International derivatives marketplace CME Group has published a notice of disciplinary action against DRW Investments LLC.
Pursuant to an offer of settlement in which DRW Investments LLC neither admitted nor denied the rule violations or factual findings upon which the penalty is based, a Panel of the Chicago Board of Trade (CBOT) Business Conduct Committee found that on one or more occasions from February 3, 2022, through July 5, 2022, an employee of DRW entered orders or order modifications in the 2-Year Treasury Note, 5-Year Treasury Note, 10-Year Treasury Note, Ultra 10-Year U.S. Treasury Note, U.S. Treasury Bond, and Ultra U.S. Treasury Bond futures markets with the intent, at the time of order entry, to cancel the orders before execution or to modify the orders to avoid execution once he received a fill in the same or a highly correlated treasury product.
Specifically, the employee entered a larger order(s) in one treasury futures market opposite either a single resting smaller order or multiple smaller orders in the same market or a highly correlated treasury futures product. After receiving fills on the smaller order(s) or multiple smaller orders, the employee then fully canceled his larger order. As a result of the employee’s trading activity, DRW realized a benefit of $465,421.86.
The Panel concluded that solely as a result of the independent conduct of the employee, which the Panel found violated Rule 575.A., DRW was strictly liable for the acts of its employee, pursuant to Rule 433.
In accordance with the settlement offer and Rule 402.B.11, the Panel ordered DRW Investments LLC to pay disgorgement of benefits totalling $465,421.86.
