CME Group has published a notice of disciplinary action as to Marex Spectron International Limited.

Pursuant to the offer of settlement in which Marex Spectron International Limited neither admitted nor denied the rule violations upon which the penalty is based, a Panel of the Chicago Mercantile Exchange (CME) Business Conduct Committee found that from July 26, 2021, through July 30, 2021, Marex traders, through a broker, executed multiple block trades in E-Mini S&P 500 Put options opposite another account with common beneficial ownership. Therefore, the Panel found that Marex violated CME Rule 534.

CME Rule 534 states:

“Wash Trades Prohibited

No person shall place or accept buy and sell orders in the same product and expiration month, and, for a put or call option, the same strike price, where the person knows or reasonably should know that the purpose of the orders is to avoid taking a bona fide market position exposed to market risk (transactions commonly known or referred to as wash sales). Buy and sell orders for different accounts with common beneficial ownership that are entered with the intent to negate market risk or price competition shall also be deemed to violate the prohibition on wash trades. Additionally, no person shall knowingly execute or accommodate the execution of such orders by direct or indirect means”.

Additionally, the Panel found that on July 30, 2021, Marex executed one of the aforementioned block trades without consideration for whether the execution price was fair and reasonable at the relevant time in violation of CME Rule 526.D.

The Panel also found that Marex did not keep adequate records of the block trade execution time for the trade executed on July 29, 2021, and therefore violated CME Rule 536.H.

Finally, the Panel found that Marex failed to provide clear and accurate guidance to its employees regarding the execution of block trades and prohibited wash transactions and, in failing to diligently supervise its employees, violated CME Rule 432.W.

In accordance with the settlement offer, the Panel ordered Marex to pay a fine in the amount of $50,000.