NOTICE OF DISCIPLINARY ACTION

FILE NO.:                             

CBOT 18-0893-BC

NON-MEMBER FIRM:                                   

Collective2 LLC

CBOT RULE VIOLATION:                       

Rule 575 Disruptive Practices Prohibited

D. No person shall enter or cause to be entered an actionable or non-actionable message with intent to disrupt, or with reckless disregard for the adverse impact on, the orderly conduct of trading or the fair execution of transactions.

FINDINGS:                         

Pursuant to an offer of settlement in which Collective2 LLC (“Collective2”) neither admitted nor denied the rule violation upon which the penalty is based, on December 19, 2019, a Panel of the Chicago Board of Trade Business Conduct Committee (“Panel”) found that on multiple dates in January 2018, a Tag50 User ID assigned to Collective2, and trading on behalf of multiple accounts, caused significant price movements in the March 2018 E-Mini Dow futures market. Collective2 acts as a marketplace for strategy developers to publish proprietary trading strategies that customers can subscribe to follow. Once individuals subscribe to a signal, they may also subscribe to Collective2’s AutoTrade service that automates a subscriber’s response to a signal and allows customization to certain features of the order, including size. Collective2’s AutoTrade program is designed to listen for signals, link the appropriate signals to the subscribers, and immediately route the orders for execution. The disruptive trading pattern was the result of orders associated with Collective2’s AutoTrade program. Collective2 did not consider the total number of orders that would result from each signal, the aggregate size of orders placed, or the current available liquidity in the relevant markets. As such, the orders entered as a result of Collective2’s AutoTrade program were entered without regard for the adverse impact on the orderly conduct of trading or the fair execution of transactions. The Panel thereby concluded that Collective2 violated CBOT Rule 575.D.

PENALTY:                           

In accordance with the settlement offer, the Panel ordered Collective2 to pay a fine of $30,000.

EFFECTIVE DATE:                                   

December 23, 2019