• NOTICE OF DISCIPLINARY ACTION

      • #
      • 12-CH-1210
      • Effective Date
      • 19 June 2013
    • 12-CH-1210

      EXCHANGE DISCIPLINARY ACTION

      CLEARING MEMBER: Cunningham Commodities, LLC

      CBOT RULE VIOLATIONS:

      Rule 971. Segregated, Secured and Cleared Swaps Customer Account Requirements 

      A. All clearing members must comply with the requirements set forth in CFTC Regulations 1.20 through 1.30, 1.32, 1.49 and 30.7, and Part 22 of the CFTC Regulations. This includes, but is not limited to, the following:

      3. Obtaining satisfactory segregation, secured 30.7 and Cleared Swaps Customer account acknowledgment letters and identifying segregated, secured 30.7 and Cleared Swaps Customer accounts as such.

      Rule 983. Disaster Recovery and Business Continuity

      A. Clearing members must have procedures in place to allow them to continue to operate during periods of stress or to transfer accounts to another fully operational clearing member with minimal disruption to either the Exchange or their customers. In order to satisfy this requirement, clearing members must perform:

      1. Periodic testing of disaster recovery and business continuity plans.

      2. Duplication of critical systems at back up sites.

      3. Periodic back-up of critical information.

      FINDINGS:  Pursuant to an offer of settlement in which Cunningham Commodities, LLC neither admitted nor denied the violations, the Clearing House Risk Committee found that Cunningham Commodities, LLC violated the above rules.

      PENALTY: In accordance with the settlement offer, the Committee imposed a $50,000 fine effective June 19, 2013. In accepting this settlement offer, the Clearing House Risk Committee agreed to waive $25,000 of the fine if no similar violations of such rules occur during the course of the 2013 examination. After a subsequent examination, the Clearing House Risk Committee waived $25,000 at the February 14, 2014 meeting.

      EFFECTIVE DATE: February 14, 2014