| The CFTC recently approved the attached rule amendments pertaining to the responsibilities of clearing members for: 1. Performance Bonds Requirements - Account Holder Level;
2 Collection of Premium;
3. Discretionary, Controlled, and Managed Accounts;
4. Authorized Traders (Corporate Accounts); and
5. Branch Offices, Guaranteed Introducing Brokers, and Associated Persons. In brief, these amendments were adopted to simplify, update, and consolidate Exchange rules. Several rule numbers were changed for better organization of similar clearing member requirements. In addition, please note the following significant changes: Performance Bonds Requirements - Account Holder Level/Collection of Premium The performance bond rules incorporate the Joint Audit Committee Margins Handbook and clarify Exchange policies regarding the loaning of funds for performance bond purposes. Discretionary, Controlled, and Managed Accounts The requirement that discretionary orders be approved by an officer, partner, or designated supervisor was eliminated. However, clearing members must still supervise discretionary trading activity. In addition, the exemptions to Discretionary Account Rule 956 were expanded to include member and proprietary/noncustomer accounts, except for the execution of a power of attorney, inclusion in the discretionary account listing, and position limits. Authorized Traders (Corporate Accounts) The requirement for a corporate resolution was eliminated from the rules. However, a list of authorized traders must be maintained for all corporate accounts. Branch Offices, Guaranteed Introducing Brokers, and Associated Persons The opening and closing of branch offices is no longer required to be submitted to the Exchange. If you have any questions, please contact the Audit Department at (312) 930-3230.
Performance Bond Requirements Rule Changes Note: New text is underlined, old text is struck out. [827.] 930. PERFORMANCE BOND[S] REQUIREMENTS: ACCOUNT HOLDER LEVEL [OF CUSTOMERS]. - A. Performance Bond System The Standard Portfolio Analysis of Risk (SPAN� ) Performance Bond System is the performance bond system adopted by the Exchange. SPAN generated performance bond requirements shall constitute Exchange performance bond requirements. All references to performance bond within the rules of the Exchange shall relate to those computed by the SPAN system.
Performance bond systems other than the SPAN system may be used to meet Exchange performance bond requirements if the clearing member can demonstrate that its system will always produce a performance bond requirement equal to or greater than the SPAN performance bond requirement. [The Board shall from the time to time determine and notify clearing members of the amounts of initial performance bonds which must be obtained by all clearing members from their customers on speculative and bona fide hedge transactions, and the amount of minimum performance bonds that must be maintained by customers on open trades including those resulting in spread positions.]
B. Performance Bond Rates The Board shall determine initial and maintenance performance bond rates used in determining Exchange performance bond requirements. [ For a transaction to be considered a bona fide hedge, it must comply with the hedge requirements set forth in Section 4(a)3 of the Commodity Exchange Act, and the regulations issued pursuant thereto, and Rule 543.] The Board may delegate its power under this rule to the Clearing House Committee, reserving the right to change or modify any performance bond levels [requirements] determined by the Committee.
[B.]C. Acceptable Performance Bond Deposits Clearing members may accept from their account holders [customers] as performance bond [,] the following: | 1 | Cash (including European Currency Units [,] and the currencies of Canada, France, Germany, Japan, Switzerland, the United Kingdom and the United States); [,] | | 2 | U.S. Treasury Bills, Bonds, and Notes; [,those U.S. government agency obligations that clearing members may deposit as performance bond with the Clearing House pursuant to Rule 825,] | | 3 | Government National Mortgage Association pass-through certificates; [,] | | 4 | U.S. Government Agency Securities of Federal Farm Credit Banks, Federal Home Loan Bank System, Federal Home Loan Mortgage Corporation, and Federal National Mortgage Association and other such U.S. Government Agency Securities approved by the Clearing House Committee; | | 5 | S[s]overeign obligations of Canada, France, Germany, Japan and the United Kingdom; [, sovereign obligations collateralized by U.S. Treasury zero coupon bonds (and commonly known as Brady Bonds) as approved by the Clearing House Committee,] | | 6 | Mexican Par and Discount Brady Bonds, Brazilian Par and Discount Series "Z" Brady Bonds, Argentina Par and Discount Brady Bonds, and other such Brady Bonds approved by the Clearing House Committee. As prescribed by the Clearing House Committee, acceptable Brady Bonds shall be valued at an amount not to exceed market value less a 40% haircut. | | 7 | Debt and equity securities listed on the New York or American Stock Exchange or included in the Standard & Poor's 500� Stock Price Index or the Standard & Poor's MidCap 400� Stock Price Index.[,] Clearing members shall not accept as performance bond from an account holder securities that have been issued by the account holder or an affiliate of the account holder unless the clearing member files a petition with and receives permission from the Clearing House Committee; | | 8 | S[s]hares of mutual funds [(under such terms and conditions] as approved by the Clearing House Committee [shall prescribe) and,]; and | | 9 | B[b]ank-issued letters of credit in a form acceptable to the Exchange. Such letters of credit must be drawable in the United States. Clearing members shall not accept as performance bond from an account holder letters of credit issued by the account holder, an affiliate of the account holder, the clearing member, or an affiliate of the clearing member. |
All assets deposited by account holders [customers] to meet performance bond requirements must be and remain unencumbered by third[-]party claims against the depositing account holder [customer]. Except to the extent that the Clearing House Committee shall prescribe otherwise, performance bond deposits other than U.S. dollars and letters of credit shall be valued at an amount not to exceed market value less applicable haircuts as set forth in SEC Rule 240.15c3-1.
D. Acceptance of Orders Clearing members may accept orders for an account provided sufficient performance bond is on deposit in the account or is forthcoming within a reasonable time. For an account which has been subject to calls for performance bond for an unreasonable time, clearing members may only accept orders that reduce the performance bond requirements of existing positions in the account. Clearing members may not accept orders for an account that has been in debit an unreasonable time.
[C.] [Clearing members shall not accept orders for new trades from a customer unless the performance bond on the customer's pre-existing open positions complies with the maintenance requirements established by the Board or it forthcoming within a reasonable time. Notwithstanding the foregoing, a clearing member is not required to collect or call for performance bond from a customer with an established account in respect of new positions that are liquidated by the close of trading on the CME.] [D.]E. Calls for Performance Bond 1. [Clearing members may call for additional performance bond at their discretion.] Clearing members must issue calls for performance bond that would bring an account up to the initial performance bond requirement: | a. | when performance bond equity in an [established] account initially falls below [is less than] the maintenance performance bond requirement; and | | b. | subsequently, when performance bond equity plus existing performance bond calls in an account is less than the maintenance performance bond requirement. [for such account. Clearing members must also issue calls for the initial performance bond requirement when an account establishes a new position. For this purpose, a new position is defined as a position added to an account in which no open positions existed at the start of the trading day.] |
[If within a reasonable time the customer fails to comply with such demand (the clearing member may deem one hour to be a reasonable time), the clearing member may close out the customer's trades or sufficient contracts thereof to restore the customer's account to required performance bond status.] Such calls must be made within one business day after the occurrence of the event giving rise to the call.
Clearing members may call for additional performance bond at their discretion. Notwithstanding the foregoing, a clearing member is not required to call for or collect performance bond for day trades.
2. Clearing members shall only reduce a call for performance bond through the receipt of performance bond deposits permitted under subsection C. of this rule. - Clearing members may delete a call for performance bond through:
a.
| the receipt of performance bond deposits permitted under subsection C. of this rule only if such deposits equal or exceed the amount of the total performance bond call; or | | b. | inter-day favorable market movements and/or the liquidation of positions only if performance bond equity in the account is equal to or greater than the initial performance bond requirement. |
- Clearing members shall reduce an account holder's oldest outstanding performance bond call first.
3.Clearing members must maintain written records of all performance bond calls issued, reduced, and deleted. [E.]][If the clearing member is unable to effect personal contact with a customer, a written demand left at the customer's place of business or a telegram sent to the customer at the address furnished by him to the clearing member shall be deemed sufficient.]
F.Disbursements of Excess Performance Bond Deposits - Clearing members may only release performance bond deposits from an account if such deposits are in excess of initial performance bond requirements. Furthermore, the release of funds composed of long option value is not allowed.
[F.][Clearing members shall be responsible to the Exchange for all performance bond requirements.]
G.Loans to Account Holders Clearing members may not extend loans, secured or unsecured, to account holders for performance bond purposes.
H. Aggregation of Accounts and Positions Clearing members may aggregate accounts under identical ownership within the same classifications of customer segregated, customer secured, and nonsegregated for performance bond purposes. Clearing members may compute performance bond requirements on identically owned concurrent long and short positions on a net basis.
I. Hedge Positions Clearing members shall have reasonable support for bona-fide hedge and risk management positions, as defined by Rule 543., that are afforded hedge performance bond rates.
J. Omnibus Accounts - Clearing members shall collect performance bond on a gross basis for positions held in domestic and foreign omnibus accounts.
- For omnibus accounts, initial performance bond requirements shall equal maintenance performance bond requirements.
- Clearing members shall obtain and maintain written instructions from domestic and foreign omnibus accounts for positions which are entitled to spread or hedge performance bond rates.
K. Liquidation of Accounts - If an account holder fails to comply with a performance bond call within a reasonable time (the clearing member may deem one hour to be a reasonable time), the clearing member may close out the account holder�s trades or sufficient contracts thereof to restore the account holder�s account to required performance bond status.
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- Clearing members shall maintain full discretion to determine when and under what circumstances positions in any account shall be liquidated.
[H.]L. Failure to Maintain Performance Bond Requirements - If [
In the event of the failure of] a clearing member fails to maintain [customer] performance bond[s as required under] requirements for an account in accordance with this rule, the Exchange [President] may direct [order] such clearing member to immediately liquidate [close out] all or [such] part of the account�s positions [on his book so as] to eliminate [correct] the deficiency [delinquency].
[G.]M. Violation - Violation of this rule may constitute[
s] a major offense.
[1007.]931. [PAYMENT] COLLECTION OF PREMIUM[.] - A clearing member shall not accept orders from accounts for the purchase of options [
for new trades] unless the full amount of the premium is on deposit or is forthcoming within a reasonable [period of] time.
(Next Rule 935) INTERPRETATION OF RULES 821 AND 827.B.
REGARDING USE OF LETTERS OF CREDIT BY BANKS
Rule 821 provides that the Clearing House will accept as performance bond bank-issued letters of credit [on certain commodities]. [Rule 827.B. allows clearing members to accept letter of credit as customer performance bond for certain commodities.] The Exchange's policy [in regard to certain letter of credit practices] is that [as follows: 1. A] a clearing member is not allowed to post with the Clearing House a letter of credit issued by itself or any of its affiliates.[,and 2. A clearing member nay not accept as performance bond from a customer a letter of credit issued by the customer, or an affiliate of the customer, the clearing member, or an affiliate of the clearing member.]
[INTERPRETATION OF RULE 827.B.]
[REGARDING PERFORMANCE BONDS AND AFFILIATES' SECURITIES]
[Rule 827.B. allows clearing members to accept as performance bond from their customers securities listed on the New York or American Stock Exchange or included in the Standard & Poor's 500 Stock Price Index or the Standard & Poor's MidCap 400 Stock Price Index (at the value of market value less applicable haircuts as set forth in SEC Rule 240.15c3 1). The Exchange has determined that, for purposes of Rule 827.B., clearing members will not be allowed to accept as performance bond form a customer securities which have been issued by the customer or an affiliate of the customer.] [The Clearing House Committee in its discretion may grant a written exemption from this interpretation to a clearing member in response to a written petition for exemption by that clearing member.] DEFINITIONS RULES. All rules, by-laws, interpretations, orders, resolutions and similar directives of the CME. The rules shall apply to the trading of all futures and options on futures contracts. All references in the rules to "commodity," "contracts," "futures," "futures contract," "futures transaction," "futures call," or similar terms shall include both "futures" and "options," except as otherwise specified or unless the context prohibits. [1001. APPLICATION OF THE RULES OF THE CHICAGO MERCANTILE EXCHANGE TO OPTION TRADING. - The rules of the Chicago Mercantile Exchange shall apply to the trading of commodity options, and all references in the rules to "commodity," "contracts," "futures," "futures contract," "futures transaction," "futures call," or similar terms shall include "options," except as otherwise specified or unless the context prohibits.] to top
Discretionary, Controlled, and Managed Accounts Rule Changes Note: New text is underlined, old text is struck out. 956[932]. [CONTROLLED,] DISCRETIONARY, CONTROLLED, AND MANAGED ACCOUNTS. - A. Requirements | 1. | Power of Attorney No clearing member shall accept or carry an account over which a person [any individual or organization], other than the [person in whose name the] account owner [is carried], exercises trading authority or control, (hereinafter referred to as a discretionary, controlled, or managed account[s,]) without first obtaining a written power of attorney, trading authorization, or similar document (hereinafter referred to as a power of attorney). Such power of attorney must be signed and dated by the account owner and clearly designate the person to whom discretionary authority has been granted. [unless:] | [1.] | [The person or organization in whose name the account is carried has executed and delivered to the clearing member a power of attorney, trading authorization, or other document by which discretionary authority or control is clearly delegated and by which the person or clearing member to whom it is delegated is clearly designated.]
The power of attorney [, trading authorization, or the document by which trading authority is given, shall be in writing showing the date it was entered into. It] shall remain in effect until it is terminated by a written revocation signed and dated by the [person for whom the] account owner [is carried] or by the death or incapacity of the account owner [such person]. Written r[R]evocation may also be made by the person to whom trading authority has been granted [such power has been delegated and must be in writing]. | | 2. | Discretionary Account Listing | [2.] | A [The records of the] clearing member must clearly identify each discretionary [controlled] account it carries[,] and [the clearing member agrees to] promptly provide the Exchange with a complete and accurate list of such accounts [promptly] upon request. | [3.] | [All other applicable Exchange rules have been complied with.] | [4.] | [The member or clearing member has ascertained in writing, from the person or persons in whose name the account is carried, the essential facts relating to the financial resources of such person.] |
[B.] [Records] [1.] | [Except as provided for under Rule 536.D., any person initiating an order for an account over which he has discretion must reduce the order to writing, record thereon the account number and date, and time-stamp the order prior to entering the order for execution.] | [2.] | [Immediately after the execution, the order shall be dated and time stamped and shall thereafter be retained by the clearing member for the next five years.] | [3.] | [Confirmation must be sent directly to the person in whose name the account is carried, showing each trade made for his account and a monthly statement showing exact position, for this account, including all open trades figured to the market]. |
B[E]. Presumption of Authority Except where specifically indicated by the phrase [noted and confirmed to the customer as] "discretion not exercised[,]" written on the order ticket, and subsequently confirmed to the customer as such, every trade in a[n] discretionary account [over which any individual or organization, other than the person in whose name the account is carried, exercises trading authority or control,] shall be [conclusively] presumed to have been made pursuant to the power of attorney [such trading authority or control] and [shall be] subject to the requirements of this rule. [Nominal joint-accounts in which the individual or organization exercising authority or control has only a nominal interest shall be considered controlled accounts and shall be subject to the requirements of this rule.] [The power of attorney, trading authorization or other document by which trading authority or control is relinquished, can be terminated only by written revocation signed by the person in whose name the account is carried or by the death of that person.]
[Revocation may also be made by the person to whom such power has been delegated and must be in writing.]
C[D]. Supervision of Discretionary Trading [1.] | All orders handled or prepared by commodity representatives or non-member employees on behalf of controlled accounts must be approved by an officer or partner or designated supervisory employee of the clearing member (appointed by a partner or officer for this purpose); approval may be obtained by initialing of the order at some time during the day of execution.] | 1[2]. | Discretionary Account Activity | | | Each clearing member shall have a supervisory employee (other than the person granted discretionary authority) [Each account with respect to which a commodity representative or non-member employee has discretionary authority must be given] continuously supervising activity in discretionary accounts. The supervision shall include, but is not limited to, [supervision by the clearing member to see that trading in such an account is not overly] a review of excessive trading in amount or frequency in relation to [the equity of the] account equity. This requirement shall only apply to discretionary accounts controlled by an employee of the clearing member or the clearing member�s guaranteed introducing brokers. | [3.] | [A commodity representative may not exercise control over controlled accounts unless he has been actively employed in the field of commodity futures for a minimum of two years, or unless he has been a registered commodity representative for a major commodity exchange or a registered representative of the New York Stock Exchange for a minimum of two years. The foregoing requirements may be waived in particular cases by the Commodity Representative/Customer Complaint Committee for good cause shown.] | 2[4]. | Floor Trading |
[For trades executed] D[d]uring Regular Trading Hours, each order for a discretionary account must [the clearing member or member firm carrying the account shall require that all orders entered for the account, for execution during Regular Trading Hours, except those accounts maintained in the name of members of the Exchange and those accounts excepted in Rule 932.F.,] be executed by a member in the pit [broker] other than the person granted discretionary trading authority over the account unless [member to whom such trading authority is given. However, the broker to whom such trading authority is given may execute orders for controlled accounts if]: | a. | The member granted discretionary authority [He] does not trade for his personal account or an[y] account referred to [referenced] in Rule 956.E. [932.F.1. or 932.F.2.]; | | b. | The member granted discretionary authority [He] has filed with the Compliance Department [of Compliance] notice of his intention to execute orders for discretionary [controlled] accounts for which he has power of attorney [trading authority]; and | | c. | Whenever the member has discretionary authority over [he manages] more than one account: |
[i](1) | The member shall disclose [he discloses] this fact to all persons having an interest in any of the discretionary [managed] accounts[,]; | [ii](2) | The member shall have [he has] a similar financial interest (including, but not limited to, equity, brokerage and performance fees) in each such account[,]; | [iii](3) | All such discretionary accounts shall be maintained [he maintains all accounts for which has he discretion] with the member�s qualifying [same] clearing member[,]; and | [iv](4) | The member's qualifying [his] clearing member shall monitor[s] the allocation of trades among such discretionary [managed] accounts. |
D[C]. Position Limits A person with discretionary trading authority over one or more discretionary [controlled] accounts shall not execute or order the execution of trades for such [the account or] accounts where such trades, by themselves or in addition to his personal trades, exceed the limits prescribed in these rules regarding total positions in any contract. A husband, wife and children are presumed to be a single entity and, as such, must adhere to the position limits as prescribed by the Exchange rules unless otherwise approved by the President upon written application.
E[F]. Exceptions The provisions of this rule shall not apply to the following accounts: | 1. | Family Accounts [The provisions of this rule shall not apply to] A[a]ccounts controlled or managed [maintained] by persons for their own family[ies], except with regard to Rule 956.D [position limits as set forth in Section C. above]. For [the] purposes of this rule, members of one's family shall include one's spouse [husband, wife], brothers, sisters, parents, grandparents, great-grandparents, children, grandchildren, great-grandchildren and in-laws. | | 2. | Member and Proprietary Accounts Accounts of members or proprietary accounts as defined by CFTC Regulation 1.3(y), except with regard to Rules 956.A.1. and 956.D. [The provisions of this rule shall not apply to accounts handled by one bona fide partner or officer of a member firm for another bona fide partner or officer of the same firm.] | [3.] | [The provisions of this rule shall not apply to commodity funds that are required to be registered with the Securities Exchange Commission, except that Rule 932.D.4. shall apply.] |
F[G]. Violation Violation of this rule may be [, or any part thereof, by any member or clearing member shall be considered] a major offense.
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Authorized Traders Rule Changes Note: New text is underlined, old text is struck out. 957[933]. AUTHORIZED TRADERS [CORPORATE, TRUST, COOPERATIVE AND INVESTMENT CLUB ACCOUNTS]. - For an account of a corporation, partnership, trust or similar organization, a clearing member must maintain a current list of authorized traders. During Regular Trading Hours, if a floor broker authorized to act on behalf of the organization executes orders for such organization, then the floor broker may not trade for any other account unless the organization specifically authorizes such floor broker to do so. A member or clearing member may not open an account in accordance with Rule 957 to avoid the requirements within Rule 956. [Upon accepting an account of a fund, corporation, trust, cooperative or investment club, a clearing member must require such association to file certified resolutions, or an equivalent document acceptable to the Compliance Department, authorizing said association to conduct futures transactions and designating the person with authority to act on behalf of the association. If such person executes transactions on the floor of the Exchange for that association, he shall not trade for his or any account other than that of the association unless he has been specifically authorized to do so by such certified resolution. The resolutions shall be in a form satisfactory to the Exchange and shall be kept on file with the clearing member. Such accounts shall have a reasonable time within which to file their documents.] [With respect to any account carried for or in the name of a cooperative (expect a lawfully formed and conducted cooperative association of producers engaged in a cash commodity business), investment club, pool or other combination of persons, a clearing member shall furnish promptly to the person designated to act on behalf of such cooperative, club, pool or combination, a copy of a monthly statement showing:] [A.] | [Open contracts with prices at which they were acquired and ledger balance carried for the account.] | [B.] | [Any securities or other property which have been deposited to performance bond, guarantee or secure the account.] | [C.] | [The net profit or loss on all contracts closed since the date of the previous statement, and the net unrealized profit or loss figured to the market on all open contracts.] |
[Such accounts shall comply with all procedural and other requirements as set by the Compliance Department.] to top
Branch Offices, Guaranteed Introducing Brokers, and Associated Persons Rule Changes Note: New text is underlined, old text is struck out. 958.BRANCH OFFICES, GUARANTEED INTRODUCING BROKERS, AND ASSOCIATED PERSONS. - | A. | Each clearing member must maintain a complete and accurate list of all branch offices, guaranteed introducing brokers, and the associated persons of the clearing member and its guaranteed introducing brokers. Such list shall be promptly provided to the Exchange upon request. | | B. | Branch offices, guaranteed introducing brokers, and the associated persons of the clearing member and its guaranteed introducing brokers must comply with Exchange rules. Each associated person of the clearing member or its guaranteed introducing brokers shall be bound by Exchange rules to the same extent as if such person were a member. | | C. | Each clearing member must diligently supervise its branch offices, guaranteed introducing brokers, and the associated persons of the clearing member and its guaranteed introducing brokers. | | D. | Each clearing member shall be responsible for the acts or omissions of its branch offices, guaranteed introducing brokers, and the associated persons of the clearing member and its guaranteed introducing brokers. Any violation of an Exchange rule by any such person may be considered a violation by the clearing member. | | E. | Violation of this rule may be a major offense. |
[930.] | | [BRANCH OFFICES. - Clearing members may maintain branch offices upon compliance with the following requirements and conditions:] |
[A.] [Application] [1.] | [Clearing members shall submit an application in a form prescribed to the President for his approval with regard to each branch office.] | [2.] | [Decisions of the President may be appealed to the Clearing House Committee.] |
[B]. [Ownership]
[Each branch office must either be wholly owned by the parent organization or the ownership thereof must be identical to the ownership of the parent firm.]
[C]. [Name]
[Branch offices maintained by clearing members shall use the parent firm's name for all purposes.]
[D.] [Commodity Representatives]
[All commodity representatives employed in branch offices must be employees of the parent firm and must comply with and shall be subject to the provisions of Rule 931.]
[E]. [Supervision] [1.] | [Each branch office shall be under the supervision and charge of a separate branch office manager, who must either be an officer or partner of the parent firm or a qualified commodity representative of the parent firm. All non-member managers must be approved by the Department of Compliance and Audits.] | [2.] | [A branch office manager may receive compensation in excess of the amounts otherwise allowed by Rules 931(G) provided, however, that the compensation agreement is previously submitted to and approved by the President.] |
[F.] [Reports]
[1.] | [The parent firm shall submit to the Department of Compliance and Audits, upon request, copies of any agreements, contracts, schedules or lists pertaining to the operation of any branch office.] | [2.] | [The closing or liquidation of any branch office, or the release or intra-firm transfer of any branch office manager, shall be reported to the Department of Compliance and Audits within 24 hours.] |
[G]. [Compliance] [1.] | [The parent firm, each branch office, branch office managers and commodity representatives shall comply with all Exchange rules and with all directives of the President.] | [2.] | [The parent firm shall maintain such financial requirements as the President shall deem necessary to insure its ability to maintain branch offices.] | [3.] | [The parent firm shall be liable for any violations of any rule, regulation or directive within a branch office.] |
[H.] [Liquidation] [The President, with cause, may order the liquidation of any branch office. Such order shall be appealable to the Board within three days.]
[931.] [COMMODITY REPRESENTATIVES.] [A]. | [A commodity representative is a person registered with the National Futures Association as an Associate member whose sponsor is a member of the Exchange and who is engaged to act as a sales representative for commodities dealt in or listed on the Exchange. The commodity representative shall be bound by the rules of the Exchange to the same extent as if he were a member.] | [B.] | [A person shall not be employed as a commodity representative unless registered as an Associate Member with the National Futures Association. The Commodity Representative/Customer Complaint Committee ("Committee") may at any time review the qualifications or conduct of a commodity representative.] [If, after hearing, the Committee finds that the commodity representative is unqualified or has violated a rule of the Exchange, it may deny him the right to act as a sales representative of a member firm or impose conditions upon his activities. A decision denying a sales representative the right to act as such for a member firm or imposing conditions on him may be appealed to the Board by the sponsoring member.] | [C.] | [The sponsor of a commodity representative shall be responsible to the Exchange for the acts of such commodity representative, and any violation of Exchange rules by such person may be considered a violation by his sponsor. It shall be the duty of the sponsoring clearing member to supervise the commodity representative's compliance with Exchange rules.] | [D.] | [Any sponsor who employs a commodity representative contrary to the provisions of this rule, or who accepts business on this Exchange from or as a result of a non-approved commodity representative, may be guilty of a major offense.] |
[936.] [GUARANTEED INTRODUCING BROKERS.] [A]. | [An introducing broker ("IB") who is guaranteed by a clearing member pursuant to CFTC Reg. 1.10(j) shall be bound by all rules of the Exchange regarding dealings with customers (e.g., sales practice rules). Each clearing member who guarantees an IB shall be responsible to the Exchange for the acts or omissions of such IB, and any violation of such an Exchange rule by such IB may be considered a violation by its guaranteeing clearing member. It shall be the duty of each guaranteeing clearing member to supervise its guaranteed IB�s compliance with such rules.] | [B]. | [A clearing member may be guilty of a major offense if it fails to supervise its guaranteed IB's compliance with such rules.] |
DEFINITIONS RULES. All rules, by-laws, interpretations, orders, resolutions and similar directives of the CME. The rules shall apply to the trading of all futures and options on futures contracts. All references in the rules to "commodity," "contracts," "futures," "futures contract," "futures transaction," "futures call," or similar terms shall include both "futures" and "options," except as otherwise specified or unless the context prohibits. [1001. APPLICATION OF THE RULES OF THE CHICAGO MERCANTILE EXCHANGE TO OPTION TRADING. - The rules of the Chicago Mercantile Exchange shall apply to the trading of commodity options, and all references in the rules to "commodity," "contracts," "futures," "futures contract," "futures transaction," "futures call," or similar terms shall include "options," except as otherwise specified or unless the context prohibits.] to top |
