NOTICE OF DISCIPLINARY ACTION

MEMBER:

303 Proprietary Trading, LLC

CME RULE VIOLATION:

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

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 303 Proprietary Trading, LLC (“303 Proprietary Trading”) neither admitted nor denied the rule violations upon which the penalty is based, on December 17, 2014, a Panel of the Chicago Mercantile Exchange (“CME”) Business Conduct Committee (“Panel”) found that it had jurisdiction over 303 Proprietary Trading pursuant to Rules 400 and 402 as the conduct occurred while 303 Proprietary Trading was a CME member. The Panel also found that for a period of less than two seconds on May 8, 2013, an algorithmic trading group employed by 303 Proprietary Trading operated an Automated Trading System (“ATS”) that sent over 27,000 resend messages on the CME Globex electronic trading platform (“Globex”). Specifically, the excessive messaging resulted in the Exchange initiating a port closure and a failure of a Globex gateway. While no orders reached the market, the excessive messaging affected up to 437 separate customer sessions, causing the cancellation of approximately two thousand orders, and resulted in the loss of customer priority. While 303 Proprietary Trading took immediate remedial measures and submitted detailed event information to CME within 24 hours, it failed to perform sufficient testing or simulation of the ATS to ensure its suitability for sending administrative messages on Globex. The Panel concluded that 303 Proprietary Trading thereby violated CME Rules 432.Q and 432.W.

PENALTY:

In accordance with the settlement offer, the Panel ordered 303 Proprietary Trading to pay a fine of $75,000.

EFFECTIVE DATE:

December 19, 2014