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.

Trader Violates Rule in FX Futures Markets

According to the 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,” the 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 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 means that he is banned from accessing any designated contract market, derivatives clearing Clearing Clearing is a general term that simply means many different things depending on the subject and related industry. Most commonly, this refers to the reciprocal exchange between banks of checks and drafts, and the settlement of the differences, or the total of claims settled at a clearinghouse. In finance and banking, the word clearing has different meanings depending on the more specific business model. Moving checks from the bank where they were deposited to the bank on which they were drawn. Th Clearing is a general term that simply means many different things depending on the subject and related industry. Most commonly, this refers to the reciprocal exchange between banks of checks and drafts, and the settlement of the differences, or the total of claims settled at a clearinghouse. In finance and banking, the word clearing has different meanings depending on the more specific business model. Moving checks from the bank where they were deposited to the bank on which they were drawn. Th Read this Term organization or swap execution Execution Execution is the process during which a client submits an order to the brokerage, which consequently executes it resulting in an open position in a given asset. The execution of the order occurs only when it is filled. There is typically a time delay between the placement of the order and the execution which is called latency.In the retail FX space, reliable brokers always strive to deliver best execution to their clients in order to maintain a solid business relationship with them. This is a co Execution is the process during which a client submits an order to the brokerage, which consequently executes it resulting in an open position in a given asset. The execution of the order occurs only when it is filled. There is typically a time delay between the placement of the order and the execution which is called latency.In the retail FX space, reliable brokers always strive to deliver best execution to their clients in order to maintain a solid business relationship with them. This is a co Read this Term facility owned or controlled by the CME Group.