CME Group Suspends Trader for Violating Rule 575

A notice of disciplinary action was taken against Eric Schwartz by the CME Group. According to CME, Eric Schwartz violated Rule 575, disruptive practices.

Rule 575 states the following:

All orders must be entered for the purpose of executing bona fide transactions. Additionally, all nonactionable messages must be entered in good faith for legitimate purposes.

A. No person shall enter or cause 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;

B. No person shall enter or cause to be entered an actionable or non-actionable message(s) with intent to mislead other market participants;

C.1. No person shall enter or cause to be entered an actionable or non-actionable message(s) with intent to overload or delay the systems of the Exchange or other market participants;

C.2. No person shall intentionally or recklessly submit or cause to be submitted an actionable or non-actionable message(s) that has the potential to disrupt the systems of the Exchange; and

D. No person shall enter or cause to be entered an actionable or non-actionable message(s) with intent to disrupt, or with reckless disregard for the adverse impact on, the orderly conduct of trading or the fair execution of transactions.

source: CME

Schwartz neither admitted nor denied the violations and findings that led to the penalty.

Henry Hub Natural Gas Futures Spread Markets

Schwartz placed orders in October 2020 - November 2020 and November 2020 - December 2020 Henry Hub Natural Gas futures spread markets according to the Panel of the NYMEX Business Conduct Committee.

Schwartz's orders were cancelled prior to execution or modified to ensure the orders are not executed. A large amount of orders were placed on one side of the market that were cancelled after receiving files for the orders. Schwartz then entered the other end of the market.

After the Panel considered Schwartz's financial conditions and the settlement offer, a $10,000 fine was imposed on Schwartz and 6 months suspension from CME owned or controlled trading floors.

Additionally, the penalty includes 'direct and indirect access to any designated contract market, derivatives clearing organization or swap execution facility owned or controlled by CME Group.'

The suspension began on 22 April 2022. The 6-month suspension will begin as soon as the payment of $10,000 is received in full.