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S&P-GSCI Futures Side-by-Side FAQ

 
Contract Specifications and Overview
1 How are the electronic GSCI futures contracts similar to the pit-traded futures contracts?
2 How are the contracts different?
3 How many contracts are listed on GLOBEX?
4 Is a position of one GSCI futures contract financially equivalent to a position of one GSCI futures contract traded on GLOBEX?
5 Can a customer use GLOBEX to liquidate a GSCI futures position initiated in the pit? Can a customer use the pit to liquidate a GSCI futures position initiated on GLOBEX?
6 What is "price banding"?
7 How do I get started trading GSCI contracts electronically?
8 How do I sign up for training on GLOBEX?
9 May GEM members trade GLOBEX-traded GSCI futures terminals on the CME trading floor during pit-traded hours?
 
q1 How are the electronic GSCI  futures contracts similar to the pit-traded futures contracts?
a1
  • Contract terms and conditions are the same.
  • Settled daily to the same settlement price.
  • Final settlement price is the same.
  • Same performance bond (margin) requirements.
  • Both are fungible with each other.
 
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q2 How are the contracts different?
a2
  • The ticker symbol for the electronically-traded GSCI futures is GD. The ticker symbol for the pit-traded GSCI futures is GI.
  • An order for any quantity may be accepted for GSCI futures traded on CME Globex. However, orders in excess of 250 contracts must be entered into the CME Globex system as multiple entries, with the quantity of any single entry not to exceed 250 contracts.
  • GSCI futures on CME Globex trade virtually 24 hours, while the pit-traded GSCI futures contracts trade from 8:45 a.m. to 2:00 p.m.
  • There is no post-settlement session for the electronically-traded GSCI futures.
 
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q3 How many contracts are listed on GLOBEX?
a3 The listing procedure is the same as the pit. Three futures contracts are listed on CME Globex as well as all possible calendar spread combinations. Outrights and calendar spread orders of any quantity may be accepted for entry on CME Globex. However, outrights and calendar spread orders in excess of 250 contracts per leg must be entered into the CME Globex system as multiple entries, with the quantity of any single entry not to exceed 250 spreads.
 
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q4 Is a position of one GSCI futures contract financially equivalent to a position of one GSCI futures contract traded on GLOBEX?
a4 Yes. The daily settlement prices for the pit-traded GSCI futures contracts are the same as the settlement prices for the CME Globex-traded GSCI futures. In addition, the performance bond (margin) requirements are the same.
 
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q5 Can a customer use GLOBEX to liquidate a GSCI futures position initiated in the pit? Can a customer use the pit to liquidate a GSCI futures position initiated on GLOBEX?
a5 Yes to both. The contracts are completely fungible, without regard to how or where they were created, so a clearing firm will automatically offset and liquidate pit-traded and CME Globex-traded GSCI futures positions held in the same account.
 
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q6 What is "price banding"?
a6 Price banding is an automated order-entry screening process designed to prevent entry of buy orders priced five index points or more above and sell orders priced five index points or more below the last price in GSCI contracts traded on CME Globex. Price banding is a safeguard to help prevent erroneously priced orders from being entered and executed by the system. CME Globex  will continue to support normal price movements.
 
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q7 How do I get started trading GSCI contracts electronically?
a7 If you are a Class B stockholder, the main requirement for trading on CME Globex is a clearing firm guarantee. If you are a customer, the main requirement is an account with your brokerage firm. You also need to choose the front-end software you will use to connect to CME Globex markets. You can select CME-provided software and a direct line to CME Globex or access over the Internet, use software you purchase or develop yourself, or use a system developed or purchased by your clearing firm. For detailed information and to determine which access method suits you best, call CME Group customer service at 1-800-331-3332 and ask to speak with CME Globex marketing.
 
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q8 How do I sign up for training on GLOBEX?
a8
  • Workstations: CME Globex classes are offered daily. These classes range from introductory to refresher courses. Please call 312- 930-3416 to register for a class. The basic CME Globex training is required for all CME Globex workstation users.
  • Handhelds: Handheld classes are offered upon request. Please stop by the Upper Trading Floor Information Desk or call Brian Linker at 312- 930-1406 to arrange for handheld training. CME Globex handheld training is required for all CME Globex handheld users.
 
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q9 May GEM members trade GLOBEX-traded GSCI futures terminals on the CME trading floor during pit-traded hours?
a9 Yes. GSCI is assigned to the GEM Division, so GEM members will be allowed to trade CME Globex-traded GSCI futures with member rates from terminals located on the trading floor. However, GEM members will not be allowed to trade other electronic products outside of the GEM division from the floor during the market pit-trading hours.
 
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Trading on GLOBEX
10 Who may access GLOBEX terminals in the GSCI pit?
11 What rights do GSCI-designated brokers have?
12 Can firms have a GLOBEX terminal in their booths?
13 Are firms subject to any restrictions on GSCI GLOBEX activity from their trading floor booths?
14 How are open GLOBEX GSCI futures orders handled at the 2:00 p.m. close?
15 How are GSCI market orders handled on GLOBEX?
16 Which market determines whether a GSCI futures stop order is elected?
17 Should a floor broker who is handling a stop order be held liable if the market on GLOBEX ticks up or down after the stop order was elected, but before it was filled?
18 Are there any circumstances in which the terminal operator is not required to enter the account number into GLOBEX?
19 When an order is flashed to a floor broker for entry at a terminal into GLOBEX, will there be a written confirmation from the floor broker indicating the price at which the order was filled?
20 What happens if a GLOBEX terminal operator makes an error when entering a GSCI futures order during Electronic Trading Hours?
21 What happens if the GLOBEX system experiences problems that cause trading to halt during pit-trading hours?
22 Are there daily price limits in GSCI futures?
 
q10 Who may access GLOBEX terminals in the GSCI pit?
a10 Designated GSCI brokers and their clerks, as well as locals, may have access to CME Globex terminals in the GSCI pit.
 
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q11 What rights do GSCI-designated brokers have?
a11 Designated GSCI brokers have access to CME Globex terminals in the pit for their use. They also have the right to employ clerks to enter customer orders on those CME Globex terminals and to employ a limited number of clerks to receive flashed orders or electronically routed orders. These clerks must not obstruct the sightlines of other members in the GSCI pit and must be closely supervised by a member.
 
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q12 Can firms have a GLOBEX terminal in their booths?
a12 Yes.
 
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q13 Are firms subject to any restrictions on GSCI GLOBEX activity from their trading floor booths?
a13 No. The restriction which prohibits firms from entering proprietary orders at the same booth where customer orders are entered does not apply to GSCI orders.
 
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q14 How are open GLOBEX GSCI futures orders handled at the 2:00 p.m. close?
a14 All open session orders at the close of the trading session (2:00 p.m.) are canceled. To be eligible when trading on CME Globex  resumes, these orders must be re-entered into CME Globex.
 
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q15 How are GSCI market orders handled on GLOBEX?
a15 TheCME Globex trading host will convert all orders it receives without a specific price to limit orders: buy orders will become limit orders at the best offered price, sell orders will become limit orders at the best bid price. The CME Globex system does not currently handle true "market orders." However, depending on the front-end software and connection, a user's trading application may have functionality that increases the likelihood that an order will be filled quickly at the best available price(s). Market users need to be aware of the functionality of the system they are using and how "market" orders are handled by that system.
 
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q16 Which market determines whether a GSCI futures stop order is elected?
a16 They are separate markets, so stop orders are elected by prices on CME Globex  for the electronically-traded market, and stop orders are elected by prices in the pit for the pit-traded market.
 
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q17 Should a floor broker who is handling a stop order be held liable if the market on GLOBEX ticks up or down after the stop order was elected, but before it was filled?
a17 Under Rule 540, a floor broker should not be held responsible for executing or failing to execute an order unless the floor broker acted negligently. Because of the way in which orders are executed on CME Globex in strict price and time priority, it is entirely possible for GSCI contracts to be traded at multiple prices on CME Globex during the seconds that it will take for the floor broker to enter a stop order after it has been elected. Assuming that no broker negligence was involved, the broker should not be held responsible for the fact that other trades were executed on CME Globex at a better price than the stop order he was handling.
 
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q18 Are there any circumstances in which the terminal operator is not required to enter the account number into GLOBEX?
a18 Generally, all orders must be entered with specific account numbers. However, Rule 572 does make an exception for certain discretionary accounts, and for FCMs to combine stop limit orders that have the exact same stop and limit prices.
 
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q19 When an order is flashed to a floor broker for entry at a terminal into GLOBEX, will there be a written confirmation from the floor broker indicating the price at which the order was filled?
a19 In the case of flashed orders that are immediately entered into CME Globex, the Exchange does not require the floor broker to record the order's execution on a trading card. However, the member or firm that flashed the order to the broker may, for business reasons, request that the broker provide such written confirmation.
 
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q20 What happens if a GLOBEX terminal operator makes an error when entering a GSCI futures order during Electronic Trading Hours?
a20 CME has had an Error Trade Policy in effect for CME Globex transactions since 1992. Please refer to the latest Error Trade Policy in Chapter 5 of the CME Rule Book.
 
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q21 What happens if the GLOBEX system experiences problems that cause trading to halt during pit-trading hours?
a21 If the CME Globex system goes down, a determination will be made about how quickly the system can resume operation. If a judgment is made that the system may be down for a significant period of time, all orders will become eligible for pit trading. In that event, regular pit trading rules will apply for trading GSCI futures orders.
 
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q22 Are there daily price limits in GSCI futures?
a22 Yes. There shall be no trading of GSCI futures at a price more than 30 index points above or below the previous day's settlement price. These limits formerly applied only to CME Globex, but now apply to both pit-traded and electronically-traded versions of the GSCI contract.
 
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Regulatory Issues
23 Is dual trading allowed in the GSCI futures contract?
24 May a clerk enter an order into a GLOBEX terminal located on the trading floor?
 
q23 Is dual trading allowed in the GSCI futures contract?
a23 Yes. Brokers in the GSCI pit are also allowed to trade for their own account in the GSCI futures traded on CME Globex. Individuals filling orders in the pit may not violate the priority of those orders by trading their own account for an account in which they have an interest in the GSCI. Similarly, individuals entering orders into CME Globex may not violate the priority of these orders by trading for their own accounts or an account in which they have an interest in the pit-traded contract. Violation of Rule 530 (priority of customer orders) is a major offense.
 
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q24 May a clerk enter an order into a GLOBEX terminal located on the trading floor?
a24 A properly registered GSCI clerk may enter an order into a CME Globex terminal included in the specialist workstation in the GSCI pit. An employee of a clearing member may enter orders into a CME Globex terminal located in its booth on the trading floor. All other CME Globex terminals located on the floor are for member use only.