RBS SECURITIES INC.
CBOT RULE VIOLATION:
854. Concurrent Long and Short Positions
Set forth below are the procedures that must be followed for concurrent long and short positions and hold-open accounts.
A. Concurrent long and short positions in the same commodity and month may be held by a clearing member at the direction of a customer or on behalf of an omnibus account; however it shall be the duty of the clearing member to ascertain whether such positions are intended for offset or to be held open prior to final transmission of position data to the Clearing House.
B. 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.
C. Clearing members which, pursuant to this rule, carry concurrent long and short positions, must report to the Clearing House both sides as open positions. When either side or both sides are reduced in accordance with Section B. of this rule, the open positions as reported to the Clearing House must be reduced accordingly.
D. The Exchange takes no position regarding the internal bookkeeping procedures of its clearing members which, for the convenience of a customer, may "hold open" a position only on their books. However, the clearing member must accurately report to the Exchange and the Clearing House, as appropriate, large trader positions, long positions eligible for delivery and open interest.
Pursuant to an offer of settlement RBS Securities Inc. (“RBS”) presented at a hearing on June 6, 2012, in which RBS neither admitted nor denied the rule violations upon which the penalty is based, a Panel of the CBOT Business Conduct Committee (“BCC”) found that as a result of inadvertently submitting 540 delivery intents for its house account rather than its customer account for October 2011 Soybean Oil futures contracts, on September 30, 2011, RBS overstated open interest in October 2011 Soybean Oil futures contracts by 540 contracts or 11%.
The Panel found that as a result, RBS violated CBOT Rule 854.
In accordance with the settlement offer, the Panel ordered RBS to pay a fine to the Exchange in the amount of $15,000.
June 8, 2012
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