NOTICE OF DISCIPLINARY ACTION

NON-MEMBER:

Bradley Tenharmsel

CBOT RULE VIOLATION:

Rule 575. Disruptive Practices Prohibited (in part)

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.

FINDINGS:

Pursuant to an offer of settlement in which Bradley Tenharmsel neither admitted nor denied the rule violation or factual findings upon which the penalty is based, on July 16, 2024, a Panel of the Chicago Board of Trade (“CBOT”) Business Conduct Committee (“Panel”) found that on October 14, 2021, Tenharmsel, a quantitative trader at a proprietary trading firm, had large orders resting across multiple price levels on the bid in the December 2021 2-Year Treasury Note futures market. While these orders were resting in the market, a market participant entered numerous large aggressive fill-and-kill (“FAK”) sell orders that traded through multiple levels of the order book and resulted in a temporary halt to the market (Velocity Logic event). When the market reopened, the ATS Tenharmsel operated on the firm’s behalf aggressively sold thousands of contracts across multiple price levels to hedge its position. While the ATS had sell-side price banding in place, Tenharmsel set the bands to an effectual price that effectively negated its purpose. The Panel found that the sell orders and subsequent fills caused a price spike and were disruptive to the orderly trading of the market.

The Panel found that as a result of the foregoing, Tenharmsel violated CBOT Rule 575.D.

PENALTY:

In accordance with the settlement offer, the Panel ordered Tenharmsel to pay a $10,000 fine and suspended him 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 five business days. The suspension shall begin on the effective date below and continue through and include July 24, 2024.

EFFECTIVE DATE:

July 18, 2024