NOTICE OF DISCIPLINARY ACTION

NON-MEMBER:

CORNERSTONE FUTURES LLC

EXCHANGE RULE:

RULE 526. – BLOCK TRADES

The Exchange shall designate the products in which block trades shall be permitted and determine the minimum quantity thresholds for such transactions. The following shall govern block trades:

F. Unless otherwise agreed to by the principal counterparties to the block trade, the seller, or, in the case of a brokered transaction, the broker handling the block trade, must ensure that each block trade is reported to the Exchange within the time period and in the manner specified by the Exchange. The report must include the contract, contract month, price, quantity of the transaction, the respective clearing members, the time of execution, and, for options, strike price, put or call and expiration month. The Exchange shall promptly publish such information separately from the reports of transactions in the regular market.

RULE 536.H – RECORDKEEPING REQUIREMENTS FOR PIT, GLOBEX, AND NEGOTIATED TRADES (IN RELEVANT PART)

Each member and member firm and employees of the foregoing must keep full, complete and systematic records, including records created or transmitted electronically, together with all pertinent data and memoranda, of all transactions relating to its business of dealing in commodity interests and related cash or forward transactions in accordance with CFTC Regulation 1.35. Written and electronic records must be retained for a minimum of five years in permanent form. Oral communications required to be recorded pursuant to CFTC Regulation 1.35(a) must be retained for a minimum of one year past the date on which the oral communication occurred.

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.

CME GROUP MARKET REGULATION ADVISORY NOTICE RA1806-5:

Block Trade Submission Requirements to CME Clearing

Please note that the execution time of a block trade is the time that the parties agree to the trade. Market Participants must accurately report the execution time of the block trade. The reporting of inaccurate execution times may result in disciplinary action.

FINDINGS:

Pursuant to an offer of settlement that Cornerstone Futures LLC (“Cornerstone”) presented at a hearing on February 4, 2021, in which Cornerstone neither admitted nor denied the rule violations, allegations or findings upon which the penalty is based, a Panel of the NYMEX Business Conduct Committee (“Panel”) found that during June 2019, Cornerstone submitted multiple block trades to the Exchange with inaccurate execution times and also failed to report block trades to the Exchange within the required time period following execution. Additionally, the Panel found that Cornerstone failed to maintain certain required records, including trade communications, relating to these block trades, and failed to properly advise and train its employees as to relevant Exchange rules and Market Regulation Advisory Notices (“MRANs”) in a manner sufficient to ensure compliance with the same.

The Panel found that as a result of the foregoing, Cornerstone violated NYMEX Rules 526.F (“Block Trades”), 536.H (“Record Keeping Requirements”) and 432.W. (“General Offenses – Failure to Supervise”).

PENALTY:

In accordance with the settlement offer, the Panel ordered Cornerstone to pay a fine to the Exchange in the amount of $40,000.