NOTICE OF DISCIPLINARY ACTION

FILE NO.:

CME 15‐0283‐BC

NON-MEMBER:

FCT Strategy Trading Limited

CME RULE VIOLATIONS:

CME Rule 432.W: General Offenses 

It shall be an offense for any party to fail to diligently supervise its employees and agents in the conduct of their business relating to the Exchange.

CME Rule 575: Disruptive Practices Prohibited (in part)

All orders must be entered for the purpose of executing bona fide transactions. Additionally, all non‐actionable messages must be entered in good faith for legitimate purposes.

A. No person shall 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.

Market Regulation Advisory Notice RA1405‐5R: Disruptive Practices Prohibited (Effective September 15, 2014) (in part)

Q20: What type of pre‐open activity is prohibited by Rule 575?

A20: Orders entered during the pre‐opening period must be entered for the purpose of executing bona fide transactions upon the opening of the market. The entry and cancellation of orders during the pre‐opening period for the purpose of either manipulating the IOP or attempting to identify the depth of the order book at different price levels is prohibited and may be deemed a violation of Rule 575 or other rules.

FINDINGS:

Pursuant to an offer of settlement in which FCT Strategy Trading Limited (“FCT”) neither admitted nor denied the rule violations upon which the penalty is based, on March 6, 2019, a Panel of the CME Business Conduct Committee (“Panel”) found that on various occasions between January 2015 and July 2015, FCT traders entered Lean Hogs, Feeder Cattle and Live Cattle spread futures orders on CME Globex during the pre‐opening period that were not made for the purpose of executing bona fide transactions, but instead to identify the depth of the order book. The entry and cancelation of these orders caused fluctuations in the publicly displayed Indicative Opening Price (“IOP”). The Panel further found that FCT did not sufficiently train or supervise its traders to prevent the non‐bona fide order entry and order cancelation during the pre‐opening period. Following this occurrence, FCT undertook remedial measures and training. 

The Panel concluded that FCT thereby violated CME Rules 432.W. and 575.A.

PENALTY:

In accordance with the settlement offer, the Panel ordered FCT to pay a fine of $75,000.

EFFECTIVE DATE:

March 8, 2019