NOTICE OF DISCIPLINARY ACTION

MEMBER:

Frank C. Catalano

CME RULE VIOLATION:

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.
539. Prearranged, Pre-Negotiated and Noncompetitive Trades Prohibited (in part)

A. No person shall prearrange or pre-negotiate any purchase or sale or noncompetitively execute any transaction…

FINDINGS:

Pursuant to an offer of settlement in which Frank C. Catalano (“Catalano”) neither admitted nor denied the rule violations upon which the penalty is based, on December 17, 2015, a Panel of the Chicago Mercantile Exchange (“CME”) Business Conduct Committee (“Panel”) found that Catalano was subject to the BCC’s jurisdiction pursuant to Rules 400 and 402 as the conduct occurred while Catalano was a CME member. The Panel further found that on June 14, 2013, Catalano executed a customer order that was not offered openly and competitively in the pit in accordance with CME Rules. Specifically, after receiving consecutive customer orders to sell 4,000 contracts and buy 4,000 contracts at a single price in the Eurodollar options on futures pit, Catalano executed 2,000 contracts on the sell side opposite another broker within his broker association that were not competitively offered and executed by open outcry.

The Panel further found that on October 2, 2013, Catalano executed a customer order that was not offered openly and competitively in the Eurodollar options on futures pit. Specifically, Catalano’s broker association received consecutive customer orders to sell 1,000 contracts and buy 5,000 contracts at the same price in the pit. Catalano executed 1,000 contracts on the sell side opposite another broker within the same broker association that were not competitively offered and executed by open outcry.

The Panel concluded that Catalano thereby violated CME Rules 521 and 539.A.

PENALTY:

In accordance with the settlement offer, the Panel ordered Catalano to pay a fine in the amount of $20,000 and serve a 15 business day suspension from access to any CME Group Inc. trading floor and direct access to any electronic trading and clearing platform owned or operated by CME Group Inc., including CME Globex. The suspension shall run from January 4, 2016, through January 25, 2016, inclusive.

EFFECTIVE DATE:

December 21, 2015