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Types of Membership

 
 

Overview

CME, CBOT and NYMEX/COMEX memberships are entirely separate from one another and offer access to different products at different rates. These differences reflect the individual histories of each of the exchanges before they became part of CME Group.

For a summary and comparison of firm membership options, see:

CME   |   CBOT   |   NYMEX/COMEX

CME Individual Memberships

Description
There are four divisions of individual CME memberships, representing the four levels of access to CME products that the Exchange had developed through the years. Individual memberships at CME became attached to a Class B share in Chicago Mercantile Exchange Holdings Inc. when the exchange de-mutualized and became a publicly traded company in 2002.

CME (B1) membership:

  • Trades: Any CME-listed contract
  • Badge: Gold 

International Monetary Market (IMM) (B2) membership:

  • Trades: Foreign exchange, interest rate and equity index futures, and all, IOM and GEM products.
  • Badge: Green 

Index and Option Market (IOM) (B3) membership:

  • Trades: Index futures contracts, random length lumber contracts, all options contracts, and all GEM products.
  • Badge: Blue 

Growth and Emerging Markets (GEM) (B4) membership:

  • Trades: Various products, including contracts related to emerging market countries; restricted financials
  • Badge: Gray

Eligibility and Requirements
To be an individual member of CME, you must be an adult and possess good moral character, a good reputation and business integrity. In addition, you must have adequate financial resources to assume the responsibilities and privileges of membership.

Corporate

Description
CME corporate membership allows member firms to receive preferential Exchange fee and performance bond rates on its proprietary trading of eligible CME products when such proprietary trading activity is conducted in accordance with CME Group’s Fee Policies. 

A CME corporate member firm may be a CME Rule 106.J. Equity Member Firm (requires membership and shares) or a CME Rule 106.H. Trading Member Firm (requires a membership).

Hedge Funds, commodity pools, banks, futures commission merchants, foreign brokers, broker-dealers, commodity trading advisors, introducing brokers, commercial entities, proprietary trading firms and other corporate entities are eligible for CME Rule 106.J. equity member firm or CME Rule 106.H. trading member firm status for their proprietary trading activity.

Eligibility and Requirements
CME Rule 106.J. Equity Membership

  • The equity member firm is required to own or have assigned to it 2 CME memberships, 2 IMM memberships, 2 IOM memberships, 1 GEM membership and 30,000 shares of CME Group. If the Rule 106.J. equity member firm is also a CBOT clearing or Rule 106.J./106.S. equity member or a NYMEX clearing or Rule 106.J. member firm, it must own or assign 45,000 shares. If the CBOT Rule 106.J. equity member firm has a 8,750 share requirement, the combined share requirement will be 38,750. If the clearing member is also a CBOT clearing or Rule 106.J./106.S.equity member and a NYMEX clearing or Rule 106.J. member firm, it must own or assign 60,000 shares. If the CBOT Rule 106.J. equity member firm has a 8,750 share requirement, the combined share requirement will be 53,750.
  • One-half of the required Exchange Memberships (i.e. one CME, one IMM, one IOM and the GEM) and shares must be owned by the Rule 106.J. equity member firm or a person, including a parent company, with an acceptable proprietary interest in the Rule 106.J. equity member firm (i.e. "firm owned"). The remaining Exchange Memberships (i.e. one CME, one IMM and one IOM) and shares may be independently assigned.
  • The "firm owned" memberships owned or assigned to the clearing member may be held by the Rule 106.J. equity member or an individual. The individual must be approved for CME individual membership.
  • The Rule 106.J. equity member firm and their 100% wholly owned subsidiaries receive preferential Exchange fee and performance bond rates on its proprietary trading of all CME products when such proprietary trading activity is conducted in accordance with CME Group Fee Policies.
  • The trading activity of parent companies and affiliates of the Rule 106.J. equity member firm may be eligible for preferential Exchange fee and performance bond rates if a CME Rule 106.I. Affiliate Corporate Membership is obtained.
  • For hedge fund and commodity pool Rule 106.J. equity member firms, only the proprietary trading activity of the hedge fund equity member firm is eligible for preferential Exchange fee rates. However, the trading activity of up to five funds within the Family of Funds of the Rule 106.J. equity member firm may be eligible for preferential Exchange fee and performance bond rates if a CME Rule 106.S. Family of Funds Corporate Membership is obtained.

For more information:

Eligibility and Requirements
CME Rule 106.H. Trading Membership

  • The trading member firm is required to purchase one or lease two memberships (CME, IMM or IOM Division) in the division in which preferential Exchange fee and performance bond rates are desired.  Shares of CME Group are not required.  
  • The membership(s) owned or leased may be held by the trading member firm or a principal or employee of the member firm.  The principal or employee must be approved for CME Individual Membership.  
  • The member firm is eligible for preferential Exchange fee rates for its proprietary trading of products (open auction and electronic) within the division of membership(s) owned or leased when such trading activity is conducted in accordance with CME Group Fee Policies.  The trading activity of parent companies, affiliates, subsidiaries or customers of the member firm are not eligible for preferential Exchange fee rates. 
  • For hedge fund and commodity pool member firms, only the proprietary trading activity of the hedge fund member firm is eligible for preferential Exchange fee rates and the rates do not apply to the trading activity of its investment manager, affiliated funds, investors, parent companies, affiliates, subsidiaries or customers. 

For more information:

Electronic Corporate

Description
CME corporate membership allows member firms to receive preferential Exchange fee and performance bond rates on its proprietary trading of eligible CME products when such proprietary trading activity is conducted in accordance with CME Group’s Fee Policies.

A CME corporate member firm may be a CME Rule 106.R. Electronic Corporate Member Firm.

Eligibility and Requirements
CME Rule 106.R. Electronic Corporate Membership

A proprietary trading firm may apply as either a:

  • CME Rule 106R ECM-Holding Membership (CME ECM-H) by purchasing one or leasing two memberships (CME, IMM or IOM) in the division in which CME ECM-H exchange fees are desired. The membership(s) must be owned or leased by the member firm. The firm or one of its principals or employees may "hold" the membership, however, trading floor access is not conferred upon the holder of the membership. Shares of CME Group are not required.
or
  • CME Rule 106R ECM –Volume Incentive Program (CME ECM-W) have a waiver of the membership holding requirement (through 12/31/08) but it must meet certain volume trading requirements on a quarterly basis (i.e. it must trade an average of 50 contracts (i.e. sides) per business day for the quarter). Volume and participation is evaluated on a quarterly basis.

Please refer to the CME Electronic Corporate Membership Question and Answer (link below) for more details on this corporate membership including restrictions on traders.

A CME Rule 106R ECM may receive CME Rule 106R ECM-H or CME Rule 106R ECM-W rates, as applicable, on their proprietary trading of products (electronic only) within the division of membership held for ECM-H member firms or on all CME products for ECM-W member firms. However, ECM-H members pay the ECM-W exchange fees when trading products outside the division of membership held.

Only eligible proprietary trading firms may apply for CME Rule 106.R. member firm status. Hedge funds, commodity pools, banks, FCMs, foreign brokers, broker/dealers, commodity trading advisors, introducing brokers, or other firms that hold and/or manage third party funds are not eligible for CME ECM. The reduced exchange fees only apply to the ECM’s proprietary trading activity when such trading activity is conducted in accordance with CME’s Fee Policy Bulletins and does not apply to the trading activity of any parent companies, affiliates, subsidiaries or customers.

See the links below for more information:

Clearing

Description
Clearing members are highly capitalized, closely monitored and carefully selected companies that stand behind all trades made through CME Group’s Exchanges. Clearing members assume full financial and performance responsibility for all transactions executed through them and cleared by CME Clearing. They are responsible and accountable for every position they carry, whether it is for the account of a member, member firm, non-member customer or their own account.

CME Clearing is a division of CME, through which all trades are confirmed, matched and settled on a daily basis until either offset or delivered and through which all financial settlement is made. In every matched transaction executed through CME, CBOT, NYMEX and COMEX, CME Clearing is substituted as the buyer to the seller and the seller to the buyer, with a clearing member assuming the opposite side of each transaction.

CME Clearing conducts business only with its clearing members, not with their customers, individual members or corporate member firms of the Exchange. Customers, members and member firms must have a relationship with a CME clearing member to be able to trade CME products. As the contra-side to every position, CME Clearing is held accountable to clearing members for performance on all open positions. CME Clearing, by monitoring and overseeing its clearing members through its Financial Safeguard System, guarantees performance on each contract to protect both buyers and sellers from financial loss. Additional requirements are imposed on the CME clearing member if it will clear OTC products.

CME clearing members with shares and their 100% wholly owned subsidiaries, receive preferential Exchange fee and performance bond rates on its proprietary trading of all CME products when such proprietary trading activity is conducted in accordance with CME Group’s Fee Policies. The trading activity of parent companies and affiliates of the clearing member may be eligible for preferential Exchange fee and performance bond rates if a CME Rule 106.I. Affiliate Corporate Membership is obtained. For hedge fund clearing members, the trading activity of up to five funds within the Family of Funds of the CME clearing member may be eligible for preferential Exchange fee and performance bond rates if a CME Rule 106.S. Family of Funds Corporate Membership is obtained.

Eligibility and Requirements
The requirements for CME clearing membership are contained in Chapter 9 of the CME rulebook. To become a clearing member for CME products, the clearing member must:

Demonstrate fiscal and moral integrity

  • Have sufficient financial capitalization to justify the risks assumed in clearing trades
  • Be a corporation (including C Corporations, Subchapter S Corporations and Limited Liability Companies), a partnership (including Limited Partnerships and General Partnerships) or a cooperative association
  • Guarantee and assume responsibility for all trading activity routed through it by members it qualifies or by any electronic trading system.

Be a CME clearing member

  • Must own or have assigned to it two CME memberships, two IMM memberships, two IOM memberships, one GEM membership.
  • One-half of the required Exchange Memberships (i.e. one CME, one IMM, one IOM and the GEM) must be owned by the clearing member or a person, including a parent company, with an acceptable proprietary interest in the clearing member (i.e. "firm owned"). The remaining Exchange Memberships (i.e. one CME, one IMM and one IOM) may be independently assigned.
  • The "firm owned" memberships owned or assigned to the clearing member may be held by the clearing member or an individual. The individual must be approved for CME individual membership.

Maintain capital requirements

  • Maintain capital (Adjusted Net Capital for non-Banks and Tier 1 Capital for Banks) at greatest of CFTC or SEC capital requirement or:
    • For non-Banks:
      • $5,000,000 if clearing only exchange-traded futures/options; or
      • $50,000,000 if clearing OTC products; or
      • 20% of aggregate performance bond requirement for all customer and house accounts containing CME-cleared CDS and IRS positions.
    • For Banks:
      • $5,000,000,000 if clearing exchange-traded futures/options; or,
      • $50,000,000 if clearing only OTC derivative products.; or
      • 20% of aggregate performance bond requirement for all proprietary and affiliate accounts containing CME-cleared CDS and IRS positions.
  • Submit daily segregated, secured 30.7 and sequestered statements through WinJammer system by 12:00 noon on following business day.
  • If non-Bank: Submit monthly Form 1-FRs (for FCM-only firms) or FOCUS reports (for broker-dealers) including Exchange Supplemental Information, through the WinJammer system within 17 business days of month-end
  • If Bank: Submit all financial reports required to be filed with its primary regulator – minimum quarterly basis- filed within 5 days after such statements are filed with it primary banking regulator.
  • If non-Bank: Submit certified financial statements to CME Group’s Audit Department within 60 days of fiscal year-end (for broker-dealers) or 90 days of fiscal year-end (for clearing members which are not registered as broker-dealers)
  • If Bank: Submit certified financial statement within 5 days after such statements are filed with its primary banking regulator.

Deposit a guaranty fund deposit with CME Clearing

  • If clearing exchange traded futures/options or OTC products (excluding IRS and CDS) Deposit must be the greater of the minimum requirement or the clearing member's proportionate share of the "Aggregate Guaranty Fund Deposit" ; and,
  • If clearing IRS, deposit is greater of $50,000,000 or proportionate share of theoretical two largest losses; and,
  • If clearing CDS, deposit is greater of $50,000,000 or proportionate share of theoretical two largest losses.

Provide parent guarantees

  • Parent guarantees cover all non-customer proprietary obligations, which include:
    • Performance bond and settlement for non-customer and proprietary positions held and cleared;
    • Non-customer and proprietary trades executed by traders who are qualified by the clearing member, until accepted for clearing by another firm; and
    • Non-customer and proprietary trades executed and processed through give-up systems by the clearing member, until accepted for clearing by another firm.
  • Submit a parent guarantee for any person or entity which owns directly or indirectly five percent or more of the clearing member.
  • Guarantor is liable to CME Clearing for all non-customer and proprietary obligations of the clearing member

Exemptions from the parent guarantee

  • Clearing members may request an exemption from the parent guarantee requirements if:
    • The clearing member maintains $300,000,000 or more in adjusted net capital;
    • The clearing member does not clear, execute and give up, or qualify individual traders who execute non-customer or proprietary trades; or
    • The clearing member meets certain criteria and is determined to have minimal activity in the house origin

 

See the links below for more information:
 
 
 
 
 
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