• NOTICE OF DISCIPLINARY ACTION

      • #
      • CBOT 15-0086-BC-2
      • Effective Date
      • 18 November 2016
    • NON-MEMBER:

      Green Plains Grain Company LLC

      CBOT RULE VIOLATIONS:

      538.A. Nature of an EFRP (LEGACY)

      An EFRP consists of two discrete but related simultaneous transactions. One party to the EFRP must be the buyer of (or the holder of the long market exposure associated with) the related position and the seller of the corresponding Exchange contract. The other party to the EFRP must be the seller of (or the holder of the short market exposure associated with) the related position and the buyer of the corresponding Exchange contract.

      534. Wash Trades Prohibited

      No person shall place or accept buy and sell orders in the same product and expiration month, and, for a put or call option, the same strike price, where the person knows or reasonably should know that the purpose of the orders is to avoid taking a bona fide market position exposed to market risk (transactions commonly known or referred to as wash sales). Buy and sell orders for different accounts with common beneficial ownership that are entered with the intent to negate market risk or price competition shall also be deemed to violate the prohibition on wash trades. Additionally, no person shall knowingly execute or accommodate the execution of such orders by direct or indirect means.

      FINDINGS:

      Pursuant to an offer of settlement in which Green Plains Grain Company LLC (“GPGC”) neither admitted nor denied the rule violations upon which the penalty is based, on November 16, 2016, a Panel of the Chicago Board of Trade (“CBOT”) Business Conduct Committee (“BCC” or “Panel”) found that GPGC was subject to the BCC’s jurisdiction pursuant to Rules 402 and 418. The Panel found that on November 27, 2013, GPGC executed two simultaneous Exchange for Physical (“EFP”) transactions in the Corn Futures market opposite Green Plains Commodity Management LLC (“GPCM”), a related entity. In one transaction GPGC purchased December 2013 Corn futures contracts and in the other transaction GPGC sold March 2014 Corn futures contracts. Each transaction consisted of a simultaneous exchange of a futures position without the exchange of a related cash position. The Panel further found that GPGC executed these transactions for the purpose of transferring positions between accounts with common beneficial ownership.

      The Panel concluded that GPGC thereby violated CBOT Legacy Rule 538.A and Rule 534.

      PENALTY:

      In accordance with the settlement offer, the Panel ordered GPGC to pay a fine in the amount of $15,000.

      EFFECTIVE DATE:

      November 18, 2016