NOTICE OF DISCIPLINARY ACTION

FILE NO.:

CBOT 12-9031-BC

NON-MEMBER FIRM:

Jilin Grain Group Import and Export Co., Ltd.

CBOT RULE VIOLATIONS:

(LEGACY) Rule 432 (“General Offenses”) (in part)

It shall be an offense:
W. for a Member to fail to diligently supervise its employees and agents in the conduct of their business relating to 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 trades or 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.

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 Jilin Grain Group Import and Export Co., Ltd. (“Jilin Grain Group”) neither admitted nor denied the rule violations upon which the penalty is based, on September 18, 2014, a Panel of the Chicago Board of Trade Business Conduct Committee (“Panel”) found that Jilin Grain Group voluntarily submitted itself to the jurisdiction of the BCC for purposes of settling this matter, and that between October 1, 2011, and November 30, 2012, Jilin Grain Group failed to diligently supervise its traders who executed thirteen wash trades on Globex totaling 1,360 Soybean and Corn futures contracts. The matching buy and sell orders were entered with the knowledge and intent that the orders would match opposite one another. The purpose of these transactions was to move positions between accounts. Additionally, during this time period, Jilin Grain Group failed to assign unique Tag50 user IDs to its employees. The Panel concluded that Jilin Grain Group thereby violated CBOT Rules (Legacy) 432.W., 534, and 576.

PENALTY:

In accordance with the settlement offer, the Panel ordered Jilin Grain Group to pay a fine of $85,000.

EFFECTIVE DATE:

September 22, 2014