Goldman Sachs & Co.
CBOT RULE VIOLATIONS:
(Legacy) 526. Block Trades (in part)
F. The seller must ensure that each block trade is reported to the Exchange within five minutes of the time of execution; except that block trades in interest rate futures and options executed outside of Regular Trading Hours (7:00 a.m. – 4:00 p.m. Central Time, Monday – Friday on regular business days) must be reported within fifteen minutes of the time of execution. The report must include the contract, contract month, price, quantity of the transaction, the respective clearing members, the time of execution, and, for options, strike price, put or call and expiration month. The Exchange shall promptly publish such information separately from the reports of transactions in the regular market.
Rule 536. Recordkeeping Requirements for Pit, Globex, and Negotiated Trades (in part)
A.1. At the time of execution, every order received from a customer must be in the form of a written or electronic record and include an electronic timestamp reflecting the date and time such order was received on the floor of the Exchange and, except as provided in Section C, must identify the specific account(s) for which the order was placed. Such record shall also include an electronic timestamp reflecting the date and time such order was modified, returned, confirmed or cancelled.
Market Regulation Advisory Notice RA1203-3 Block Trades
5. Block Trade Price Reporting Requirements
b) Reporting Obligation (in part)
The failure to submit timely, accurate and complete block trade reports may subject the party responsible for the reporting obligation to disciplinary action.
Pursuant to an offer of settlement in which Goldman, Sachs & Co. (“Goldman”) neither admitted nor denied the rule violations upon which the penalty is based, on October 28, 2014, a panel of the Chicago Board of Trade (“CBOT”) Business Conduct Committee found that it has jurisdiction over Goldman because it is a CBOT member and on several occasions between December 30, 2009, and November 27, 2012, Goldman, through its employees, executed multiple block trades for customers in various CBOT interest rate futures contracts that were not reported to the Exchange within the applicable time limit following execution.
Additionally, the Panel found that during the same timeframe, Goldman, through its employees, reported to the Exchange inaccurate execution times of block trades and failed to maintain accurate records with respect to block trade executions. Specifically, Goldman’s order tickets did not accurately reflect the time of execution. In so doing, the Panel concluded that Goldman violated CBOT Rules 526.F. and 536.A.
The panel further found that on January 6, 2010, and again on August 1, 2013, Goldman, through its employees, consummated a block trade with a customer and, after realizing the trade was not reported to the Exchange within the requisite time limit, canceled the block trade and executed an identical trade with the same customer. In cancelling consummated block trades, the Panel found that Goldman violated CBOT Rule 526.F.
In accordance with the settlement offer, the Panel ordered Goldman to pay a $90,000 fine.
October 30, 2014
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