NOTICE OF DISCIPLINARY ACTION

FILE NO.:

CBOT 08-02498-BC

MEMBER FIRM:

EAGLE MARKET MAKERS INC.

CBOT RULE VIOLATION:

RULE 713 (“DELIVERY PROCEDURES”)
713.B. (“Delivery Notice”) (In Relevant Part)
A seller obligated or desiring to make delivery of a commodity shall issue and deliver to the Clearing House a delivery notice in the form and manner specified by the Clearing House.
Where a clearing firm has an interest both long and short for accounts on its own books, it must tender to the Clearing House such notices of intention to deliver as it receives from its accounts that are short. No office deliveries may be made by clearing members.
Unless a different time is prescribed by the rules pertaining to a particular commodity, delivery notices must be delivered to the Clearing House by 4:00 p.m. on position day except that, on the last notice day of the delivery month, delivery notices for those commodities utilizing the electronic delivery system via the Clearing House’s on-line system may be delivered to the Clearing House until 10:00 a.m., or 2:00 p.m. for all other commodities on notice day. The Clearing House shall, on the same day, assign the deliveries to eligible buyers as provided in Rule 713.C.

713.C. (“Eligibility to Receive Delivery and Notice to Buyers”) (In Relevant Part)

Prior to 8:00 p.m. of each day on which delivery notices may be delivered, each clearing member shall report to the Clearing House its long positions eligible for delivery. Such reports shall show the dates on which such purchases were made, and shall exclude purchases to which the clearing member has applied deliveries assigned to it but which remain open on its books pending receipt of delivery. With respect to omnibus accounts, the reports shall show the dates on which such purchases were made as reflected on the ultimate customers’ account statements.

FINDINGS:

Pursuant to an offer of settlement in which Eagle Market Makers Inc. (“Eagle”) neither admitted nor denied the rule violations upon which the penalty is based, on August 16, 2012, a Panel of the Chicago Board Of Trade Business Conduct Committee found that on August 28, 2008, the first day of a new delivery system interface, an Eagle employee inadvertently submitted intents for delivery in contracts for which Eagle had no corresponding short position and failed to report Eagle’s long dates eligible for delivery. The Panel found that in so doing, Eagle violated CBOT Rules 713.B. and 713.C.

 

PENALTY:

In accordance with the settlement offer, the Panel fined Eagle $25,000.

EFFECTIVE DATE:

August 20, 2012