International derivatives market CME Group fined Jae Jun Kim $120,000 for engaging in prohibited disruptive practices.
On December 11, 2023, the Chief Regulatory Officer of CME Group’s Market Regulation Department filed charges against Jae Jun Kim for violating Rules 575.B. and 432.L.1. based on allegations that, from March 17, 2021 to May 16, 2022, Kim entered orders at levels on both sides of the copper, silver, and gold futures markets and modified those orders into and out of the top of the order book with the intent to mislead other market participants.
Kim placed orders for various quantities and prices on both sides of the market. He then 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 remaining quantity on the opposite side of the market.
This imbalance prompted market participants to trade the rest orders for smaller quantities, contrary to the market bias it created.
Kim repeated this pattern of entering and modifying orders that alternated between creating buy-side and sell-side pressure to induce market participants to trade the smaller rest amounts 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 trades the improved price.
In addition, Kim failed to appear before Exchange staff at a scheduled staff interview in connection with this investigation.
On June 12, 2024, a Chairman of the COMEX Business Conduct Committee (“BCC”) initially found that Kim, after failing to file a written response to the charges against him, was deemed to have admitted the charges. Accordingly, Kim waived his right to a hearing on the merits of the charges. Pursuant to Rule 408.F., a BCC panel subsequently found Kim guilty of committing the admitted charges and held a sanctions hearing thereafter.
Based on the record and the Panel’s findings and conclusions, the Commission ordered Kim to pay a fine of $120,000 in connection with this case and the accompanying CBOT and NYMEX cases ($40,000 allocated to each Exchange). The panel also permanently suspended Kim from access to any trading venue owned or controlled by CME Group and from direct and indirect access to any designated contract market, derivatives clearing house or swap execution facility owned or controlled by CME Group.
The effective date of the notice of disciplinary action is July 1, 2024.