NOTICE OF DISCIPLINARY ACTION

FILE NO.:

CME 11-8435-BC

MEMBER:

RICE DAIRY, LLC

CME RULE VIOLATIONS:

Rule 533. Simultaneous Buy and Sell Orders for Different Beneficial Owners (in part)

…. On the Globex platform, opposite orders for different beneficial owners that are simultaneously placed by a party with discretion over both accounts may be entered into the Globex platform provided that one order is exposed for a minimum of 15 seconds in the case of options orders….

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.

Rule 432. General offenses

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

FINDINGS:

Pursuant to an offer of settlement in which Rice Dairy, LLC neither admitted nor denied the rule violations upon which the penalty is based, on February 27, 2014, a Panel of the CME Business Conduct Committee found that on May 9, and May 10, 2011, in connection with option orders, a trader for Rice Dairy, LLC failed to expose one side of his order for the requisite 15 seconds before placing the opposite side of the order for different beneficial owners on the CME Globex electronic trading platform. This event occurred due to the trader’s lack of knowledge of Exchange Rules. In addition, Rice Dairy, LLC failed to ensure that the trader entered orders on CME Globex under his own unique Tag 50 ID. The Panel found that in so doing, Rice Dairy, LLC violated Rules 533, 576 and 432.W.

PENALTY:

In accordance with the settlement offer, the Panel fined Rice Dairy, LLC $37,500.

EFFECTIVE DATE:

March 3, 2014