NOTICE OF DISCIPLINARY ACTION

MEMBER:

ALLSTON TRADING LLC

EXCHANGE RULES:

RULE 575.A. DISRUPTIVE PRACTICES PROHIBITED

It shall be an offense to enter or cause to be entered an order with the intent, at the time of order entry, to cancel the order before execution or to modify the order to avoid execution.

RULE 433. STRICT LIABILITY FOR THE ACTS OF AGENTS

Pursuant to Section 2(a)(1)(B) of the Commodity Exchange Act, and notwithstanding Rule 432.W., the act, omission, or failure of any official, agent, or other person acting for any party within the scope of his employment or office shall be deemed the act, omission or failure of the party, as well as of the official, agent or other person who committed the act.

FINDINGS:

Pursuant to an offer of settlement in which Allston Trading LLC (“Allston”) neither admitted nor denied the rule violations upon which the below penalty is based, on August 15, 2018, a Panel of the Chicago Mercantile Exchange (“CME”) Business Conduct Committee (“BCC” or “Panel”) found that, between September 15, 2014 and October 1, 2014, an Allston trader engaged in a pattern of disruptive trading activity in the E-mini S&P Futures market wherein he typically entered an order, or a layer of orders, on one side of the market and then cancelled them several seconds after smaller-sized orders on the opposite side of the book were executed. The trader’s purpose in entering these larger-sized, or layered, orders was not to execute trades but, rather, to encourage market participants to trade with his smaller-sized orders and, in many cases, his orders had that effect. Although the trader was aware of a CME investigation (the “Investigation”) into his trading, he concealed that information from Allston when seeking employment with Allston. Allston promptly terminated the employee when it learned of the Investigation. The Panel concluded that, pursuant to Exchange Rule 433, Allston is strictly liable for the acts of an employee whose conduct the Panel concluded violated Exchange Rule 575.A.

PENALTY:

In accordance with the settlement offer, the BCC Panel ordered Allston to disgorge profits in the amount of $59,535.