Block trades are privately negotiated futures trades between two eligible counterparties which are subsequently submitted to the CME Clearing House for bookkeeping purposes.
Block trades offer institutional traders the convenience of privately negotiating a futures transaction with a select eligible counterparty. In particular, institutions often seek to execute large transactions at a singular price while enjoying the benefits imparted by the financial sureties associated with the CME centralized counterparty (CCP) clearing system.
Applicable during the following times:
ETH: 12:00 a.m. – 7:00 a.m. Central Time (CT), Monday through Friday on regular business days
RTH: 7:00 a.m. – 4:00 p.m. CT, Monday through Friday on regular business days
ATH: 4:00 p.m. – 12:00 a.m. CT, Monday through Friday on regular business days and at all times on weekends
Firms can enter a block through CME Direct or through Front End Clearing
View CME Group’s electronic futures and options markets and privately-negotiated Block markets on one easy-to-use screen with CME Direct.
Use CME Direct, to execute on a customer’s behalf or instantly process voice-negotiated Blocks. Brokers using CME Direct can efficiently open a CME Direct trade ticket, populate the details of a block trade, and submit the deal directly to CME ClearPort.
CME Direct Block Trade Features:
CME Direct Block Trading offers low-cost electronic trading and increased block entry efficiency for clients. Users can maintain key value add and reduce errors while complying with regulations easier than before.
Almost all block trades may be reported to the GCC.
To report a trade to the GCC:
Parties or executing brokers familiar with the block trade procedures designated by the Contacting firm can call trades into the GCC without ClearPort registration, although the exchange prefers parties who are ClearPort registered.
The Front-End Clearing System (FEC) and Front End Clearing Plus FEC+ are web-based applications available on CME Clearing Portal that provide clearing member firm back office staff with an integrated method for entering and processing a variety of trade types. Member staff can enter, modify, and delete unmatched trade records using FEC and FEC+. Give-up and Average Pricing functionality is also available.
Block trades: 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 “Nine” and an order type “B.”
Traders must enter a Request for Quote (RFQ) before the RFC can be submitted.
For IR options buy and sell orders, the trader must wait 15 seconds after submitting the RFQ, before submitting the RFC order.
If an RFC order is not entered within 30 seconds of submitting the RFQ, the RFQ must be re-submitted before submitting an RFC.
Pre-execution communications are discussions between market participants for the purpose of discerning interest in the execution of a transaction prior to the exposure of the order to the market. Pre-execution communications are governed by each Exchange's Rule 539.
A block trade must be for a quantity that is at or in excess of the applicable minimum threshold. (See Block Threshold tab for details)
Pre-execution communications are communications between market participants for the purpose of discerning interest in the execution of a transaction prior to the exposure of the order to the market. Any communication that involves discussion of the size, side of market, price of an order, or a potentially forthcoming order, constitutes a pre-execution communication.
Rule 533 allows for the direct crossing of buy and sell orders by a floor broker provided that the orders are for the accounts of different beneficial owners and the floor broker executing the orders first openly bids and offers the price and quantity three times in a manner that is transparent to the pit. If neither the bid nor the offer is accepted, then the floor broker may match the orders, or any remaining portion of the orders, in the presence of, and with the approval of, a Floor Operations staff member.
A floor broker:
Market participants are reminded that pre-execution communications or any other form of prearrangement are prohibited with respect to all orders entered for execution in the open outcry venue.
Report with CME ClearPort:
Report to the Global Command Center (GCC):
Pricing must be in minimum tick increments and must be “fair and reasonable” based on the size of the block, market conditions in the contract and related products, and the circumstances of the market and parties to the trade.
Include the following information when reporting the block:
View the CME Fee Schedule.