• NOTICE OF DISCIPLINARY ACTION

      • #
      • CME 15-8683-BC
      • Effective Date
      • 08 June 2017
    • MEMBER:

      INTL FCStone Financial, Inc.

      CME RULE VIOLATIONS:

      Rule 536. Recordkeeping Requirements For Pit, Globex, And Negotiated Trades (in part)

      B. Globex Order Entry

      2. Electronic Audit Trail Requirements for Electronic Order Routing/Front-End Systems

      …Clearing members guaranteeing a connection to Globex are responsible for maintaining or causing to be maintained the electronic audit trail for such systems. This electronic audit trail must be maintained for a minimum of 5 years, and clearing members must have the ability to produce this data in a standard format upon request of Market Regulation.

      * * *

      This electronic audit trail must contain all order receipt, order entry, order modification, and response receipt times to the highest level of precision achievable by the operating system, but at least to the millisecond.

      In the case where the guaranteeing Clearing Firm has a direct connect client that is another Clearing Firm or an Equity Member Firm, the Clearing Firm may notify the client Clearing Firm or Equity Member Firm that it is their obligation to maintain the electronic audit trail. Upon execution of this written notice, it shall be the duty of the client Clearing Firm or Equity Member Firm to maintain an electronic audit trail pursuant to this rule. …

      Rule 432. General Offenses

      L.2. to fail to fully answer all questions or produce all books and records at such hearing or in connection with any investigation, or to make false statements.
      110B536.C.

      FINDINGS:

      Pursuant to an offer of settlement in which INTL FCStone Financial, Inc. (“FC Stone”) neither admitted nor denied the rule violations upon which the penalty is based, on June 6, 2017, a Panel of the CME Business Conduct Committee (“Panel”) found that during 2014, FC Stone failed to maintain complete audit trail data containing all required fields, including all order receipt, order entry, order modification, and response receipt times for five years. FC Stone also certified to Market Regulation that it had maintained or caused to be maintained audit trail data with all the proper elements for five years, which was incorrect.

      The Panel concluded that FC Stone thereby violated CME Rules 536.B.2. and 432.L.2.

      PENALTY:

      In accordance with the settlement offer, the Panel ordered FC Stone to pay a fine of $40,000.

      EFFECTIVE DATE:

      June 8, 2017