NOTICE OF DISCIPLINARY ACTION

NON-MEMBER  FIRM:

Kapital Trading, LLC

CME RULE VIOLATIONS:

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.

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 Kapital Trading, LLC (“Kapital”) neither admitted nor denied the rule violations upon which the penalty is based, on October 20, 2015, a Panel of the Chicago Mercantile Exchange (“CME”) Business Conduct Committee (“Panel”) found that Kapital voluntarily submitted itself to the jurisdiction of the BCC for purposes of settling this matter. The Panel further found that on numerous occasions between May 4, 2012, and April 20, 2014, when Kapital was the only participant on one side of the book, an automated trading system operated by Kapital entered orders in Eurodollar Packs, Bundles and Calendar spreads, which caused incrementally widening spreads between the bid and offer prices in these markets, and thereby led to aberrant prices being disseminated to the market. Kapital lacked sufficient internal controls to monitor and remedy any of the price widening instances. The Panel concluded that as a result of the foregoing, Kapital violated CME Rules 432.Q. and 432.W.

PENALTY:

In accordance with the settlement offer, the Panel ordered Kapital Trading to pay a fine in the amount of $75,000.

EFFECTIVE DATE:

October 22, 2015