NOTICE OF DISCIPLINARY ACTION

FILE NO.:

CBOT 17-0831-BC

MEMBER:

Elephas Investment Management Limited

CBOT VIOLATION:

562. Position Limit Violations (in part)

Any positions in excess of those permitted under the rules of the Exchange shall be deemed position limit violations.

FINDINGS:

Pursuant to an offer of settlement in which Elephas Investment Management Limited (“Elephas”) neither admitted nor denied the rule violation upon which the penalty is based, on June 18, 2019, a Panel of the CBOT Business Conduct Committee (“Panel”) found that at the close of business on November 29, 2017, Elephas held a futures equivalent net long position of 1,680 long December Soft Red Winter Wheat futures (“Wheat”) contracts, 1,080 contracts (180%) over the spot month position limit. After close of trading on November 29, 2017, Elephas was assigned 1,185 Wheat certificates via the delivery process, bringing Elephas to a futures equivalent net long position of 495 contracts. After realizing it was over the limit, Elephas rolled its remaining futures contracts and entered into a short position to retender its certificates by selling 1680 December 2017/March 2018 Wheat spreads. By virtue of exceeding the position limit and liquidating its overage through the delivery process, Elephas reduced its loss on its December Wheat position by $166,590. The Panel found that Elephas thereby violated CBOT Rule 562.

PENALTY:

In accordance with the settlement offer, the Panel ordered Elephas to pay a fine in the amount of $50,000 and to pay the $166,590 benefit it received in reduced losses.

EFFECTIVE DATE:

July 2, 2019