International derivatives marketplace CME Group has posted a notice of disciplinary action against Liger Investments Ltd.
Pursuant to an offer of settlement in which Liger Investments Ltd neither admitted nor denied the Rule violations or factual findings upon which the penalty is based, a Panel of the CME Business Conduct Committee found that on July 27, 2020, CME Group issued a market regulation advisory notice (MRAN) RA2006-05, which became effective on August 10, 2020.
The MRAN was issued based on an amendment to Rule 575 to adopt a new provision regarding the prohibition on potentially disruptive messages (575.C.2.) and to add guidance on this and existing provisions. Leading up to and contemporaneous with the MRAN’s issuance, Liger engaged in extensive communications with the Market Regulation Department regarding the advisory’s content and its application to Liger’s trading strategies.
Between September 8, 2020, and June 18, 2021, Liger submitted incomplete data packets to the Exchange switch. Specifically, Liger’s trading system began by constructing an order message for various CME markets, including E-mini Nasdaq-100, Micro E-mini Nasdaq-100, E-mini S&P 500, and Micro E-mini S&P 500 futures based on a signal in the market data that indicated a market event occurred to which Liger would want to trade in response.
If Liger did not receive any information negating its desire to trade during construction of the order message, the order message would be submitted as normal.
However, if Liger received later information during the construction of the order message that negated Liger’s desire to complete the trade, Liger’s trading system stopped message construction thereby causing an incomplete packet to be sent to the Exchange switch.
The incomplete order message would then be discarded by the switch pursuant to normal networking protocol. Although incomplete data packets could, in certain circumstances, have the potential to disrupt the systems of the Exchange, the incomplete packets Liger submitted did not cause actual disruption to the Exchange’s systems.
Liger engaged in this conduct based on its belief that its practices did not violate Rule 575.C.2. and sought clarification from Market Regulation regarding changes to MRAN RA2006-05 Disruptive Practices Prohibited (effective August 10, 2020).
Additionally, Liger worked to reduce its instances of dropped packets, including identifying and developing technical solutions to address signals that resulted in dropped packets, and discontinued the practice described above when CME issued MRAN RA2107-5 Disruptive Practices Prohibited (effective August 2, 2021).
The Panel found that as a result of the foregoing, Liger violated Rule 575.C.2.
In accordance with the settlement offer, the Panel ordered Liger to pay a $50,000 fine.
The effective date of the disciplinary notice is September 26, 2025.