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COM Privileges: Options/Futures Spread Transactions

All Commodity Options Membership Interest Holders (“COM members”) are reminded that spreads involving options and futures that are executed as a single transaction may be executed only by individuals who have membership privileges in both the options and the futures contracts. COM members are prohibited from executing options/futures spread combinations as a single transaction.

A COM member is permitted to indicate a bid or an offer for an options/futures spread transaction; however, in order to participate in such a transaction, the COM member must enter an order, verbally or through the order flow process, with an eligible broker who has trading privileges in the options and the futures contracts. COMs may not execute the covered spread, record the options leg of the spread and have an eligible broker record the futures leg of the spread on their behalf.

As a reminder, COMs may transmit futures orders from an options pit verbally, by hand signals or in writing to the underlying futures pit provided that the futures order is for hedge purposes. A COM who wishes to enter a speculative futures order is required to enter the order through the normal customer order flow process. At a minimum, this requires that the COM member enter his order through an order desk and that an order ticket be prepared and time stamped prior to the transmission of the order to an eligible broker in the futures pit.

Should you have any questions regarding this notice, please contact Jennifer Baum of the Office of Investigations & Audits at 341-3124.

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