NOTICE OF DISCIPLINARY ACTION

MEMBER:

Belvedere Trading LLC

CME RULE VIOLATION:

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 trades or 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 Belvedere Trading LLC neither admitted nor denied the rule violation or factual findings upon which the penalty is based, on December 21, 2022, a Panel of the Chicago Mercantile Exchange Business Conduct Committee (“Panel”) found that on April 30, 2021, following solicitation by an Introducing Broker, Belvedere bought and sold May 2021 S&P 500 options in separate block trades for the same account and opposite a single counterparty. The purpose of the block trades was to accommodate the counterparty’s liquidation and subsequent re-initiation of a position held at different clearing firms. As such, Belvedere knew or should have known that the purpose of the trades was to avoid taking a bona fide position exposed to market risk.

The Panel thereby concluded that Belvedere violated CME Rule 534.

PENALTY:

In accordance with the settlement offer, the Panel ordered Belvedere to pay a fine of $15,000.