Overview
Wash Trades
- Wash Trades - Definition of a Wash Trade
- Wash Trades – Responsibility and Implications
- Wash Trades – Automated Trading Systems
- Wash Trades - Freshening
EFRP
- EFRP - What is an EFRP?
- EFRP - Parties to an EFRP
- EFRP - Pricing and the Related Position for EFRPs
- EFRP - Reporting and Recordkeeping
- EFRP - Prohibited Transitory EFRPs
Block Trades
- Block Trades - What is a Block Trade?
- Block Trades – Participant Eligibility
- Block Trades – Eligible Products, Times and Prices
- Block Trades – Reporting and Recordkeeping
- Block Trades – Pre-Hedging
- Block Trades – TAS, TAM and BTIC
Disruptive Practices Prohibited
- Disruptive Practices Prohibited - General Information
- Disruptive Practices Prohibited - Factors Market Regulation Considers
- Disruptive Practices Prohibited - Spoofing
- Disruptive Practices Prohibited - Flipping
- Disruptive Practices Prohibited - Additional Examples
- Disruptive Practices Prohibited - Frequently Asked Questions
CME Globex Operator ID Requirements
- CME Globex Operator ID Requirements – General Rule
- CME Globex Operator ID Requirements - Registration and Requirements
- CME Globex Operator ID Requirements - Individual and Team Operators
Pre-Execution Communications
Rule 524 - TAS, TAM, BTIC and TACO
Enforcement Process
Pricing Requirements
Exchange for Related Positions (EFRP) may be transacted at such commercially reasonable prices as are mutually agreed upon by the parties to the transaction. However, the exchange component of the EFRP transaction must be priced in accordance with the applicable futures price increments or option premium increments.
EFRPs may not be priced to facilitate the transfer of funds between parties for any purpose other than as a consequence of legitimate commercial activity. Market participants may be required to demonstrate that EFRPs executed at prices away from the prevailing market prices were executed at such prices for legitimate purposes.
Related Position to an EFRP
It is important that each EFRP results in a bona fide transfer of ownership of the underlying asset between the parties (which would be relevant to Exchange of Futures for Physical), or a bona fide, legally binding contract between the parties consistent with relevant market conventions for the particular related position transaction (relevant to Exchange of Futures Risk or Exchange of Option for Option).
Traders must also consider the quantity and type of the related position when negotiating an EFRP.
The quantity of a related position component must be approximately equivalent to the quantity of the exchange component. This does not mean the quantities need to be identical – appropriate hedge ratios between the exchange and related position components of the EFRP may be used to establish equivalency.
The related position component of an EFRP must be one of the following:
- The cash commodity underlying the exchange contract
- A by-product, a related product or an OTC derivative instrument of such commodity that has a reasonable degree of price correlation to the commodity underlying the exchange contract
The related position component of an EFRP may not be a futures contract or an option on a futures contract.
Where the risk characteristics and/or maturities of the related position differ from the instrument underlying the exchange contract, the parties to the EFRP may be required to demonstrate the correlation between the products and the methodology used in equating the futures to the related position. In all cases, the related position transaction must be comparable with respect to quantity, value or risk exposure of the corresponding exchange contract.
Generally acceptable related position instruments for EFRPs in the various product groups can be found in the EFRP Market Regulation Advisory Notice (MRAN).
This is part of a course on EFRPs. For official regulatory guidance on EFRPs, reference the applicable Market Regulation Advisory Notice.
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