• NOTICE OF DISCIPLINARY ACTION

      • #
      • 16-CH-1606
      • Notice Date
      • 09 December 2016
      • Effective Date
      • 09 December 2016
    • BOARD OF TRADE OF THE CITY OF CHICAGO, INC.

      NOTICE OF DISCIPLINARY ACTION

      FILE NO.: 16-CH-1606

      MEMBER FIRM: CHS Hedging, LLC

      CBOT RULES:

      970. FINANCIAL REQUIREMENTS

      A. Subject to exemptions granted by Exchange staff, all clearing members, including non-FCMs, must comply with the requirements set forth in CFTC Regulations 1.10, 1.12, 1.17 and 1.18.  This includes, but is not limited to, the following:

      4. Completely and accurately computing and recording the balances in the net capital computation including capital requirements.

      971. SEGREGATION, 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:

      2. Computing, recording and reporting completely and accurately the balances in                                   the: 

      a. Statement of Segregation Requirements and Funds in Segregation;

      b. Statement of Secured Amounts and Funds Held in Separate Accounts.

      980. FINANCIAL REQUIREMENTS

      B. Each clearing member shall maintain an adequate accounting system, internal accounting controls, and procedures for safeguarding customer and firm assets.  This includes, but is not limited to, the following:

      1. Preparation and maintenance of complete and accurate reconciliations for all accounts.                                                        

      FINDINGS: Pursuant to an offer of settlement in which CHS Hedging, LLC neither admitted nor denied the rule violations upon which the penalty is based, on December 8, 2016, the Clearing House Risk Committee found that CHS Hedging, LLC violated CBOT Rules 970.A.4., 971.A., 971.A.2.a, 971.A.2.b., and 980.B.1.

      PENALTY: In accordance with the settlement offer, the Committee imposed a $50,000 fine.

      EFFECTIVE DATE: December 9, 2016