NOTICE OF DISCIPLINARY NOTICE

FILE NO.:

CME 13-9281-BC

NON-MEMBER FIRM:

SIEMENS AG

CME RULE VIOLATIONS:

Rule 432 (“General Offenses”) (in part)

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.

Rule 534. Wash Trades Prohibited
No person shall place or accept buy and sell orders in the same product and expiration month, and, for a put or call option, the same strike price, where the person knows or reasonably should know that the purpose of the orders is to avoid taking a bona fide market position exposed to market risk (transactions commonly known or referred to as wash sales). Buy and sell orders for different accounts with common beneficial ownership that are entered with the intent to negate market risk or price competition shall also be deemed to violate the prohibition on wash trades. Additionally, no person shall knowingly execute or accommodate the execution of such orders by direct or indirect means.

FINDINGS:

Pursuant to an offer of settlement in which Siemens AG (“Siemens”) neither admitted nor denied the rule violations upon which the penalty is based, on July 1, 2014, a Panel of the Chicago Mercantile Exchange Business Conduct Committee (“Panel”) found that Siemens voluntarily submitted itself to the jurisdiction of the BCC for purposes of settling this matter and that on July 20, 2012, an employee acting on behalf of Siemens executed four trades on Globex totaling 4,000 Eurodollar options on futures contracts in which Siemens maintained ownership and control of the accounts on both sides of the transactions through different subsidiaries of Siemens. The matching buy and sell orders were entered by an employee of Siemens with the knowledge and intent that the orders would match opposite one another. The purpose of these transactions was to liquidate one of the accounts because the account had reached its monthly loss limit. The employee now understands that this type of transaction should be effected via a back office transfer. The Panel also found that Siemens failed to diligently supervise its traders in a manner sufficient to ensure that their conduct was consistent with Exchange rules.

The Panel concluded that Siemens thereby violated CME Rules 432.W. and 534.

PENALTY:

In accordance with the settlement offer, the Panel ordered Siemens to pay a fine of $40,000.

EFFECTIVE DATE:

July 3, 2014