered orders near the
top of the book in various foreign exchange futures markets, including
Australian dollar futures, British pounds futures and Euro FX futures. In the
derivatives industry, this practice describes the act of placing orders close
to the best bid and asking prices in an attempt to improve the chances of
having an order filled at a favorable price.
On the
contrary, CME Group’s rule in this regard requires that all orders must be
entered for the purpose of executing bona fide transactions. The rule on prohibited disruptive practices also demands that all non-actionable messages
must be entered in good faith for legitimate purposes.
“Shu
engaged in a pattern of entering or modifying multiple orders, typically of 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,” CME Group explained in a notice.
To defend against the allegation, the derivatives market operator said the trader was invited to submit
a written response, but he did not respond. As a result, CME Groups’
Chief Regulatory Officer charged Shu in September last year charged the trader with violating its rules related to illegal disruptive practices and failure to appear before an investigative hearing committee.
Furthermore, on April
25, 2023, the Chair of the CME’s Business Conduct Committee’s Hearing Panel reached the decision that Shu, as a result of his refusal to answer to the allegation, admitted to the charges. The trader
was then subsequently determined to be guilty.
The
permanent suspension issued against Shu also means that he is banned from
accessing any designated contract market, derivatives clearing organization or
swap execution facility owned or controlled by CME Group.
