CME Group fines Budo Trading for alleged violations of wash trades prohibition

International derivatives marketplace CME Group has posted a notice of disciplinary action against Budo Trading LLC.

Pursuant to an offer of settlement in which Budo neither admitted nor denied the rule violations or factual findings upon which the penalty is based, on June 26, 2024, a Panel of the Chicago Mercantile Exchange Business Conduct Committee found that from at least November 14, 2022, through February 28, 2023, Budo entered numerous opposing buy and sell orders, both manually and using an automated trading system, for the same account in various Micro Bitcoin and Micro Ether futures contracts that matched opposite each other on more than an incidental basis.

Despite being notified on several occasions that it executed numerous self- matches, Budo relied on erroneous information that self-match prevention was enabled by its clearing firm without sufficiently investigating and monitoring for the self-match activity. Budo’s failures to employ functionality to minimize the potential for the orders to self-match resulted in Budo executing further self- matches.

The Panel found that Budo reasonably should have known that entering orders in this manner would achieve a wash result.

The Panel therefore concluded that Budo violated CME Rules 432.W. and 534.

In accordance with the settlement offer, the Panel ordered Budo to pay a $50,000 fine. The notice is effective June 28, 2024.