International derivatives marketplace CME Group today posted a notice of disciplinary action against Mark IV Brokerage, LLC.

Pursuant to an offer of settlement in which Mark IV Brokerage, LLC, neither admitted nor denied the rule violations or factual findings upon which the penalty is based, a Panel of the Chicago Mercantile Exchange Business Conduct Committee found that on April 18, 2023, Mark IV employees accepted and executed buy and sell orders in December 2023 and March 2024 Call options on three-month SOFR futures markets that matched opposite each other for accounts with common beneficial ownership.

Specifically, upon receipt of the simultaneous buy and sell orders involving the same client, Mark IV employees executed the orders in the pit without making an inquiry sufficient to ascertain whether the orders were for accounts with common beneficial ownership.

The Mark IV employees knew or reasonably should have known that the purpose of the orders was to avoid taking a bona fide market position exposed to market risk.

Additionally, the Panel found that Mark IV failed to diligently supervise its employees by not properly advising and training them as to Exchange rules pertaining to wash trades.

The Panel concluded that Mark IV thereby violated CME Rules 534 and 432.W.

In accordance with the settlement offer, the Panel ordered Mark IV to pay a $25,000 fine.