Aardvark Trading LLC
CME RULE VIOLATIONS:
432. General Offenses
It shall be an offense:
Q. to commit an act which is detrimental to the interest or welfare of the Exchange or to engage in any conduct which tends to impair the dignity or good name of the Exchange;
W. for a Member to fail to diligently supervise its employees and agents in the conduct of their business relating to the Exchange.
Pursuant to an offer of settlement in which Aardvark Trading LLC (“Aardvark”) neither admitted nor denied the rule violations upon which the penalty is based, on October 25, 2016, a Panel of the Chicago Mercantile Exchange (“CME”) Business Conduct Committee (“BCC” or “Panel”) found that Aardvark was subject to the BCC’s jurisdiction pursuant to Rules 400 and 402. The Panel also found that on November 13, 2014, an automated trading system (“ATS”) operated by Aardvark did not operate as intended, causing it to execute approximately 17,000 contracts in the associated legs of the Eurodollar Complex. The incident also caused price and volume aberrations in numerous Eurodollar Pack Spread Futures instruments during a nine second period. The Panel further found that the incident was the result of supervisory errors on the part of Aardvark, including the improper configuration and modification of the ATS’s code, the failure to adhere to its own policies with respect to an ATS deployment, and the failure to appropriately test the ATS’s code before allowing it to trade in a live market. Additionally, the Panel found that on several occasions in June and October of 2014, ATSs that Aardvark operated did not operate as intended as a result of supervisory errors. None of these events had significant market impact. The Panel thus concluded that Aardvark thereby violated CME Rules 432.Q and 432.W.
In accordance with the settlement offer, the Panel ordered Aardvark to pay a fine of $205,000.
October 27, 2016