CME Orders Citi to Pay $50,000 Penalty for Rules Breaches

CME Group (CME) announced recently it has fined Citigroup Global Markets Inc. (Citi) $50,000, for its violations of CBOT Rule 971. SEGREGATION, SECURED AND CLEARED SWAPS  CUSTOMER ACCOUNT REQUIREMENTS.

CBOT Rules requires that:

A. All clearing members must comply with the requirements set forth in CFTC Regulations 1.20 through 1.30, 1.32, 1.49 and 30.7, and Part 22 of the CFTC Regulations. This includes, but is not limited to, the following:

1. Maintaining sufficient funds at all times in segregation, secured 30.7 and Cleared Swaps Customer accounts;

E. All disbursements not made for the benefit of a customer from a segregated, secured 30.7 or Cleared Swaps Customer account which exceed 25% of the FCM clearing members excess segregated, secured 30.7 or Cleared Swaps Customer of the respective origin must be preapproved in writing by the clearing member’s Chief Executive Officer, Chief Financial Officer or their authorized representative with knowledge of the firm’s financial requirements and position.

F. All clearing members must provide written notice to the Financial and Regulatory Surveillance Department of a failure to maintain sufficient funds in segregation, secured 30.7 or Cleared Swaps Customer accounts. The Financial and Regulatory Surveillance Department must receive immediate written notification when a clearing member knows or should have known of such failure.         

According to an offer of settlement in which Citi neither admitted nor denied the rule violations upon which the penalty is based, on October 14, 2021, the Clearing House Risk Committee found that Citi violated CBOT Rules 971.A.1., 971.E. and 971.F.