CME fines traders Yu and Liu; suspends Yu from markets

Between Nov. 3 and Dec. 5, 2023, CME Group’s disciplinary panel found that hedge fund traders Bernie Yu and Jeffrey Liu repeatedly created and executed User Defined Spreads on the exchange’s Globex platform linked to E‑mini S&P 500 options and futures. The panel found the activity produced $247,048.12 in trading profits by producing favorable over‑allocations or under‑allocations of the associated futures contracts.

The exchange’s Business Conduct Committee resolved the matter through a settlement. Under the settlement, Yu was fined $55,000 and Liu $45,000. Both traders were ordered to disgorge the full $247,048.12 identified by the panel. Neither party admitted or denied the alleged rule violations or the factual findings in the settlement.

The panel determined that the conduct breached CME Rules 575.D and 576, which govern disruptive trading practices and market conduct. The exchange also found that Yu placed orders using the operator ID assigned to Liu.

As part of the remedies, Yu received a market‑access restriction. He was suspended for one month from access to any trading floor CME owns or controls and from direct or indirect access to CME‑controlled designated contract markets, derivatives clearing organizations and swap execution facilities. The suspension runs through Sept. 28, 2026.

User Defined Spreads allow traders to submit linked orders that combine options and futures and specify sizes and delta settings. The disciplinary panel said the traders used repeated combinations of quantity and delta that resulted in unequal allocations of the futures contracts tied to the E‑mini S&P 500 products under review.

The action follows the exchange’s enforcement framework for activity on its electronic trading platform and lists the rule breaches, financial penalties and access restrictions applied for conduct during the November–December 2023 window.