NOTICE OF DISCIPLINARY ACTION

FILE NO.:

CME 12-8967-BC

MEMBER:

Dorman Trading LLC

CME RULE VIOLATION:

854.B. Concurrent Long and Short Positions (in part)

Concurrent long and short positions in physically delivered contracts that are held by the same owner during the delivery month and two business days prior to the delivery month must be offset by transactions executed in the market, by allowable privately negotiated transactions, or fulfilled through the normal delivery process, provided however that trades may be transferred for offset if the trade date of the position being transferred is the same as the transfer date. Such positions may not be offset via netting, transfer, or position adjustment except to correct a bona fide clerical or operational error on the day the error is identified and provided that the quantity of the offset does not represent more than one percent of the reported open interest in the affected futures contract month.

Clearing House Manual of Operations; Chapter 5, Position Management -Position Adjustments (in part)

If a clearing firm’s gross positions (after clearing plus their out trades) do not equal its internal bookkeeping gross positions, the firm must correct the final position information. Firms must submit corrections upon detection. Positions allow the clearing firm to submit position adjustments on-line. Position adjustments must be submitted prior to 8:00 a.m. to adjust the prior day’s preliminary reported open interest…

FINDINGS:

Pursuant to an offer of settlement in which Dorman Trading LLC (“Dorman”) neither admitted nor denied the rule violation upon which the penalty is based, on July1, 2014, a Panel of the CME Business Conduct Committee (“Panel”) found that it had jurisdiction over Dorman pursuant to Rules 400 and 402 as the conduct occurred while Dorman was a CME member, and that for trade date June 29, 2012, Dorman failed to adjust its position reporting following option assignments on the option expiration day for the July 2012 Random Length Lumber futures contract before the 8:00 a.m. deadline. As a result, Dorman overstated open interest in the contract by 117 contracts, or 10%. The Panel found that Dorman thereby violated CME Rule 854.B.

PENALTY:

In accordance with the settlement offer, the Panel ordered Dorman to pay a $15,000 fine.

EFFECTIVE DATE:

July 3, 2014