CME Group Fines Trader $50,000 Over Rogue Algorithm
December 23 2011 - 6:32PM
Dow Jones News
CME Group Inc. (CME) on Friday fined a trader at Infinium
Capital Management $50,000 for unleashing an automated trading
strategy that erroneously bought thousands of crude-oil futures
over the course of three seconds.
The episode, which occurred in February 2010, wasn't caught by
Infinium's order-control system and roiled markets to the point
that CME officials deemed the trading a threat to the "good name"
of its platform, according to a disciplinary notice issued by CME
on Friday.
The trader, Neil Brookes, neither admitted to nor denied
violating CME's rules. Brookes at the time was "live-testing" an
algorithmic trading strategy, which contained an error, according
to the CME notice.
"The malfunction caused Infinium to enter 6,767 individual
one-lot limit orders into the CME Globex electronic trading
platform to purchase March 2010 Light Sweet Crude Oil futures
contracts over the course of approximately three seconds," CME
officials wrote in the notice.
Chicago-based Infinium is one of the city's more prominent
electronic trading firms. CME in November fined the firm itself
$850,000 for the February mishap and two other episodes that
occurred in 2009.
Brookes was also suspended from trading on CME's markets until
Jan. 31, 2012, according to the notice.
-By Jacob Bunge, Dow Jones Newswires; 312 750 4117;
jacob.bunge@dowjones.com
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