NOTICE OF DISCIPLINARY ACTION

FILE NO.:

COMEX 11-8253-BC

MEMBER:

LOUIS QUAGLIA

COMEX RULE VIOLATIONS:

521. REQUIREMENTS FOR OPEN OUTCRY TRADES
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.

530. PRIORITY OF CUSTOMERS' ORDERS
A member shall not buy (sell) a futures contract, buy (sell) a call option or sell (buy) a put option for his own account, an account in which he has a direct or indirect financial interest, or an account over which he has discretionary trading authority when he is in possession of an executable order for another person to buy (sell) a futures contract, buy (sell) a call option or sell (buy) a put option in the same product, regardless of the venue of execution. All contract months in a given futures product and all options on the futures product, in addition to any corresponding alternative sized (mini or micro) futures or options contracts on a given product, shall be considered the same product for the purposes of this rule.

…

No person shall enter an order into the Globex platform for his own account, an account in which he has a direct or indirect financial interest or an account over which he has discretionary trading authority, including, without limitation, an order allowing discretion as to time and price, when such person is in possession of any order for another person that the Globex platform is capable of accepting.

531. TRADING AGAINST CUSTOMERS' ORDERS PROHIBITED

531.A. General Prohibition
No person in possession of a customer order shall knowingly take, directly or indirectly, the opposite side of such order for his own account, an account in which he has a direct or indirect financial interest, or an account over which he has discretionary trading authority.

539. PREARRANGED, PRE-NEGOTIATED AND NONCOMPETITIVE TRADES PROHIBITED

539.A. General Prohibition (states in pertinent part:)
No person shall prearrange or pre-negotiate any purchase or sale or noncompetitively execute any transaction . . .

FINDINGS:

Pursuant to an offer of settlement Louis Quaglia (“Quaglia”) presented at a hearing on February 5, 2014, in which Quaglia neither admitted nor denied the rule violation upon which the penalty is based, a Panel of the COMEX Business Conduct Committee (“BCC”) found that at the time of the conduct, Quaglia was a COMEX member and thus subject to the jurisdiction of the Exchange and that on trade dates March 7, 2011 and April 8, 2011, Quaglia traded ahead of a customer order, engaged in non-competitive, pre-arranged trading and indirectly traded opposite customer orders.

The Panel found that, as a result, Quaglia violated Exchange Rules 521 (“Requirements for Open Outcry Trades”), 530 (“Priority of Customers’ Orders”), 531.A. (“Trading against Customers’ Orders Prohibited”) and 539.A. (“Pre-Arranged, Pre-Negotiated and Noncompetitive Trades Prohibited”).

PENALTY:

In accordance with the settlement offer, the Panel ordered Quaglia to pay a $30,000 fine, disgorge profits in the amount of $1,125, pay restitution in the amount of $250 and to serve a two (2) week suspension of any access to any CME Group Inc. trading floor and of direct and indirect access to all electronic trading and clearing platforms owned or controlled by CME Group Inc., including CME Globex. The suspension will run from February 7, 2014 through February 20, 2014.

EFFECTIVE DATE:

February 7, 2014