KMJ Capital LLC
CME RULE VIOLATIONS: 538.H. Documentation (Legacy)
Parties to any EFRP transaction must maintain all documents relevant to the Exchange contract and the cash, OTC swap, OTC option, or other OTC derivative, including all documents customarily generated in accordance with relevant market practices and any documents reflecting payment and transfer of title. Any such documents must be provided to the Exchange upon request, and it shall be the responsibility of the carrying clearing member firm to provide such requested documentation on a timely basis.
On December 1, 2015, a Panel of the Chicago Mercantile Exchange (“CME”) Probable Cause Committee (“PCC”) charged KMJ Capital LLC (“KMJ”) with violating CME Rule 538.H. based on allegations that for six transitory EFPs in CME FX products executed on July 19, 2013, November 12, 2013, and January 23, 2014, KMJ failed to maintain all documents relevant to the related cash positions, a violation of (Legacy) CME Rule 538.H.
On May 2, 2016, a Hearing Panel Chair of the CME Business Conduct Committee (“BCC”) entered an order finding that KMJ failed to answer the charge issued against it. In failing to answer the charge, the Hearing Panel Chair further ordered that KMJ was deemed to have admitted the charges issued and waived its right to a hearing on the merits of the charge.
Pursuant to CME Rule 407.C., a penalty hearing was held before a Panel of the BCC (“Panel”) on July 12, 2016. The Panel found KMJ guilty of committing the admitted charge.
Based on the record and the Panel’s findings and conclusions, the Panel ordered KMJ to pay a fine in the amount of $30,000, and to have its access to all CME Group trading floors and direct and indirect access to all electronic trading and clearing platforms owned or controlled by CME Group suspended for a period of three years.
August 16, 2016