Options RFC Overview

Options 
Pre-Execution Communication
Request for Cross (RFC)
CME Group Market Regulation Advisory Notice (MRAN) on Pre-Execution Communications
RFC Requirements
RFC Matching for Options
RFC and CME EOS Trader Smart Cross Ticket

Other
Additional Resources

Pre-Execution Communications 

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.

• Pre-execution communications are permitted in all CME, NYMEX and COMEX options traded on CME Globex and in CBOT Interest Rate, Ethanol and Dow options. Pre-execution communications are prohibited in all CBOT Agricultural options.
• Pre-execution communications allow for size, price and direction to be discussed prior to the entry of orders into CME Globex.
• Parties engaging in pre-execution communications must have permission to do so from their customers.
• Pre-execution communications are not permitted in any CME, CBOT, NYMEX or COMEX futures or options executed via open outcry on the trading floor.

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Request for Cross (RFC) 

• Subsequent to engaging in a pre-execution communication, a Request for Quote ("RFQ") must be entered into CME Globex for the particular option or option spread or combination trade.
• All market participants are thereby notified of interest in a particular option and liquidity providers are able to respond with their best prices.
• Subsequent to the entry of the required RFQ, the RFC ticket allows a sales desk to enter an options buy order and sell order in a single order entry.
• View a presentation on using RFC for energy options
• View a presentation on using RFC for interest rate options

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CME Group Market Regulation Advisory Notice (MRAN) on Pre-Execution Communications 

• View the latest MRAN on pre-execution communications

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RFC Requirements 

• A Request for Quote (RFQ) must be entered before the RFC can be submitted.
• Subsequent to the RFQ, the trader must
  • For IR and Equity options wait 5 seconds before submitting the RFC order, which includes both the buy and the sell orders.
  • For all other options wait 15 seconds before submitting the RFC order, which includes both the buy and the sell orders.
• If an RFC order is not entered within 30 seconds after the RFQ, the RFQ must be resubmitted prior to submission of an RFC

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RFC Matching for Options 

• If the RFC price improves both the best bid and best offer in the order book or if there is no bid/offer in the order book, 100 percent of the RFC quantity will match at the RFC price immediately upon submission.
• If the RFC price matches or is outside the best bid or offer in the market, the applicable side of the RFC order will immediately match against the orders in the market at a price better than, or equal to, the RFC price. The remainder of the smaller quantity will then immediately match at the RFC price.
• Any remaining balance will remain working unless cancelled by the RFC initiator.

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RFC and CME EOS Trader Smart Cross Ticket 

• Ensures observance of the time rules within each asset class.
• Requires an RFQ from the ticket before you can submit the RFC.
• "Submit" button is only enabled within the applicable 5-30 second or 15-30 second time period.
• If more than 30 seconds elapses, the RFQ must be resubmitted prior to being able to enter an RFC.

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Additional Resources 

• For a list of ISVs that support RFC functionality: www.cmegroup.com/isv
• For more information on CME EOS Trader: www.cmegroup.com/eostrader

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