NOTICE OF DISCIPLINARY ACTION

NON-MEMBER:

KE XU

RULE VIOLATIONS:

NYMEX RULE 575.A. DISRUPTIVE PRACTICES PROHIBITED

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.

NYMEX RULE 432. GENERAL OFFENSES (IN PART)

It shall be an offense:

L. 1. To fail to appear before the Board, Exchange staff or any investigative or hearing committee at a duly convened hearing, scheduled staff interview or in connection with any investigation;

NYMEX RULE 576. IDENTIFICATION OF GLOBEX TERMINAL OPERATORS

Each Globex terminal operator shall be identified to the Exchange, in the manner prescribed by the Exchange, and shall be subject to Exchange rules. If user IDs are required to be registered with the Exchange, it is the duty of the clearing member to ensure that registration is current and accurate at all times. Each individual must use a unique user ID to access Globex. In no event may a
person enter an order or permit the entry of an order by an individual using a user ID other than the individual’s own unique user ID.

FINDINGS:

On March 1, 2018, a Panel of the New York Mercantile Exchange (“NYMEX”) Probable Cause Committee charged Ke Xu (“Xu”) with violating NYMEX Rules 575.A., 432.L.1., and 576 based on allegations that, between June 28, 2016 and July 13, 2016, Xu engaged in disruptive trading activity in the Crude Oil Futures market by entering orders without the intent to trade. Specifically, Xu typically entered a larger order, or layered orders, on one side of the market and then cancelled them after resting smaller orders on the opposite side of the book were executed, in addition to failing to appear before Exchange staff for a scheduled interview.

On June 21, 2018, a Hearing Panel Chair of the NYMEX Business Conduct Committee (“BCC”) entered an order finding that Xu failed to answer the charges against him. The Hearing Panel Chair further ordered that Xu was deemed to have admitted the charges issued and waived his right to a hearing on the merits of the charges.

On July 11, 2018, a penalty hearing was held before a panel of the NYMEX BCC (“BCC Panel”) which found that Xu had committed the violations charged.

PENALTY:

In accordance with NYMEX Rule 402.B (Sanctions), the BCC Panel ordered Xu to (1) pay a total monetary fine in the amount of $60,000 in connection with this case and companion case COMEX 16-0485-BC ($10,000 of the monetary fine is allocated to NYMEX; and (2) be permanently banned from (a) applying for Membership at any CME Group exchange; (b) direct or indirect access to any
trading or clearing platform owned or controlled by the CME Group, Inc.; and (c) access to any trading floor owned or operated by any CME Group, Inc. exchange.