NOTICE OF DISCIPLINARY ACTION

MEMBER:

Mitchell Zale

CME RULE VIOLATIONS:

Rule 521 Requirements for Open Outcry Trades (in part)

In open outcry trading, bidding and offering practices must at all times be conducive to the competitive execution of transactions. All open outcry transactions, including spread and combination transactions, shall be made openly and competitively in the pit designated for the trading of the particular transaction. No bid or offer shall be specified for acceptance by a particular trader. Transactions may take place only at the best price available in the open outcry market at the time the trade occurs.

Rule 539 Prearranged, Pre-negotiated and Noncompetitive Trades Prohibited (in part)

A. General Prohibition – No person shall prearrange or pre-negotiate any purchase or sale or noncompetitively execute any transaction, except in accordance with Sections B. and C. below.

FINDINGS:

Pursuant to an offer of settlement in which Mitchell Zale (“Zale”) neither admitted nor denied the rule violations upon which the penalty is based, a Panel of the Chicago Mercantile Exchange Business Conduct Committee (“Panel”) found that Zale was subject to the jurisdiction of the Exchange pursuant to Rules 400 and 402, as the conduct occurred while Zale was a CME member. The Panel further found that on April 9, 2013, Zale executed a portion of customer orders that was not bid openly and competitively in the pit. Specifically, a customer entered orders to buy 6,500 contracts and sell 12,500 contracts for a spread trade in the Eurodollar options on futures pit. Zale executed 6,500 contracts opposite another broker from his group in the pit without either openly bidding or offering in the pit. Subsequently, the same customer entered orders for an additional 10,000 on the buy side and 5,000 contracts on the sell side. Zale executed 2,000 contracts opposite another broker from his group in the pit without either openly bidding or offering in the pit.

The Panel further found that on August 7, 2013, Zale again executed a portion of customer orders that was not bid openly and competitively in the pit. Specifically, a customer entered consecutive orders to buy 10,000 contracts and sell 8,000 contracts in a single strike price in the Eurodollar options on futures pit. Zale executed 8,000 contracts on the sell side opposite another broker from his group in the pit without either openly bidding or offering in the pit. The Panel concluded that Zale’s conduct on both April 9, 2013 and August 7, 2013, thereby violated CME Rules 521 and 539.A.

PENALTY:

In accordance with the settlement offer, the Panel ordered Zale to pay a fine to the Exchange in the amount of $25,000 and serve a fifteen business day suspension of access to any CME Group Inc. trading floor and of direct access to any electronic trading and clearing platform owned or operated by CME Group Inc., including CME Globex. The suspension shall run from April 13, 2015, through May 1, 2015, inclusive.

EFFECTIVE DATE:

March 23, 2015