Flow Traders Holding B.V.
CBOT RULE VIOLATION:
Rule 538.C. Related Position
The related position component of an EFRP must be the cash commodity underlying the Exchange contract or a by-product, a related product or an OTC derivative instrument of such commodity that has a reasonable degree of price correlation to the commodity underlying the Exchange contract. The related position component of an EFRP may not be a futures contract or an option on a futures contract.
Each EFRP requires a bona fide transfer of ownership of the underlying asset between the parties or a bona fide, legally binding contract between the parties consistent with relevant market conventions for the particular related position transaction.
The execution of an EFRP transaction may not be contingent upon the execution of another EFRP or related position transaction between the parties where the transactions result in the offset of the related position without the incurrence of market risk that is material in the context of the related position transactions.
Pursuant to an offer of settlement in which Flow Traders Holding B.V. (“Flow Traders”) neither admitted nor denied the rule violation upon which the penalty is based, on March 28, 2017, a Panel of the Chicago Board of Trade (“CBOT”) Business Conduct Committee (“Panel”) found that on June 17, 2016, Flow Traders, through two of its subsidiaries, executed an exchange of futures for physical (“EFP”) transaction that consisted of the simultaneous exchange of futures positions without the exchange of a related cash position, thereby executing a non-bona fide EFP. The Panel concluded that Flow Traders thereby violated CBOT Rule 538.C.
In accordance with the settlement offer, the Panel ordered Flow Traders to pay a fine $15,000.
March 30, 2017
CME Group is the world's leading and most diverse derivatives marketplace. The company is comprised of four Designated Contract Markets (DCMs). Further information on each exchange's rules and product listings can be found by clicking on the links to CME, CBOT, NYMEX and COMEX.