NOTICE OF DISCIPLINARY ACTION

FILE NO.:

CME 15-0307-BC

MEMBER:

Belvedere Trading LLC

CME RULE VIOLATIONS:

432.General Offenses

It shall be an offense:

Q. to commit an act which is detrimental to the interest or welfare of the Exchange or to engage in any conduct which tends to impair the dignity or good name of the Exchange;

W. for a Member to fail to diligently supervise its employees and agents in the conduct of their business relating to the Exchange.

FINDINGS:

Pursuant to an offer of settlement in which Belvedere Trading LLC (“Belvedere”) neither admitted nor denied the rule violations upon which the penalty is based, on December 12, 2017, a Panel of the Chicago Mercantile Exchange (“CME”) Business Conduct Committee (“BCC” or “Panel”) found that on November 25, 2015, a Belvedere trader manually sent eight malformed Request for Quote (“RFQ”) messages in the E-Mini S&P 500 Options Complex to Globex. The malformed RFQs submitted by Belvedere resulted in the failure of the Equity Options Globex match engine, which prevented all messaging and trading activity on that engine for over 11 seconds in products including, but not limited to, the E-Mini S&P and E- Mini NASDAQ Option Complexes. The Panel further found that the incident was the result of supervisory errors on the part of Belvedere, including mistakenly configuring new RFQ sending functionality that was neither prepared nor intended for production at the time, which was the primary cause of the malformed messages, as well as failing to restrict its traders’ access to the new, untested RFQ functionality. The Panel thus concluded that Belvedere thereby violated CME Rules 432.Q. and 432.W.

PENALTY:

In accordance with the settlement offer, the Panel ordered Belvedere to pay a fine of $135,000.

EFFECTIVE DATE:

December 14, 2017