International derivatives marketplace CME Group has imposed a fine of $120,000 on Jae Jun Kim for engaging in prohibited disruptive practices.
On December 11, 2023, the Chief Regulatory Officer of CME Group’s Market Regulation Department issued charges against Jae Jun Kim for violating Rules 575.B. and 432.L.1. based on allegations that, from March 17, 2021, through May 16, 2022, Kim entered layered orders on both sides of the Copper, Silver, and Gold futures markets and modified these orders in and out of the top of the order book with the intent to mislead other market participants.
Kim layered orders for various quantities and prices on both sides of the market. He subsequently modified these orders to create a disproportionate quantity of contracts on one side of the best bid and offer in the affected market, which resulted in an imbalance that was many times greater than the resting quantity on the opposite side of the market.
This imbalance induced market participants to trade into his resting orders for smaller quantities opposite the market bias he created.
Kim repeated this pattern of order entry and modification that alternated between creating buy-side and sell-side pressure to induce market participants to trade into his smaller resting quantities on the opposite side of the market. Similarly, if a market participant improved the bid or offer after being misled by the market imbalance he created, Kim aggressively traded into the improved price.
Additionally, Kim failed to appear before Exchange staff at a scheduled staff interview in connection with this investigation.
On June 12, 2024, a Hearing Panel Chair of the COMEX Business Conduct Committee (“BCC”) first determined that Kim, having failed to submit a written answer to the charges issued against him, was deemed to have admitted the charges. Kim therefore waived his right to a hearing on the merits of the charges. Pursuant to Rule 408.F., a BCC Panel then found Kim 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 Kim to pay a fine in the amount of $120,000 in connection with this case and companion cases CBOT and NYMEX ($40,000 allocated to each Exchange). The Panel also permanently suspended Kim from 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.
The effective date of the disciplinary action notice is July 1, 2024.
