Hard Eight Futures, LLC
CBOT RULE VIOLATIONS:
Rule 432 – General Offenses
It shall be an offense to:
Q. commit an act which is detrimental to the interest or welfare of the Exchange or to engage in any conduct which tends to impair the dignity or good name of the Exchange.
T. to engage in dishonorable or uncommercial conduct.
Rule 576 – Identification of Globex Terminal Operators
Each Globex terminal operator shall be identified to the Exchange, in the manner prescribed by the Exchange, and shall be subject to Exchange rules. If user IDs are required to be registered with the Exchange, it is the duty of the clearing member to ensure that registration is current and accurate at all times. Each individual must use a unique user ID to access Globex. In no event may a person enter an order or permit the entry of an order by an individual using a user ID other than the individual’s own unique user ID.
Pursuant to an offer of settlement in which Hard Eight Futures, LLC (“Hard Eight”), a member firm and subject to the jurisdiction of the Chicago Board of Trade (“CBOT”) pursuant to CBOT Rule 400, neither admitted nor denied the Rule violations upon which the penalty is based, on April 7, 2014, a Panel of the CBOT Business Conduct Committee (the “Panel”) found that throughout March 2011, in the June 2011 10-Year U.S. Treasury Note futures contract, employees at Hard Eight entered and canceled large orders without the intent to trade. In some cases, the orders were entered for the purpose of obtaining fills on much smaller liquidating orders already resting on the other side of the order book. In other cases, the orders had the effect of encouraging a market movement in order to receive better fills when entering aggressive, liquidating orders. As a result of this trading activity, Hard Eight realized a benefit of $4,781.25. The Panel found that in so doing, Hard Eight violated CBOT Rules 432.Q. and 432.T.
The Panel also found that Hard Eight allowed its employees to enter orders onto the CME Globex trading platform using Tag50 User IDs registered to other Hard Eight employees. The Panel concluded that in so doing, Hard Eight violated CBOT Rules 576.
The Panel ordered Hard Eight to pay a fine of $140,000 and disgorgement of $4,781.25.
April 9, 2014