R&B Commodities LLC
CME RULE VIOLATION:
Rule 575 Disruptive Practices Prohibited
D. No person shall enter or cause to be entered an actionable or non-actionable message with intent to disrupt, or with reckless disregard for the adverse impact on, the orderly conduct of trading or the fair execution of transactions.
Market Regulation Advisory Number RA1516-5 (Superseded)
Q.14 Is a market participant precluded from entering orders that may be considered large for a particular market, and thus may have a potential impact on the market?
A.14 The size of an order or cumulative orders may be deemed to violate Rule 575 if the entry results in disorderliness in the markets, including but not limited to, price or volume aberrations. Market participants should further be aware that the size of an order may be deemed to violate Rule 575 if that order distorts the integrity of the settlement prices. Accordingly, market participants should be cognizant of the market characteristics of the products they trade and ensure that their order entry activity does not result in market disruptions. Exigent circumstances may be considered in determining whether a violation of Rule 575 has occurred and, if so, what the appropriate sanction should be for such a violation.
Pursuant to an offer of settlement in which R&B Commodities LLC (“R&B”) neither admitted nor denied the rule violation upon which the penalty is based, on September 23, 2020, a Panel of the Chicago Mercantile Exchange Business Conduct Committee (“Panel”) found that on multiple occasions between January 2016, and February 2017, R&B executed large market orders in the Live Cattle futures market on behalf of clients with reckless disregard for the orderly execution of transactions. Specifically, R&B placed such large orders without sufficient consideration for the resting quantity in the order book, which caused significant and disruptive price movements in the Live Cattle futures market. For example, on April 18, 2016, R&B entered a 100-lot sell market order into a Live Cattle market that displayed 33 contracts in aggregate at the top five book levels on the opposite side of the market. R&B’s order was filled across 19 unique prices. Within one second, R&B continued to enter multiple market orders that caused additional significant and disruptive price breaks in the market in a short period of time.
The Panel thereby concluded that R&B violated Rule 575.D.
In accordance with the settlement offer, the Panel ordered R&B Commodities LLC to pay a fine of $40,000.
September 25, 2020