NOTICE OF DISCIPLINARY ACTION

NON-MEMBER:

Porto Seguro Investimentos LTDA

CME RULE VIOLATIONS:

Rule 432 (“General Offenses”) (in part)

It shall be an offense:

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

Rule 534 Wash Trades Prohibited

No person shall place or accept buy and sell orders in the same product and expiration month, and, for a put or call option, the same strike price, where the person knows or reasonably should know that the purpose of the orders is to avoid taking a bona fide market position exposed to market risk (transactions commonly known or referred to as wash sales). Buy and sell orders for different accounts with common beneficial ownership that are entered with the intent to negate market risk or price competition shall also be deemed to violate the prohibition on wash trades. Additionally, no person shall knowingly execute or accommodate the execution of such orders by direct or indirect means.

FINDINGS:

Pursuant to an offer of settlement in which Porto Seguro Investimentos LTDA (“Porto Seguro”) neither admitted nor denied the rule violations or factual findings 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 September 14, 2020, in E-mini S&P 500 options, and on November 19, 2020, in Australian Dollar/U.S. Dollar options, a trader employed by Porto Seguro executed transactions between accounts with common beneficial ownership. The trader executed the opposing buy and sell orders in a manner designed to avoid taking a bona fide market position exposed to market risk, and for the purpose of alleviating the accounts’ maintenance margin requirements. The Panel also found that Porto Seguro failed to diligently supervise its employee’s trading activity and failed to provide compliance training to its employee to ensure conduct consistent with Exchange Rules. The Panel concluded that Porto Seguro thereby violated CME Rules 432.W. and 534.

PENALTY:

In accordance with the settlement offer, the Panel ordered Porto Seguro to pay a $40,000 fine.