CBOT Rule 526. Block Trades
The Exchange shall designate the products in which block trades shall be permitted and determine the minimum quantity thresholds for such transactions. Additionally, with respect to block trades in swaps, the minimum size for such transactions shall be established at levels at or in excess of those set forth in Appendix F to Part 43 of CFTC Regulations.
The following shall govern block trades:
A. A block trade must be for a quantity that is at or in excess of the applicable minimum threshold. Orders may not be aggregated in order to achieve the minimum transaction size, except by those entities described in Sections I. and J.
F. Unless otherwise agreed to by the principal counterparties to the block trade, the seller, or, in the case of a brokered transaction, the broker handling the block trade, 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, options, swaps or futures/swap spreads 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.
Pursuant to an offer of settlement Jefferies LLC (“Jefferies”), formerly known as Jefferies Bache LLC, presented at hearing on April 15, 2015, in which Jefferies neither admitted nor denied the rule violations upon which the penalty is based, a Panel of the CBOT Business Conduct Committee (“Panel”) found that it had jurisdiction over Jefferies as a CBOT member pursuant to Exchange Rules 400 and 402, and that on April 16, 2012, Jefferies aggregated block orders on one side of a block transaction for different beneficial owners.
The Panel also found that on May 18, 2012, Jefferies executed a block trade that was not reported to the Exchange within the applicable time limit following execution.
The Panel found that as a result, Jefferies violated Rules 526.A. and 526.F.
In accordance with the settlement offer, the Panel ordered Jefferies to pay a fine to the Exchange in the amount of $17,500.
April 17, 2015
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