ELDORADO TRADING GROUP LLC
413. SUMMARY ACCESS DENIAL ACTIONS (in part)
413.A. Authority to Deny Access
The Chief Regulatory Officer or his delegate, upon a good faith determination that there are substantial reasons to believe that such immediate action is necessary to protect the best interests of the Exchange, may order that: 1) any party be denied access to any or all CME Group markets; 2) any party be denied access to the Globex platform; 3) any party be denied access to any other electronic trading or clearing platform owned or controlled by CME Group; or (4) any Member be immediately removed from any trading floor owned or controlled by CME Group.
On January 5, 2017, CME Group’s Market Regulation Department (“Market Regulation”), through its Chief Regulatory Officer, summarily denied Eldorado Trading Group LLC (“Eldorado”) direct and indirect access to the CME Globex electronic trading platform (“Globex”) for purposes of trading or entering Trading at Settlement (“TAS”) orders in any product. The summary access denial prohibits Eldorado, or anyone on behalf of Eldorado, from trading TAS, placing TAS orders, and controlling or directing TAS trading for any person, entity, or account in any CME Group exchange product.
CME Group’s Chief Regulatory Officer’s summary access denial of Eldorado was based upon a Market Regulation Department investigation, which revealed that on multiple dates beginning in December 2016, Eldorado traders submitted TAS order messages in various products with knowingly inaccurate and incomplete data in required fields. Specifically, on numerous dates, Eldorado submitted inaccurate and incomplete values in the Sender Location ID (Tag 142) field of their order messages. By decreasing the number of characters contained in the order message, Eldorado realized an advantage in gaining queue priority upon the opening of the TAS markets. After attaining queue priority, Eldorado modified those order messages to correct the knowingly inaccurate and incomplete data in the Sender Location ID field.
On December 22, 2016, Market Regulation informed Eldorado via telephone and a written letter that a formal investigation into their conduct had been initiated. On December 22, 26, 27, 28, 29, 2016, and January 2, 2017, Eldorado continued to submit order messages with knowingly inaccurate and incomplete data in required fields. On January 3, 2017, Market Regulation instructed Eldorado to immediately discontinue engaging in this practice and informed Eldorado that if it persisted in violating the exchange’s rules, a summary access denial would be taken. Eldorado acknowledged receipt of this communication on January 4. Later on January 4, Eldorado again submitted TAS order messages in two products with knowingly inaccurate and incomplete data in required fields. After attaining TAS queue priority in those products, Eldorado modified those order messages to correct the knowingly inaccurate and incomplete data.
The foregoing supports a good-faith determination that there are substantial reasons to believe that such immediate action is necessary to protect the best interests of the Exchanges and the marketplace.
Pursuant to Rule 413, this access denial will remain in effect for 60 days, commencing on the effective date below and continuing through and including March 6, 2017, unless the Chief Regulatory Officer or his delegate provides written Notice that this access denial will be extended for an additional period of time.
January 5, 2017