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      • CME 12-9067-BC-4
      • Effective Date
      • 26 May 2015



      Rule 540. Responsibility of Customer Orders

      A. Standard of Responsibility

      A Member (as defined in Rule 400) shall exercise due diligence in the handling and execution of customer orders. Failure to act with due diligence shall constitute negligence. In the case of a dispute as to whether a Member has exercised due diligence, the appropriate arbitration or disciplinary committee is authorized to determine whether the Member was negligent and, if so, whether an adjustment is due to the customer. The committee may take into consideration the nature of the order and existing market conditions, including the existence of a "fast market" (a designation invoked to reflect rapid price changes and volatile market conditions in the pit), at the time the Member acted or failed to act. However, no market condition nullifies a Member's responsibility to exercise due diligence.

      A Member (as defined in Rule 400) is prohibited from directly or indirectly guaranteeing the execution of an order or any of its terms such as quantity or price. A Member may only report an execution that has occurred as a result of open outcry, has been effected through the Globex platform, or has been executed as a permissible privately negotiated transaction. This rule shall not be construed to prevent a Member from assuming or sharing in the losses resulting from an error or the mishandling of an order.


      Pursuant to an offer of settlement in which Mark Allen Christman (“Christman”) neither admitted nor denied the rule violations upon which the penalty is based, on May 21, 2015, a Panel of the CME Business Conduct Committee (“Panel”) found that it had jurisdiction over Christman pursuant to Rules 400 and 402 as the conduct occurred while Christman was an employee of a CME member firm. The Panel also found that on April 20, 2012, Christman received a customer order to sell a put spread in Eurodollar options on futures. Christman communicated a fill to the customer on the order before execution occurred in the pit. The Panel concluded that Christman thereby violated CME Rule 540.A.


      In accordance with the settlement offer, the Panel ordered Christman to pay a fine of $20,000 and serve a seven business day suspension of access to any CME Group Inc. trading floor and of direct access to all electronic trading and clearing platforms owned or controlled by CME Group, Inc., including CME Globex. The suspension shall run from June 4, 2015, through June 12, 2015, inclusive.


      May 26, 2015