NOTICE OF DISCIPLINARY ACTION

CHICAGO BOARD OF TRADE

NOTICE OF DISCIPLINARY ACTION

FILE NO.:                     17-CH-1702                             

MEMBER FIRM:           Cunningham Commodities, LLC                        

CBOT RULES:             930. PERFORMANCE BOND REQUIREMENTS: ACCOUNT HOLDER LEVEL

C. Acceptable Performance Bond Deposits

Clearing members may accept from their account holders as performance bond cash currencies of any denomination, readily marketable securities (as defined by SEC Rule 15c3-1(c)(11) and applicable SEC interpretations), money market mutual funds allowable under CFTC Regulation 1.25, bank–issued letters of credit, warrants, warehouse receipts and shipping certificates that are registered as deliverable for commodities traded on Chicago Mercantile Exchange Inc., Chicago Board of Trade Inc., New York Mercantile Exchange, Inc. or Commodity Exchange, Inc., and "London Good Delivery" gold, as defined by the London Bullion Market Association… All assets deposited by account holders to meet performance bond requirements must be and remain unencumbered by third party claims against the depositing account holder…

E. Calls for Performance Bond

2. Clearing members shall only reduce a call for performance bond through the receipt of performance bond deposits permitted under subsection C. of this rule. Clearing members may cancel a call for performance bond through: a) the receipt of performance bond deposits permitted under subsection C. of this rule only if such deposits equal or exceed the amount of the total performance bond call; or b) inter-day favorable market movements and/or the liquidation of positions only if performance bond equity in the account is equal to or greater than the initial performance bond requirement. Clearing members shall reduce an account holder's oldest outstanding performance bond call first.

970. FINANCIAL REQUIREMENTS

A.         Subject to exemptions granted by Exchange staff, all clearing members, including nonFCMs, must comply with the requirements set forth in CFTC Regulations 1.10, 1.12, 1.17 and 1.18. This includes, but is not limited to, the following:

4.         Completely and accurately computing and recording the balances in the net capital computation including capital requirements.

971. SEGREGATION, SECURED AND CLEARED SWAPS CUSTOMER ACCOUNT REQUIREMENTS

A.         All clearing members must comply with the requirements set forth in CFTC Regulations 1.20 through 1.30, 1.32, 1.49 and 30.7, and Part 22 of the CFTC Regulations.  This includes, but is not limited, to the following.

FINDINGS:                   Pursuant to an offer of settlement in which Cunningham Commodities, LLC neither admitted nor denied the rule violations upon which the penalty is based, on May 11, 2017, the Clearing House Risk Committee found that Cunningham Commodities, LLC violated CBOT Rules 930.C., 930.E.2., 970.A.4. and 971.A.

PENALTY:                   In accordance with the settlement offer, the Clearing House Risk Committee imposed a $25,000 fine.

EFFECTIVE DATE:      May 12, 2017