The Chicago Mercantile Exchange (CME) has imposed a monetary penalty of $500,000 on Grand International Futures Company Limited as a disciplinary action for violating the trading venue’s rules around customer identification.

CME Fines Grand International Futures

According to the official announcement, the settlement offer came after a panel of the Chicago-based derivatives exchange giant’s business conduct committee found multiple violations in the practices of Grand in offering trading activities.

Unique identification of every customer of a clearing member using CME’s platforms is a necessity. “Each individual must use a unique operator ID to access Globex. In no event may a person enter an order or permit the entry of an order by an individual using an operator ID other than the individual’s own unique operator ID,” the CME stated.

However, Grand, from 3 February 2020 to 17 February 2021, failed to have appropriate policies and procedures in place for the creation, maintenance, and monitoring of operator identifications for its customers. The company permitted its customers to create their operational identifications using a third-party software provider, which could not identify the customer that used the operator identifications. Further, the system allowed multiple customers to enter orders using the same operator identification.

“The Panel found that by allowing its customers to repeatedly create operator IDs via the third-party software vendor, Grand removed its ability to identify and track those customers who sent messages to the Exchange under these operator IDs,” the CME added.

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CME - A Major US Derivatives Trading Venue

CME is one of the two largest derivatives exchange venues in the United States. Its revenue for the third quarter of the ongoing year increased by 11 percent to come in at $1.11 billion reported, along with a net income of $719 million compared to $574 million a year earlier. The quarterly figures were pushed higher due to a 26 percent jump in trading activities on the platform.

Meanwhile, CME is focused on increasing its product lineups. Last September, It introduced retail event contracts, which are binary options-styled trading instruments.