Eagle Market Makers

Eagle Market Makers was fined a total of $500,000 ($150,000 by CME Group and $350,000 by the CFTC) because their traders effectively conducted wash trades for orders that were entered in the pre-opening period.

During the pre-opening period for various Agricultural futures spread markets, and prior to the No Cancel period, several EMM traders entered buy (sell) orders.

After the pre-open period transitioned to the No Cancel period, other market participants’ new orders caused the Indicative Opening Price (“IOP”) to shift up (down).

Because of the change in market conditions, the EMM traders no longer wanted to buy (sell) at the new (higher/lower) IOP and were unable to cancel or modify their resting orders.

As a result, the EMM traders entered crossed-market sell (buy) orders to offset or “scratch” the original buy (sell) orders.

Given the pricing of the opposing orders through each other, the EMM traders knew or reasonably should have known that the purpose of these orders was to trade opposite their resting orders on the market open.

With the entry of the crossed-market orders, the EMM traders did not intend to take a bona fide market position and intended to negate market risk.