NOTICE OF DISCIPLINARY ACTION

FILE NO.:                           

CBOT 12-8736-BC

MEMBER FIRM:               

Barclays Capital Inc.

CBOT RULE VIOLATIONS:                     

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.

539        PREARRANGED, PRE-NEGOTIATED AND NON-COMPETITIVE TRADES PROHIBITED (in part)

C.           Pre-Execution Communications Regarding Globex Trades in Interest Rate, Ethanol and Dow Options (in part)

Parties may engage in pre-execution communications with regard to Interest Rate, Ethanol and Dow options transactions executed on the Globex platform where one party wishes to be assured that a contra party will take the opposite side of the order under the following circumstances:

4.            Subsequent to the pre-execution communication, a Request for Quote (“RFQ”) for the particular option or option spread or combination must be entered into Globex. Thereafter, in equity and interest rate options, a Request for Cross (“RFC”) order which contains both the buy and the sell order must be entered into Globex no less than fifteen (15) seconds and no more than thirty (30) seconds after the entry of the RFQ in order to proceed with the trade…The RFQ and the RFC order must be entered within the same trading session. Failure to enter the RFC within 30 seconds after the entry of the RFQ will require a new RFQ to be entered prior to the entry of the RFC order, which must be entered in accordance with the time parameters described above in order to proceed with the trade.     

FINDINGS:                        

Pursuant to an offer of settlement in which Barclays Capital Inc. (“Barclays”), neither admitted nor denied the Rule violations upon which the penalty is based, on May 20, 2014, a Panel of the Chicago Board of Trade Business Conduct Committee (“Panel”) found that on November 3, 2011, Barclays executed a block trade in the January 2011 Bond 150/151 call option spread, which it did not report to the Exchange within the applicable time limit following execution. In addition, as part of the same order, Barclays crossed 4,127 contracts on Globex without first issuing a Request for Cross.

Further, on August 30, 2012, Barclays reported a block trade five and a half hours after it was executed, due to Barclays’ mistaken belief that it was not the party required to report the trade.

The Panel concluded that Barclays thereby violated CBOT Rules 526.F and 539.C.

PENALTY:                          

In accordance with the settlement offer, the Panel fined Barclays $22,500.

EFFECTIVE DATE:

May 22, 2014