Broker Banned from Trading on CBOT for 25 Years

By CnAgri Print

The Chicago Board of Trade has barred a wheat broker from trading for 25 years for engaging in prohibited transactions. According to Reutersm John Peavy, who worked in the open-outcry pit on the historic CBOT trading floor, broke exchange rules by executing more than 160 "prearranged, round-turn transactions" of wheat futures contracts for his customers from April 2009 to March 2010, according to a disciplinary notice from the exchange.

Wheat prices were often under pressure during that year-long period due to large global supplies.

The prohibited trades were part of a strategy in which Peavy was "illegally offsetting customer orders opposite a single accommodating local trader for that local's personal account," according to the notice.

The second trader, who was not named, made profits for his personal account, it said

CBOT rules state all open-outcry transactions must be made "openly and competitively" and that "no bid or offer shall be specified for acceptance by a particular trader."

The unnamed trader also engaged in prohibited transactions by non-competitively buying and selling identical quantities of the same wheat futures contract opposite Peavy, who was trading for his personal account, according to the notice.