NOTICE OF DISCIPLINARY ACTION

NON-MEMBER:

Alvaro Herrador

CME RULE VIOLATIONS:

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

A. No person shall prearrange or pre-negotiate any purchase or sale or noncompetitively execute any transaction, except in accordance with Sections B. and C. below.

…

C. Parties may engage in pre-execution communications with regard to transactions executed on the Globex platform where one party (the first party) wishes to be assured that a contra party (the second party) will take the opposite side of the order under the following circumstances:
…

3. Permissible Entry Methods for Orders

The following order entry methods for futures, options, spreads and combinations vary by product, as set forth in the Rule 539.C. Crossing Protocols Table (“Table”) in the Interpretations Section at the end of Chapter 5.

a. Globex Cross (“G-Cross”) The first party’s order is entered into the Globex platform first. The second party’s order may not be entered into the Globex platform until a period of 5 seconds has elapsed from the time of entry of the first order.

Rule 576. Identification of Globex Terminal Operators (in part)

Each individual must use a unique operator ID to access Globex. In no event may a person enter an order or permit the entry of an order by an individual using an operator ID other than the individual’s own unique operator ID.

FINDINGS:

Pursuant to an offer of settlement in which Alvaro Herrador neither admitted nor denied the rule violations upon which the penalty is based, on April 20, 2022, a Panel of the Chicago Mercantile Exchange (“CME”) Business Conduct Committee (“Panel”) found that on October 2, 2020, Herrador entered orders in December 2020 E-mini S&P 500 futures and options, E-mini Nasdaq 100 futures, Euro FX futures, Euro/Japanese Yen futures, and Euro British Pound futures on his employer’s behalf in a prearranged fashion. Specifically, Herrador and a colleague coordinated their order entries for their employer’s account to ensure that the orders traded opposite each other and without following Globex Cross procedures. The Panel also found that Herrador utilized the unique operator ID of another employee to enter orders.

The Panel concluded that Herrador violated Rules 539.A. and 576.

PENALTY:

In accordance with the settlement offer, the Panel ordered Herrador to pay a fine in the amount of $15,000 and suspended Herrador from all direct and indirect access to any designated contract market, derivatives clearing organization, or swap execution facility owned or controlled by CME Group Inc. for 10 business days. The suspension shall begin on the effective date below and continue through and include May 5, 2022.