International derivatives marketplace CME Group today posted a notice of disciplinary action against The Toronto-Dominion Bank (TD Bank).
Pursuant to an offer of settlement in which TD Bank neither admitted nor denied the rule violations or factual findings upon which the penalty is based, a Panel of the Chicago Board of Trade (CBOT) Business Conduct Committee found that on June 20, 2023, TD Bank executed an Exchange for Physical (EFP) transaction in the September 2023 Short-Term Treasury Note futures (2-Year) market that consisted of the simultaneous exchange of futures positions without the exchange of related cash positions, resulting in the execution of a non-bona fide EFP, as there was no bona fide transfer of ownership of the underlying asset.
The Panel further found that TD Bank executed the transaction in order to transfer the futures position between accounts with common beneficial ownership, and knew or reasonably should have known that the purpose of the orders was to avoid taking a bona fide market position exposed to market risk.
The Panel concluded that TD Bank thereby violated CBOT Rules 538.C. And 534.
In accordance with the settlement offer, the Panel ordered TD Bank to pay a $25,000 fine.
The effective date of the notice is September 12, 2025.
