• Revision to Rule 559 ("Position Limits and Exemptions")

      • To
      • Members, Member Firms and Market Users
      • From
      • Market Regulation Department
      • #
      • SER-6954
      • Notice Date
      • 10 December 2013
      • Effective Date
      • 23 December 2013
    • Pending all relevant regulatory review periods, effective on December 23, 2013, CME, CBOT, NYMEX and COMEX (collectively, the “Exchanges”) will each adopt a revision to Rule 559 (“Position Limits and Exemptions”) with respect to filing position limit exemption requests with the Market Regulation Department.
      Rule 559 currently requires a party establishing an exemption-eligible position to file the exemption request with the Market Regulation Department within one (1) day unless the Market Regulation Department expressly approves a later filing which cannot exceed five (5) business days.
      The revision to each Exchange’s Rule 559 will provide market participants the ability to file the exemption request up to five (5) days after assuming a position in excess of speculative position limits without having the position in excess of the limits constitute a violation of the Rule.  The Exchanges have found that there are instances where market participants hold exemption-eligible positions and have not been able to file the exemption application within the one business day window as currently required.  The change to the rule will allow the Market Regulation Department to require a more prompt filing of an exemption request where deemed necessary.  
      The revision to Rule 559 appears below, with additions underscored and deletions overstruck.
      ThepositionlimitlevelsapplicabletothosecontractswithpositionlimitsaresetforthinthePositionLimit,Position AccountabilityandReportableLevelTable(Table”) intheInterpretationsSectionattheend ofChapter 5.
      ApersonseekinganexemptionfrompositionlimitsmustapplytotheMarketRegulationDepartmentonforms providedbytheExchange.  Inorder to obtainan exemptionfrompositionlimits,aperson must:
      [Numbers 1. – 9. are unchanged.]
      A  person  intending  to  exceed  position  limits,  including  limits  established  pursuant  toa  previously approved exemption, must file the required application and receive approval from the Market Regulation Department prior to exceeding such limits.   However, a person who establishes an exemption-eligible position in excess of position limits and files the required application with the Market Regulation Department shall not be inviolation of this rule provided the filing occurs within five (5) business days after assuming the position except in circumstances where the Market Regulation Department requires a person to file prior to the fifth business day.  In the event the positions in excess of the limits are not deemed to be exemption-eligible,the applicant and clearing firm will be in violation of speculative limits for the period of time in which the excess positions remained open.
      [The remainder of the Rule is unchanged.]
      If you have any questions concerning the new rule, please contact one of the following individuals in the Market Regulation Department:
      Chris Reinhardt, Director, Market Surveillance, at 212.299.2882
      Erin Peddicord, Manager, Market Surveillance, at 312.435.3628
      For media inquiries concerning this Special Executive Report, please contact CME Group Corporate Communications at 312.930.3434 or news@cmegroup.com.