NOTICE OF DISCIPLINARY ACTION

FILE NO.:

CBOT 12-8782-BC

NON-MEMBER:

Sambit Mishra
 

CBOT RULE VIOLATION:

Rule 432. General Offenses

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.

Rule 534. Wash Trades Prohibited

No person shall place or accept buy and sell orders in the same product and expiration month, and, for a put or call option, the same strike price, where the person knows or reasonably should know that the purpose of the orders is to avoid taking a bona fide market position exposed to market risk (transactions commonly known or referred to as wash sales). Buy and sell orders for different accounts with common beneficial ownership that are entered with the intent to negate market risk or price competition shall also be deemed to violate the prohibition on wash trades. Additionally, no person shall knowingly execute or accommodate the execution of such orders by direct or indirect means.

FINDINGS:

Pursuant to an offer of settlement in which Sambit Mishra (“Mishra”) neither admitted nor denied the rule violations upon which the penalty is based, and after Mishra voluntarily submitted himself to the BCC’s jurisdiction for purposes of settling this matter, on June 24, 2013, a Panel of the CBOT Business Conduct Committee found that on August 5, 2011, an automated execution trade system programmed by Mishra for a proprietary trading firm malfunctioned and executed numerous unintended wash trades over a two-minute period in the September 2011 Five-Year Note Treasury futures contact. Mishra failed to ensure that the appropriate checks and balances were included in the system’s code. The Panel concluded that in so doing, Mishra violated CBOT Rules 432.Q. and 534.

PENALTY:

In accordance with the settlement offer and taking Mishra’s financial condition into account when levying the sanction, the Panel barred Mishra for a period beginning on the effective date and lasting four months from accessing all CME Group Inc. trading floors, and indirect and direct access to all electronic trading and clearing platforms owned or controlled by CME Group Inc.

EFFECTIVE DATE:

June 26, 2013