• NOTICE OF DISCIPLINARY ACTION

      • #
      • CME-16-0369-BC-5
      • Effective Date
      • 22 June 2017
    • FILE NO.:

      CME 16-0369-BC

      MEMBER:

      Andrew J. Schwieters

      CME RULE VIOLATIONS:

      Rule 515 MRAN RA1602-2 [Effective April 1, 2016]

      B. Restrictions

      Order executions in restricted contract months by members of a broker association opposite other members of the same broker association will be limited to 20% per month.

      . . .

      Best and Only Bid and Offer Documentation

      In circumstances where two members of the same broker association trade opposite one another in a contract month subject to the trading restrictions set forth above, and at the time the trade is executed one member is the best and only bid and the other member is the best and only offer, the quantity associated with the execution will be removed from each member’s monthly intra-association percentage restrictions provided that all of the following requirements are met:

      1. A note is made on the trading document by one of the two members involved in the trade indicating that at the time the trade was executed, one member was the best and only bid and the other member was the best and only offer in the pit. Noting “B&O” on the trading document is sufficient for this purpose. That notation must be made contemporaneously with the trade being made.

      2. The time of the trade to the nearest minute is recorded on the trading document containing the B&O notation.

      3. A signature and a legible acronym of a member (or the signature of an Exchange official) attesting to the fact that the members were the best and only bid and best and only offer at the time the trade was made must be noted on the trading document. The signature and acronym of the member (or the signature of the Exchange official) must be obtained as soon as possible after the trade has been made. Members executing the trade may request signatures only from members (or Exchange officials) who were present when the trade was made. Members signing such trading documents may do so only if they were present and can attest to the fact that the trade was a best and only bid and offer at the time it was made. Members of the same broker association are not eligible to sign as a witness for this purpose.

      4. Copies of the documentation are forwarded to the Market Regulation Department...

      Properly documented best and only bids and offers will be removed from each member’s intra-association trading volume and total trade volume when calculating compliance with the applicable trading restrictions. If the removal of the volume associated with the best and only bids and offers results in the reduction of a member’s intra-association trading percentage to a non-violative level, the member will not be deemed to have violated Rule 515.E.

      FINDINGS:
      Pursuant to an offer of settlement in which Andrew J. Schwieters (“Schwieters”) neither admitted nor denied the rule violations upon which the penalty is based, on June 20, 2017, a Panel of the Chicago Mercantile Exchange (“CME”) Business Conduct Committee (“Panel”) found that on numerous occasions between September 2015 and December 2016, customer orders executed between Schwieters and other brokers in his broker association were improperly documented as resulting from “best and only bids and offers” (“B&O”). The trading documents submitted to CME Group’s Market Regulation Department (“Market Regulation”) related to these trades failed to comply with one or more of the documentation requirements set forth in the relevant Market Regulation Advisory Notice for Rule 515. The Panel thus concluded that Schwieters violated CME Rule 515.

      PENALTY:
      In accordance with the settlement offer, the Panel ordered Schwieters to pay a fine of
      $10,000, and to have his access to all CME Group trading floors and direct and indirect access to all electronic trading and clearing platforms owned or controlled by CME Group suspended for a period of five business days. The suspension shall run from August 18, 2017, through August, 24, 2017, inclusively.

      EFFECTIVE DATE:

      June 22, 2017