CME Group has announced sanctions against three traders for indirect wash trades in FX futures on Globex. The three, Adrien Froidure, Pierre Tomatis and Charlotte Sanit-Paul, neither admit nor deny the rule violation, and they were fined $20,000 by CME and banned from direct and indirect access to any designated contract market, derivatives clearing organization, or swap execution facility owned or controlled by CME Group for three months in the case of Froidure and Tomatis and two months in the case of Saint-Paul.
CME says that on several dates between December 19, 2017, and January 2, 2018, Froidure entered buy or sell orders in multiple 2018 expirations of Japanese yen futures, euro/yen futures, and euro/British pound futures indirectly opposite Tomatis with whom he jointly owned two accounts, as well as with Saint-Paul, using outright and spread instruments. Specifically, CME says he entered buy (sell) orders and traded opposite one counterparty, then the same counterparty subsequently entered sell (buy) orders at the same price and quantity that matched opposite the trader with whom Froidure jointly owned accounts.
Froidure communicated with the Tomatis prior to entering all buy and sell orders in the same instruments, at the same price and quantity. As a result, CME says he knew, or should have known, that he would trade indirectly opposite Tomatis for the purpose of avoiding market risk. Froidure also allowed Tomatis to enter orders using Froidure’s Tag 50 User ID.
Saint-Paul operated in the same fashion although without joint ownership of accounts of the sharing of tags.