NOTICE OF DISCIPLINARY ACTION

MEMBER FIRM:

Newedge USA, 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.

FINDINGS:

Pursuant to an offer of settlement in which Newedge USA, LLC (“Newedge”) neither admitted nor denied the rule violations upon which the penalty is based, on December 15, 2015, a Panel of the Chicago Mercantile Exchange Business Conduct Committee (“Panel or BCC”) found that it has jurisdiction over Newedge pursuant to Rules 400 and 402 as the conduct occurred while Newedge was a clearing member of the Exchange, and that between August, 2013, and April, 2014, Newedge entered into multiple transitory EFRP transactions in CME foreign exchange (“FX”) products that did not contain documentation of the corresponding cash positions and, thus, were not bona fide EFRP transactions.

The Panel also found that on June 13, 2014, Newedge entered into a transitory EFRP transaction in the Norwegian krona market that did not contain documentation of the corresponding cash position or documentation showing the quantity of the corresponding cash position and, thus, was also not a bona fide EFRP transaction.

The Panel concluded that Newedge thereby violated CME Rule 538.H.

PENALTY:

In accordance with the settlement offer, the Panel ordered Newedge to pay a fine of $60,000.

EFFECTIVE DATE:

December 17, 2015