Barclays Capital Inc.
CBOT RULE VIOLATION:
Rule 854.B. (“ CONCURRENT LONG AND SHORT POSITIONS”)
Concurrent long and short positions in physically delivered contracts that are held by the same owner during the delivery month and two business days prior to the delivery month must be offset by transactions executed in the market, by allowable privately negotiated transactions, or fulfilled through the normal delivery process, provided however that trades may be transferred for offset if the trade date of the position being transferred is the same as the transfer date. Such positions may not be offset via netting, transfer, or position adjustment except to correct a bona fide clerical or operational error on the day the error is identified and provided that the quantity of the offset does not represent more than one percent of the reported open interest in the affected futures contract month.
Pursuant to an offer of settlement in which Barclays Capital Inc. (“Barclays”) neither admitted nor denied the rule violation upon which the penalty is based, on December 17, 2013, a Panel of the CBOT Business Conduct Committee found that on November 25, 2011, Barclays entered a booking error through Front End Clearing on an EFR transaction to buy 4,000 Dec 2011 Soybean Oil futures contracts and sell 4,000 futures equivalent swaps contacts. Barclays detected the error and entered the correct trade, however, the initial trade was not immediately cancelled. The end result was that Barclays had to net-down 1,991 contracts in a delivery month. In doing so, the Panel found that Barclays violated CBOT Rule 854.B (Concurrent Long and Short Positions).
In accordance with the settlement offer, the Panel fined Barclays $10,000.
December 19, 2013
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