Elephas Investment Management Limited
562. Position Limit Violations (in part)
Any positions in excess of those permitted under the rules of the Exchange shall be deemed position limit violations.
Pursuant to an offer of settlement in which Elephas Investment Management Limited (“Elephas”) neither admitted nor denied the rule violation upon which the penalty is based, on June 18, 2019, a Panel of the CBOT Business Conduct Committee (“Panel”) found that at the close of business on November 29, 2017, Elephas held a futures equivalent net long position of 1,680 long December Soft Red Winter Wheat futures (“Wheat”) contracts, 1,080 contracts (180%) over the spot month position limit. After close of trading on November 29, 2017, Elephas was assigned 1,185 Wheat certificates via the delivery process, bringing Elephas to a futures equivalent net long position of 495 contracts. After realizing it was over the limit, Elephas rolled its remaining futures contracts and entered into a short position to retender its certificates by selling 1680 December 2017/March 2018 Wheat spreads. By virtue of exceeding the position limit and liquidating its overage through the delivery process, Elephas reduced its loss on its December Wheat position by $166,590. The Panel found that Elephas thereby violated CBOT Rule 562.
In accordance with the settlement offer, the Panel ordered Elephas to pay a fine in the amount of $50,000 and to pay the $166,590 benefit it received in reduced losses.
July 2, 2019