Front-End Clearing Systems (FEC)

 
 
 

A Back Office Application for Processing and Entering a Variety of Trade Types

The Front-End Clearing System (FEC) and Front End Clearing Plus FEC+ are a web-based applications available on CME Clearing Portal that provides clearing member firm back office staff with an integrated method for entering and processing a variety of trade types. The trade types are shown below. Member staff can enter, modify and delete unmatched trade records using FEC and FEC+. Give-up and Average Pricing functionality is also available.

Trade Types

Block Trades
Differential Spreads
Exchange of Futures For Related Positions (EFRP)
Fungibles
Mutual Offset System
Pit Trades
Transfer Trades

 

 

Block Trades

A block trade is a privately negotiated futures or option transaction executed apart from the public auction market (ex-pit transaction). It allows Eligible Contract Participants as that term is defined in Section 1a(12) of the Commodity Exchange Act to engage in block trades in eligible products to initiate or liquidate futures or option position(s), provided the block trade meets the minimum order size requirement.

All block futures trades should be entered using FEC with an order type ‘B.’ Block option trades should be entered using the clearing firms’ internal trade system or FEC. Block option trades must be entered with transaction type ‘9’ and an order type ‘B.’

Back to Top

 

Differential Spreads

Single Line of Entry of Differential Spreads (Sleds)-CME Clearing allows simple futures calendar spreads to be matched at the differential price in FEC and for the buyer and seller to indicate any leg prices as long as the leg prices remain within the spread range established for that trading day and the prices conform to the differential price.

Traders agree on a spread price based on the current differential. To complete the spread trade, one trader buys a contract for one or more months or commodities and simultaneously sells the other months or commodities. The opposite trader establishes the opposite positions. The positions constituting a single spread are referred to as the legs of the spread.

Back to Top

 

Exchange of Futures For Related Positions (EFRP)

Exchange for Related Positions (EFRP) transactions (also known as cash for futures) include Exchange for Physical (EFP), Exchange for Risk (EFR) and Exchange for Options (EOO). They are ex-pit privately negotiated transactions. An EFRP allows traders to initiate or liquidate futures position(s) by completing a simultaneous purchase or sale of the actual underlying cash commodity with an opposite purchase or sale of the underlying futures contract. See Exchange Rule 538 for further information.

EFRP trades executed during regular trading hours must be submitted to clearing prior to the final reconciliation. EFRP trades executed following the opening of the next Globex session should be submitted to clearing on a next day basis.

The clearing system does not edit the filling or opposite broker fields of the EFRP trade record. However, if a valid broker is input as the filling broker that broker will be credited with the associated volume on the broker’s monthly volume report.

Back to Top

 

Fungibles

Upon customer request, multiples of five E-mini Equity Index futures contracts may be used to offset (liquidate) one full-sized Equity Index futures contract. Multiples of two E-mini currency contracts may be used to offset (liquidate) one full-sized currency contract.

This is accomplished using the special FEC screen “Fungible Product Offset Entry.” This procedure is for liquidation only. It is not to be used to create a new position in any fungible contract. Fungible product offset may only be done up to and including the last day of trading.

The price field will be automatically updated with the prior day’s settlement price. The user will enter in only one side of the transaction and the opposing side will be created by the system. Both sides of this entry will be routed to the firm’s bookkeeping system via MQM\FIXml messaging.

Back to Top

 

Mutual Offset System

The Singapore Exchange and CME have a Mutual Offset Agreement which allows trades executed at one exchange to be transferred to the books of a firm at the other exchange. Currently, Eurodollar futures, Nikkei, and Nifty Fifty futures are eligible for inter-exchange transfer through MOS.

Back to Top

 

Pit Trades

 

  • For CME and CBOT exchanges, following trade execution, the buying member and selling member are required to record specific information about each trade and submit such information to their respective clearing firms. Clearing firms transmit trade data to the Exchange via a Financial Information Exchange Markup Language (FIXML) record layout in real-time utilizing Message Queue Manager (“MQM”) communication software. Clearing firms can either use their internal trade entry system or a trade entry system provided by one of several software providers. Clearing firms may also utilize FEC for “clearing only” trade entry or correction.
     
  • For NYMEX and COMEX exchanges, following trade execution, the floor member Seller (or clerk) enters the trade into FEC (Broker UI) within 30 minutes of execution. Buyer side transaction is created in FEC and the trade matches. Floor member Buyer (or clerk) must review the trade and add their execution time and card number of the buyer side. Buyer has and affirmatively rejects any trades within 60 minutes of execution.

 

Back to Top

 

Transfer Trades

Firms use transfer trades to transfer a trade from one account to another. Please refer to Rule 853 for further information regarding the conditions under which transfer trades can be submitted.

Transfer Type Codes

All transfer trades must include the appropriate transfer type code in the order type indicator field. The codes are as follows:

Code

Description

A

Error in assignment of account (in-house)

B

For correcting Rule 527 mis-clears

C

Transfer at the request of a customer (to another firm)

D

For correcting Rule 551 mis-clears

E

Transfer to correct a firm-to-firm clerical error in clearing a trade

F

Transfer for liquidation (offset) of a trade that cleared at the wrong house due to clerical error only

I

Customer/House origin transfer to correct error

J

For rule 770 transfers

M

Transfer for portfolio margining purposes

N

Transfer of positions to a newly approved clearing firm

S

For transferring new Singapore Exchange executed positions between local firms

T

Transfer due to the merger of two or more clearing firms

W

Transfer due to withdrawal of a clearing firm

X

For transferring offsetting Singapore Exchange executed positions between local firms

Y

Cross Exchange Transfer (OCC)

Z

Used for transfers that offset CME Rule 527 trades

 

Transfer type “E” or “F” trades must be submitted within three business days after the original trade date. This is in accordance with the requirement that all clearing members be in balance at all times.

Back to Top

 
 
 

Futures & Options Trading

As the world's leading and most diverse derivatives marketplace, CME Group is where the world comes to manage risk. CME Group exchanges offer the widest range of global benchmark products across all major asset classes, including futures and options based on interest rates, equity indexes, foreign exchange, energy, agricultural commodities, metals, weather and real estate. CME Group brings buyers and sellers together through the CME Globex electronic trading platform and trading facilities in New York and Chicago. CME Group also operates CME Clearing, one of the largest central counterparty clearing services in the world, which provides clearing and settlement services for exchange-traded contracts, as well as for over-the-counter derivatives transactions through CME ClearPort.

Idea Exchange

Idea Exchange is your direct link to the product managers, marketers, and the development teams who create cmegroup.com and will allow you to review functionality, participate in focus and provide feedback on upcoming Web initiatives

Contact Us

CME Group/Chicago HQ:
Local: +1 312 930 1000
Toll Free: +1 866 716 7274

Global Customer Contacts

More CME Group Direct Lines
Phone list by department

Global Partnerships

Global

Global Offices Contact Information

 
Calgary Houston Chicago New York Washington São Paulo Belfast London Singapore Hong Kong Seoul Tokyo Beijing

© 2014 CME Group Inc. All rights reserved.

CME Group is the world's leading and most diverse derivatives marketplace. The company is comprised of four Designated Contract Markets (DCMs). Further information on each exchange's rules and product listings can be found by clicking on the links to CME, CBOT, NYMEX, and COMEX.