- What is a Directed Request for Quote (DRFQ)?
- How do I participate in a DRFQ?
- What are the advantages of using DRFQ?
- What is CME Direct?
- How do I create a DRFQ?
- Who can I send a DRFQ to?
- How do I create a DRFQ Relationship?
- How does a DRFQ differ from using an instant messaging (IM) platform?
- Do I need to request any change to my CME Direct setup to participate in DRFQ?
- How can a Firm Admin assist with DRFQ entitlements?
- How does a Directed RFQ differ from an RFQ?
- Do DRFQ participants need to be registered for ClearPort?
- Is a DRFQ for CME ClearPort only?
- What products are DRFQ-eligible?
- Does the use of DRFQ comply with Rule 526 (“Block Trades”)?
- Will CME maintain the DRFQ audit trail?
- Can I DRFQ from an existing Globex RFQ?
- How do I respond to a DRFQ?
- Can anyone see my DRFQ responses?
- Are my DRFQ responses directly tradeable?
- How do I learn more about DRFQ and CME Direct?
- Can I remain anonymous while participating in a DRFQ negotiation?
- How do I know which counterparties are eligible to trade with me?
- Can both traders and broker intermediaries use DRFQ?
- Are there additional fees associated with using DRFQ?
- Do DRFQ transactions have to meet reporting times and block-size minimums?
- Can I connect to DRFQ through an API?
- Can I chat with a counterparty during block trade negotiations?
- During a DRFQ can I communicate while sending a quote?
- Can I build a DRFQ from the existing strategy builders?
- What strategies can I DRFQ with a flexible hedge and delta?
- For delta negotiation on covered options can I create strategies with multiple hedges?
- How do I indicate the premium leg of the trade on which we are negotiating?
- How are legs priced when confirming a DRFQ?
- What if I receive an error when submitting a deal to ClearPort?
1. What is a Directed Request for Quote (DRFQ)?
A DRFQ is available in CME Direct for privately negotiated transactions, in which participants request and negotiate quotes for block trades and subsequent submission.
2. How do I participate in a DRFQ?
Within CME Direct, a user will need to establish DRFQ relationships with counterparties via “Contacts” in the Directed RFQ view. If you are not currently a CME Direct user click here to register.
3. What are the advantages of using DRFQ?
The advantages include the convenience of a structured process on a single electronic platform, full audit trail, speed and accuracy of deal entry, and firm admin controls. It is also CME Group Market Regulation-approved.
4. What is CME Direct?
CME Direct enables users to access CME Group futures, options, and block markets all on one screen with a fast, secure, and highly-configurable trading front-end. Both CME Globex and CME ClearPort can be accessed with a single interface.
5. How do I create a DRFQ?
Users can create a DRFQ from trading and market activity grids. One just needs to right-click on a product and select “Send DRFQ” or create it in the DRFQ book.
6. Who can I send a DRFQ to?
A DRFQ can only be sent and received between users who have an established DRFQ relationship.
7. How do I create a DRFQ Relationship?
Users manage their DRFQ relationships from the Directed RFQ view by clicking on “Contacts”. From here, users can initiate relationship requests as well as “Accept,” “Ignore,” “Reject,” and “Delete” incoming requests.
8. How does a DRFQ differ from using an instant messaging (IM) platform?
DRFQ is a fully structured quote negotiation process; it is not free-form text. Users send bids/offers and quantities as numeric fields in specific negotiation forms.
9. Do I need to request any change to my CME Direct setup to participate in DRFQ?
No, users are enabled by default for DRFQ. Any changes to users can be done via your Firm Administrator. To participate in a DRFQ, however, you will need established relationships.
10. How can a Firm Admin assist with DRFQ entitlements?
A Firm Admin has access to all users in the firm’s DRFQ entitlements and can adjust the granular roles for a user, as well as manage relationship requests on behalf of the firm’s users.
11. How does a Directed RFQ differ from an RFQ?
DRFQ is a private price negotiation for a block trade. The DRFQ and responses are not public, and responses are indications of interest until acted on and confirmed.
12. Do DRFQ participants need to be registered for ClearPort?
Yes, but your CME Direct registration comes with ClearPort registration, so nothing more is required.
13. Is a DRFQ for CME ClearPort only?
Yes, a DRFQ is a request to negotiate a ClearPort block. DRFQ is not allowed for Globex trading.
14. What products are DRFQ-eligible?
DRFQ is optimized for block submission. Any block-eligible exchange product can be requested and quoted.
15. Does the use of DRFQ comply with Rule 526 (“Block Trades”)?
Yes, the DRFQ workflow has been reviewed by CME Group Market Regulation and complies with the private negotiation requirement for block trades. Additional regulatory information is included in the Market Regulation Advisory Notice concerning block trades, available MRAN Notice.
16. Will CME maintain the DRFQ audit trail?
No, market participants will continue to need to comply with record keeping and audit trail requirements as described in Rule 536 and Rule 526. Firm Admins can export DRFQ audit trail up to 90 days of DRFQ transactions for record keeping purposes.
17. Can I DRFQ from an existing Globex RFQ?
Yes, users can right click and “Send DRFQ” using an existing Globex-listed product, or strategy to create a DRFQ for private negotiation and block submission.
18. How do I respond to a DRFQ?
Users will receive a notification of a new DRFQ to open or manage all DRFQ workflow in the DRFQ book.
19. Can anyone see my DRFQ responses?
No, all responses are private one-to-one correspondence between you and the DRFQ participant to whom you are responding.
20. Are my DRFQ responses directly tradeable?
No, all quotes are indications of interest and must be confirmed before a block trade can be consummated using the workflow.
21. How do I learn more about DRFQ and CME Direct?
22. Can I remain anonymous while participating in a DRFQ negotiation?
No, DRFQ is relationship-based trading. All negotiations are one-to-one. You will be known to the other side of the negotiation. However, a broker acting on behalf of a customer will not disclose their customer to the other side of a DRFQ.
23. How do I know which counterparties are eligible to trade with me?
All block trade enabled users on ClearPort are eligible to participate in a DRFQ. Users and firms are still required to follow all block rules and regulations. As well be properly set up with accounts and credit limits by their FCM.
24. Can both traders and broker intermediaries use DRFQ?
Yes, all firm and user types can participate as initiators and recipients of DRFQs.
25. Are there additional fees associated with using DRFQ?
No, DRFQ is CME Direct functionality, and there is no additional fee associated with participating.
26. Do DRFQ transactions have to meet reporting times and block-size minimums?
Yes, a DRFQ is a block, and all block trading requirements must be followed, including quantity minimums and reporting times.
27. Can I connect to DRFQ through an API?
Not at this time, users can only participate in DRFQ while using the CME Direct desktop application.
28. Can I chat with a counterparty during block trade negotiations?
There is no embedded chat functionality within the DRFQ negotiation windows. Users can sign up for CME Chat and use that simultaneously if they want.
29. During a DRFQ can I communicate while sending a quote?
Yes, negotiation notes which are a text field can be sent along with a quote during a DRFQ. The use of negotiation notes can be managed by the Firm Admin.
30. Can I build a DRFQ from the existing strategy builders?
Yes, users can leverage the contract link that is created in the option strategy builder to “Send DRFQ”.
31. What strategies can I DRFQ with a flexible hedge and delta?
With DRFQ, you can negotiate the hedge and delta of a strategy if there is only a single hedge leg.
32. For delta negotiation on covered options can I create strategies with multiple hedges?
No, strategies with more than one futures hedge leg are only DRFQ-eligible as full structures. The futures legs hedge reference prices and delta will be static throughout the DRFQ.
33. How do I indicate the premium leg of the trade on which we are negotiating?
When creating the strategy, the initiator selects the “Over” field setting the premium leg which the strategy price will be negotiated.
34. How are legs priced when confirming a DRFQ?
The price of legs can be set by either party when confirming the DRFQ: either the user who is agreeing to the price initially sets the legs, or they can leave the leg fields blank and have the other user enter leg prices to confirm the deal.
35. What if I receive an error when submitting a deal to ClearPort?
All examples in this report are hypothetical interpretations of situations and are used for explanation purposes only. The views in this report reflect solely those of the author and not necessarily those of CME Group or its affiliated institutions. This report and the information herein should not be considered investment advice or the results of actual market experience.