NOTICE OF DISCIPLINARY ACTION

FILE NO.:

CBOT 11-8056-BC

NON-MEMBER:

TOWER RESEARCH CAPITAL INVESTMENTS LLC

CBOT RULE VIOLATIONS:

Rule 432. GENERAL OFFENSES (in part)

It shall be an offense:

Q. to 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;

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

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.

FINDINGS:

Pursuant to an offer of settlement in which Tower Research Capital Investments LLC, acting through its affiliate Tower Research Capital LLC, (“Tower”) neither admitted nor denied the rule violations upon which the penalty is based, on September 18, 2014, a Panel of the CBOT Business Conduct Committee (“BCC” or “Panel”) found that it had jurisdiction over Tower pursuant to Rules 400 and 402 as the conduct occurred while Tower was a member of the Chicago Mercantile Exchange, and that on October 18, 2010, an Automated Trading System (“ATS”) that a Tower trading group utilized entered an excessive number of order, modification, and cancel messages during a fifty-minute time period in the March 2011 Corn futures contract on the CME Globex electronic trading platform (“Globex”). Specifically, due to a threshold configuration issue, the ATS repeatedly reacted to the presence of its own orders in the market during the fifty minutes. Once the trading group observed the excessive messaging, it corrected the configuration issue. The Panel further found that during the month of July 2011, the Tower trading group erroneously assigned the same Tag 50 user ID to two separate algorithms it employed. The Panel concluded that Tower thereby violated CBOT Rules 432.Q., 432.W., and 576.

PENALTY:

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

EFFECTIVE DATE:

September 22, 2014