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Crossing of Orders in Open Auction Trading

Exchange Regulation 331.04 allows for the direct crossing of orders by a floor broker provided that the orders are for different account owners and provided that the broker has first bid and offered the orders by open outcry for a reasonable period of time. All floor brokers should be aware of the following requirements in connection with this regulation:

● Prior to crossing the orders, the floor broker must first bid and offer the orders by open outcry for a reasonable time, specifying the price and the number of contracts. The “reasonable time” criterion shall be considered to have been met if the broker has bid and offered the orders at least three times in a manner that is open and audible to the pit.

● If neither the bid nor the offer is accepted in whole or in part within a reasonable time frame, the orders, or any remaining portion of the orders, may be matched in the presence of a member of the Pit Committee.

● The executing member must record the time of execution to the nearest minute on each of the crossed orders and the trade documents must be initialed by a member of the Pit Committee. If an order involved in the cross has been entered electronically via the order routing system, the member must record the trade on a brokerage card or dummy card and present that document to the witnessing Pit Committee member to be initialed. All such documents are required to be retained by the member.

● A floor broker may not cross an order with a trade for his personal account, and may only take the other side of a customer order for his error account in accordance with Regulation 350.04, Outtrades and Errors and Mishandling of Orders.

Questions regarding this notice may be directed to any of the following individuals:

Jennifer Baum, (312) 341-3124, jbaum@cbot.com; Melissa Kemp, (312) 435-3681, mkemp@cbot.com; Shelly Goodwin, (312) 347-4123, sgoodwin@cbot.com

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