NOTICE OF DISCIPLINARY ACTION

FILE NO.:

CBOT 11-8060-BC

MEMBER:

Nomura Securities International, Inc.

CBOT RULE VIOLATIONS:

(Legacy) Rule 526 Block Trades (in part)

F. The seller must ensure that each block trade is reported to the Exchange within five minutes of the time of execution; except that block trades in interest rate futures and options executed outside of Regular Trading Hours (7:00 a.m. – 4:00 p.m. Central Time, Monday – Friday on regular business days) must be reported within fifteen minutes of the time of execution. The report must include the contract, contract month, price, quantity of the transaction, the respective clearing members, the time of execution, and, for options, strike price, put or call and expiration month. The Exchange shall promptly publish such information separately from the reports of transactions in the regular market.

Rule 536. Recording Requirements for Pit, Globex and Negotiated Trades

A. At the time of execution, every order received from a customer must be in the form of a written or electronic record and include an electronic timestamp reflecting the date and time such order was received on the floor of the Exchange and, except as provided in Section C, must identify the specific account(s) for which the order was placed. Such record shall also include an electronic timestamp reflecting the date and time such order was modified, returned, confirmed or cancelled.

FINDINGS:

Pursuant to an offer of settlement in which Nomura Securities International, Inc. (“Nomura”) neither admitted nor denied the rule violations upon which the penalty is based, on April 30, 2014, a panel of the Chicago Board of Trade (“CBOT”) Business Conduct Committee found that it has jurisdiction over Nomura because it is a CBOT member and on two separate occasions in 2010 and a third occasion in 2011, Nomura employees executed block trades in the U.S. Treasury Note Futures contracts, and did not report the trades to the Exchange within five minutes of the time of execution. During the same time frame, Nomura, through its employees, reported to the Exchange inaccurate execution times of the block trades. The Panel also found that Nomura failed to maintain accurate records with respect to block trade executions. The Panel concluded that Nomura thereby violated CBOT (Legacy) Rule 526.F. and Rule 536.A.

PENALTY:

In accordance with the settlement offer the Panel fined Nomura Securities Inc., $30,000.

EFFECTIVE DATE:

May 2, 2014