NOTICE OF DISCIPLINARY ACTION

MEMBER:                        

Straits Financial LLC

CBOT RULE VIOLATIONS:                  

Rule 574             Globex Access Restrictions

Clearing members shall suspend or terminate a Person’s Globex access if the Exchange determines that the actions of the Person threaten the integrity or liquidity of any contract or violate any Exchange rule or the Act, or if the Person fails to cooperate in an investigation.

If a clearing member has actual or constructive notice of a violation of Exchange rules in connection with the use of Globex by any Person for which it has authorized a direct connection and the clearing member fails to take appropriate action, the clearing member may be found to have committed an act detrimental to the interest or welfare of the Exchange.

Rule 432             General Offenses

It shall be an offense:

W.         for a Member to fail to diligently supervise its employees and agents in the conduct of their business relating to the Exchange.

FINDINGS:                         

Pursuant to an offer of settlement in which Straits Financial LLC (“Straits”) neither admitted nor denied the rule violations upon which the penalty is based, on July 27, 2020, a Panel of the Chicago Board of Trade (“CBOT”) Business Conduct Committee (“Panel”) found that between November 20, 2014, and February 20, 2015, Straits, a clearing member, received actual notice that one of its customers executed numerous trades in various futures markets while suspended from trading by the Exchange and failed to terminate the customer’s access to Globex. Specifically, Straits knew that, on November 20, 2014, Straits’s customer was suspended from accessing any CME Group Inc. trading floor, and direct and indirect access to all electronic trading and clearing platforms owned or controlled by CME Group Inc. for three months for a violation of CME Legacy Rule 432.G. Having received the Notice of Disciplinary Action pertaining to its customer, Straits had actual knowledge of its customer’s Exchange rule violation and the suspension. Moreover, Straits received correspondence from its customer during his suspension about his ongoing trade activity. Despite this knowledge, Straits failed to terminate its customer’s access to Globex and allowed him to trade throughout his suspension. Further, Straits failed to have a process in place to effectively prevent suspended traders from accessing Globex.

The Panel concluded that Straits thereby violated CBOT Rules 574 and 432.W.

PENALTY:                         

In accordance with the settlement offer, the Panel ordered Straits to pay a fine of $42,500.

EFFECTIVE DATE:                               

July 29, 2020