NOTICE OF DISCIPLINARY ACTION

FILE NO.:

CBOT 16-0391-BC

MEMBER:

Brian Jay Welsh

CBOT RULE VIOLATIONS:

Rule 521. Requirements for Open Outcry Trades (in part)

In open outcry trading, bidding and offering practices must at all times be conducive to the competitive execution of transactions. All open outcry transactions, including spread and combination transactions, shall be made openly and competitively in the pit designated for the trading of the particular transaction. No bid or offer shall be specified for acceptance by a particular trader. Transactions may take place only at the best price available in the open outcry market at the time the trade occurs.

Rule 531. Trading Against Customers’ Orders Prohibited

No person in possession of a customer order shall knowingly take, directly or indirectly, the opposite side of such order for his own account, an account in which he has a direct or indirect financial interest, or an account over which he has discretionary trading authority.

Rule 539. Prearranged, Pre-Negotiated and Noncompetitive Trades Prohibited (in part)

A. General Prohibition

No person shall prearrange or pre-negotiate any purchase or sale or noncompetitively execute any transaction.

FINDINGS:

Pursuant to an offer of settlement in which Brian Jay Welsh (“Welsh”) neither admitted nor denied the rule violations upon which the penalty is based, on August 8, 2018, a Panel of the Chicago Board of Trade Business Conduct Committee (“Panel”) found that on multiple occasions between September 29, 2015, and January 27, 2016, Welsh did not openly and competitively bid or offer for trades executed in the 10-Year T-Note options pit. In addition, on one such occasion, after an intermediary communicated a fill to a customer before Welsh fully executed the order in the pit, Welsh instructed another broker to sell the remaining quantity for Welsh’s error account opposite the customer order even though a brokerage error did not occur. The Panel concluded that Welsh violated CBOT Rules 521, 531, and 539.

PENALTY:

In accordance with the settlement offer, the Panel ordered Welsh to pay a fine in the amount of $20,000 and to serve a 15 business-day suspension from accessing any CME Group Inc. trading floor and all direct and indirect access to all electronic trading and clearing platforms owned or controlled by CME Group Inc. The suspension shall run from September 17, 2018, through October 5, 2018, inclusive.

EFFECTIVE DATE:

August 10, 2018