NOTICE OF DISCIPLINARY ACTION

FILE NO.:

CME 08-04882-BC

MEMBER:

JOHN MELONE

CME RULE VIOLATION:

Rule 521. Requirements for Open Outcry Trades

In open outcry trading, bidding and offering practices must at all times be conducive to the competitive execution of transactions. All open outcry transactions, including spread and combination transactions, shall be made openly and competitively in the pit designated for the trading of the particular transaction.

Rule 539.A. Prearranged, Pre-negotiated and Noncompetitive Trades Prohibited

No person shall prearrange or pre-negotiate any purchase or sale or noncompetitively execute any transaction, except in accordance with Sections B. [Block Trades and EFP Transactions] and C. [Pre-execution Communications Regarding Globex Trades].

FINDINGS:

Pursuant to an offer of settlement in which John Melone neither admitted nor denied the rule violations upon which the penalty is based, on May 31, 2011, a Panel of the CME Business Conduct Committee found that on December 18, 2008, while in possession of three customer orders in the March 2009 Standard & Poor’s MidCap 400 Stock Price Index futures contract, Melone crossed two buy orders totaling eight contracts opposite a portion of a sell order without bidding or offering those eight contracts openly and competitively in the pit. The Panel concluded that in so doing, Melone violated CME Rules 521. and 539.A.

PENALTY:

In accordance with the settlement offer and in consideration of Melone’s inability to pay a fine, the Panel suspended Melone’s membership privileges, access to any CME Group trading floor, and direct access to any CME Group electronic trading or clearing platform for 20 business days beginning on the effective date below and continuing through and including June 29, 2011.

EFFECTIVE DATE:

June 2, 2011