NOTICE OF DISCIPLINARY ACTION

NON-MEMBER:

JAMES THOMAS ADDLEY

CME RULE VIOLATION:

(Legacy) Rule 539. Prearranged, Pre-Negotiated and Noncompetitive Trades Prohibited

C. Pre-Execution Communications Regarding Globex Trades (in part)

Parties may engage in pre-execution communications with regard to transactions executed on the Globex platform where one party (the first party) wishes to be assured that a contra party (the second party) will take the opposite side of the order under the following circumstances:
...
4. In the case of options orders, subsequent to the pre-execution communication, a Request for Quote (“RFQ”) for the particular option or option spread or combination must be entered into Globex. Thereafter, in equity and interest rate options, a Request for Cross (“RFC”) order which contains both the buy and the sell orders must be entered into Globex no less than five (5) seconds and no more than thirty (30) seconds after the entry of the RFQ in order to proceed with the trade. In all other options, the RFC order must be entered no less than fifteen (15) seconds and no more than thirty (30) seconds after the entry of the RFQ in order to proceed with the trade. The RFQ and the RFC order must be entered within the same trading session. Failure to enter the RFC order within 30 seconds after the entry of the RFQ will require a new RFQ to be entered prior to the entry of the RFC order, which must be entered in accordance with the time parameters described above in order to proceed with the trade.

FINDINGS:

Pursuant to an offer of settlement in which James Thomas Addley (“Addley”) neither admitted nor denied the rule violations upon which the penalty is based, on May 21, 2015, a Panel of the CME Business Conduct Committee (“Panel”) found that it had jurisdiction over Addley pursuant to Rules 400 and 402 as the conduct occurred while Addley was an employee of a CME member firm. The Panel also found that on January 17, 2012, Addley engaged in pre-execution communications related to Eurodollar options on futures orders, and subsequently crossed the opposing customer buy and sell orders on Globex without entering an RFC after the entry of the RFQ. The Panel concluded that Addley thereby violated CME Rule 539.C.

PENALTY:

In accordance with the settlement offer, the Panel ordered Addley to pay a fine of $20,000 and serve a seven business day suspension of access to any CME Group Inc. trading floor and of direct access to all electronic trading and clearing platforms owned or controlled by CME Group, Inc., including CME Globex. The suspension shall run from May 26, 2015, through June 3, 2015, inclusive.

EFFECTIVE DATE:

May 26, 2015