CME Group Fines Trader $50,000 Over Rogue Algorithm

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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