CME suspends trader for engaging in disruptive FX trading practices
International derivatives marketplace CME Group has published a notice of disciplinary action against Xin Liu.
The Chief Regulatory Officer of the CME Group’s Designated Contract Markets charged Xin Liu with violations of CME Rules 575.A., 575.B., and 432.L.1. based on allegations that on one or more occasions from March 17, 2021, through August 13, 2021, Liu entered or caused to be entered an order with the intent, at the time of order entry, to cancel the order before execution or to modify the order to avoid execution, and entered or caused to be entered an actionable or non-actionable message or messages with the intent to mislead other market participants in the Japanese Yen, Euro FX, and Canadian Dollar futures markets.
Specifically, Liu entered multiple buy (sell) orders at various prices away from the best bid (offer), and the best bid (offer) moved higher (lower). Liu then entered an aggressive sell (buy) order and cancelled his resting layered bids (offers).
Liu profited $1,417.50 from this activity.
Liu also engaged in a second pattern of activity where he layered orders in Japanese Yen, Euro FX and Canadian Dollar futures without the intent to trade. In this pattern, Liu entered layered thousands of orders on one side of the market and cancelled all of these orders without placing any orders on the opposite side of the market.
Moreover, Liu failed to appear for a scheduled staff interview in connection with this investigation, and only appeared for a scheduled staff interview with Market Regulation after the investigation was completed and the case was referred for disciplinary action.
A Hearing Panel Chair of the CME Business Conduct Committee (BCC) has determined that Liu, having failed to submit a written answer to the charges issued against him, was deemed to have admitted the charges. Liu therefore waived his right to a hearing on the merits of the charges. Pursuant to CME Rule 408.F., a BCC Panel then found Liu guilty of committing the admitted charges and held a penalty hearing thereafter.
Based on the record and the Panel’s findings and conclusions, the Panel ordered Liu to pay a fine in the amount of $55,000, ordered Liu to pay disgorgement of profits of $1,417.50, and suspended his access to any trading floor owned or controlled by CME Group and from direct and indirect access to any designated contract market, derivatives clearing organization or swap execution facility owned or controlled by CME Group for a period of five years, beginning on the effective date (August 18, 2023) and continuing for five years from the date that the ordered fine and disgorgement are paid.