• NOTICE OF DISCIPLINARY ACTION

      • #
      • 12-CH-1208
      • Effective Date
      • 08 March 2013
    • 12-CH-1208

      EXCHANGE DISCIPLINARY ACTION

      CLEARING MEMBER: Citigroup Global Markets Inc.

      CBOT RULE VIOLATIONS: Rule 971. Segregated, Secured and Cleared Swaps Customer Account Requirements 

      B. All FCM clearing members must submit a daily segregated, secured 30.7 and Cleared Swaps Customer amount statement, as applicable, through Exchange-approved electronic transmissions by 12:00 noon on the following business day.

      D. All FCM clearing members must submit a report of investments in a manner as prescribed through Exchange-approved electronic transmissions as of the 15th of the month (or the following business day if the 15th is a holiday or weekend) and last business day of the month by the close of business on the following business day. The report of investments shall be prepared and shall identify separately for segregated and secured 30.7 funds and Cleared Swaps Customer Collateral held:

      1. The dollar amount of funds held in cash and each permitted investment identified in CFTC Regulation 1.25(a).

      E. All disbursements not made for the benefit of a customer from a segregated, secured 30.7 or Cleared Swaps Customer account which exceed 25% of the FCM clearing members excess segregated, secured 30.7 or Cleared Swaps Customer of the respective origin must be pre-approved in writing by the clearing member’s Chief Executive Officer, Chief Financial Officer or their authorized representative with knowledge of the firm’s financial requirements and position.. 1. In determining if a disbursement exceeds the 25% level, such disbursement must be:

      a. Compared to the most recent calculation of excess segregated, secured 30.7 and sequestered amounts; and

      b. A single disbursement must be reviewed individually and in the aggregated with all other disbursements not made for the benefit of a customer of the respective segregated, secured 30.7 or Cleared Swaps Customer origin since the last calculation of excess funds.

      2. Upon approval of a single disbursement or the disbursement which in the aggregated exceeds the 25% level as defined in Rule 971.E.1., the FCM clearing member must provide immediate notification to the Audit Department through Exchange-approved electronic transmissions. Such notification shall include:

      a. Confirmation that the FCM clearing member’s Chief Executive Officer, Chief Financial Officer or their authorized representative with knowledge of the firm’s financial requirements and position pre-approved in writing the disbursement(s);

      b. The amount(s) and recipient(s) of such disbursement(s); and

      c. A description of the reasons for the single or multiple transaction(s) that resulted in the disbursement(s).

      3. The FCM clearing member’s Chief Executive Officer and Chief Financial Officer will remain responsible for the pre-approvals by their authorized representative and for compliance with this rule.

      FINDINGS: Pursuant to an offer of settlement in which Citigroup Global Markets Inc. neither admitted nor denied the violations, the Clearing House Risk Committee found that Citigroup Global Markets Inc. violated the above rules.

      PENALTY: In accordance with the settlement offer, the Committee imposed a $50,000 fine effective March 8, 2013. In accepting this settlement offer, the Clearing House Risk Committee agreed to waive $25,000 of the fine if no further similar violations of such rules occur within the next six months. After six months, the Clearing House Risk Committee waived $25,000 of the fine at the November 22, 2013 meeting.

      EFFECTIVE DATE: November 22, 2013