Markets Home

Active trader

Hear from active traders about their experience adding CME Group futures and options on futures to their portfolio.

Find a broker

Search our directory for a broker that fits your needs.

CREATE A CMEGROUP.COM ACCOUNT:

MORE FEATURES, MORE INSIGHTS

Get quick access to tools and premium content, or customize a portfolio and set alerts to follow the market.
Market Data Home

Real-time market data

Stream live futures and options market data directly from CME Group.

E-quotes application

Access real-time data, charts, analytics and news from anywhere at anytime.

CME DATAMINE:

THE SOURCE FOR HISTORICAL DATA

Explore historical market data straight from the source to help refine your trading strategies.
Services Home

Uncleared margin rules

Understand how CME Group can help you navigate new initial margin regulatory and reporting requirements.

Calculate margin 

Evaluate your cleared margin requirements using our interactive margin calculator.
Education Home

FX Insights from Macro Hive

Receive exclusive insights on key FX macro themes, volatility trends, and market events through our bi-weekly report.

Create a CMEGroup.com Account: More features, more insights

Get quick access to premium educational content, including expert-led webinars, a real-time trading simulator, and more.
      Block Trades – Pre-Hedging
      You completed this course.Get Completion Certificate

      Block Trades – Pre-Hedging

      Video not supported!

      Pre-hedging

      Principal counterparties to a potential block trade may engage in pre-hedging, or anticipatory hedging, of the position that they believe will result from the consummation of the block trade.

      However, this does not apply to intermediaries that take the opposite side of their customer orders; the intermediary may enter transactions to offset the position only after the block has been consummated.

      Prior to the consummation of the block trade, the intermediary is prohibited from offsetting the position established by the block trade in any account which is owned or controlled, or in which an ownership interest is held, or for the proprietary account of the employer of such intermediary.

      Prohibited Use of Non-Public Information

      It is important to note that pre-hedging is different than front running. It is a violation of Rule 526 for a person to engage in the front running of a block trade when (1) acting on material nonpublic information regarding an impending transaction by another person, (2) acting on nonpublic information obtained through a confidential employee/employer relationship, broker/customer relationship, or (3) in breach of a pre-existing duty.

      Parties privy to non-public information regarding a consummated block trade may not disclose such information to any other party prior to the public report of the block trade by the exchange. However, parties solicited to provide a two-sided block market are not deemed in possession of non-public information, provided side-of-market interest is not disclosed in the context of the solicitation.

      This is part of a course on block trades. For official regulatory guidance on block trades, reference the applicable Market Regulation Advisory Notice.


      Test your knowledge

      Related Courses
      /content/cmegroup/en/education/lessons/block-trades-pre-hedging
      • {{ course.name }}
      Previous Lesson
      Next Lesson
      Course Overview
      Get Completion Certificate
      Previous Lesson Next Lesson
      • YouTube
      • Twitter
      • Facebook
      • LinkedIn
      • Instagram
      • Rss

      CME Group is the world's leading and most diverse derivatives marketplace. The company is comprised of four Designated Contract Markets (DCMs). 
      Further information on each exchange's rules and product listings can be found by clicking on the links to CME, CBOT, NYMEX and COMEX.

      © 2021 CME Group Inc. All rights reserved.

      Disclaimer  |  Privacy Policy  |  Cookie Policy  |  Terms of Use  |  Data Terms of Use  |  Modern Slavery Act Transparency Statement  |  Report a Security Concern