NOTICE OF DISCIPLINARY ACTION

MEMBER FIRM:

Toji Trading Group, LLC

CBOT RULE VIOLATIONS:

Rule 432 (“General Offenses”) (in part)
It shall be an offense:

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

Rule 534 Wash Trades Prohibited

No person shall place or accept buy and sell orders in the same product and expiration month, and, for a put or call option, the same strike price, where the person knows or reasonably should know that the purpose of the orders is to avoid taking a bona fide market position exposed to market risk (transactions commonly known or referred to as wash trades or wash sales). Buy and sell orders for different accounts with common beneficial ownership that are entered with the intent to negate market risk or price competition shall also be deemed to violate the prohibition on wash trades. Additionally, no person shall knowingly execute or accommodate the execution of such orders by direct or indirect means.

FINDINGS:

Pursuant to an offer of settlement in which Toji Trading Group, LLC (“Toji”) neither admitted nor denied the rule violations upon which the penalty is based, on June 8, 2016, a Panel of the Chicago Board of Trade Business Conduct Committee (“Panel”) found it had jurisdiction over Toji pursuant to Rules 400 and 402 as the conduct occurred while Toji was a Chicago Board of Trade member. The Panel also found that on multiple dates between July 2012 and March 2013, Toji operated an ATS that executed numerous transactions over several days in 10-Year T-Note Options on Futures markets, wherein orders for a Toji account frequently self-matched. In some instances, the trades comprised 100% of the individual strike’s market volume. Moreover, the Panel found that the self-match transactions occurred as a result of ATS configuration errors and malfunctions, which were compounded by the firm’s failure to employ effective functionality designed to minimize self-matches. The Panel also found that Toji failed to diligently supervise its traders in a manner sufficient to ensure that their conduct was consistent with Exchange rules. The Panel concluded that Toji thereby violated CBOT Rules 534 and 432.W.

PENALTY:

In accordance with the settlement offer, the Panel ordered Toji to pay a fine of $75,000.

EFFECTIVE DATE:

June 10, 2016