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.
Rule 432. General Offenses (in part)
It shall be an offense:
L.2. to fail to fully answer all questions and produce all books and records at such hearing or in connection with any investigations, or to make false statements.
Pursuant to an offer of settlement in which Christopher McGrath (“McGrath”) neither admitted nor denied the rule violations upon which the penalty is based, on December 17, 2015, a Panel of the Chicago Mercantile Exchange Business Conduct Committee (“Panel”) found that McGrath was subject to the jurisdiction of the Exchange pursuant to Rules 400 and 402, as the conduct occurred while McGrath was a CME member. The Panel further found that on more than one occasion between August 5, 2013, and July 31, 2015, McGrath, a broker in the Eurodollar options on futures pit, executed a portion of customer orders that was not bid openly and competitively in the pit. Specifically, after a customer entered both buy and sell orders for the same product and strategy, McGrath executed the smaller quantity of the opposing buy or sell order opposite the larger buy or sell order held by another broker from his group. As a result, the full quantity of both orders was not executed openly and competitively in the pit. The Panel concluded that McGrath thereby violated CME Rules 521 and 539.A.
Additionally, the Panel found that McGrath initially declined to answer all substantive questions during an interview in connection with Market Regulation’s investigation. After the investigation concluded, McGrath answered all substantive questions in a subsequent interview. The Panel concluded that by failing to answer all questions during Market Regulation’s investigation, McGrath thereby violated CME Rule 432.L.2.
In accordance with the settlement offer, the Panel ordered McGrath to pay a fine in the amount of $35,000 and serve a 30 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 December 21, 2015, through February 3, 2016, inclusive.
December 21, 2015