CME Punishes Trader for Spoofing Soybean Oil Futures Market

CME Group Inc. fined a trader, Peter DiStaulo, $20,000 and suspended him for 60 days for allegedly engaging in a form of market manipulation known as spoofing.

DiStaulo placed orders for soybean oil futures without intending to actually complete the transactions, according to a disciplinary action released Friday by Chicago-based CME, which runs the exchange where the contracts trade. The alleged misconduct occurred in August 2012 and also between Jan. 1 and April 1, 2014, CME said.

DiStaulo neither admitted nor denied the exchange’s findings, according to CME. There was no response to a voicemail message left at a phone number listed under his name.

Spoofing is banned because it can trick other traders into thinking prices are poised to move, prompting them into nudging prices in the direction the cheater prefers. The practice got a flood of attention after U.S. prosecutors in April accused Navinder Singh Sarao of engaging in the technique for years and helping spur the flash crash, which erased almost $1 trillion from U.S. stocks in minutes in May 2010.

CME said DiStaulo on multiple occasions entered large orders without intending to complete the transactions. CME found a pattern in which DiStaulo placed a smaller order and then entered multiple large orders, creating the appearance of an imbalance in the market. Once the smaller order started trading, he canceled the large orders, according to CME.

“DiStaulo entered these large orders for the purpose of inducing other market participants to trade opposite his smaller resting orders,” the exchange said, adding that this behavior is a violation of its rules.

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