NOTICE OF DISCIPLINARY ACTION

NON-MEMBER FIRM:

Protein Sources Milling, LLC

CBOT RULE VIOLATIONS:

538.A. Nature of an EFRP

An EFRP consists of two discrete but related simultaneous transactions. One party to the EFRP must be the buyer of (or the holder of the long market exposure associated with) the related position and the seller of the corresponding Exchange contract. The other party to the EFRP must be the seller of (or the holder of the short market exposure associated with) the related position and the buyer of the corresponding Exchange contract.

FINDINGS:

Pursuant to an offer of settlement in which Protein Sources Milling, LLC (“Protein Sources”) neither admitted nor denied the rule violations upon which the penalty is based, on May 27, 2015, a Panel of the Chicago Board of Trade Business Conduct Committee (“Panel or BCC”) found that Protein Sources is subject to the BCC’s jurisdiction pursuant to Rules 402 and 418, and that between November 2012, and November 2013, Protein Sources entered into eight Exchange for Physical (“EFP”) transactions in the Corn and Mini-Corn futures markets that consisted of a simultaneous exchange of a futures position without an exchange of a related cash position. Thus, the transactions were not bona fide. The purpose of the transactions was to offset positions between two Protein Sources accounts.
The Panel concluded that Protein Sources thereby violated CBOT Rule 538.A.

PENALTY:

In accordance with the settlement offer, the Panel ordered Protein Sources to pay a fine of $30,000.

EFFECTIVE DATE:

May 29, 2015