The Board of Directors and the CFTC have approved revisions to the Exchange’s e-cbot® Error Trade Policy (CBOT® Rulebook Appendix 9B.2) as summarized below.  These revisions will be effective as of Sunday, April 2, 2006 (trade date April 3, 2006).

1)         With respect to CBOT Metals futures, the revised policy will address circumstances where equivalent markets (i.e., full-sized and mini-sized metals) become disjointed.  Specifically:

-           For sell/buy errors in the Metals Complex, e-cbot Operations will identify the low/high for the equivalent contract for the time period that the markets were disjointed and use that value as the reference price to determine the price adjustment of the error trade.  e-cbot Operations may determine that a metals futures trade is an error if the trade has been executed at a price at least $4 away from fair value for the Gold Complex and at least 8¢ away from fair value for the Silver Complex.

-           Metals futures error trades will be resolved via a price adjustment based on the following prices:

Gold:  $4 less than the determined reference price in the case of a sell error or $4 greater than the determined reference price in the case of a buy error.

Silver:  8¢ less than the determined reference price in the case of a sell error or 8¢ greater than the determined reference price in the case of a buy error.

These provisions for re-pricing (rather than busting) metals futures transactions have been developed based on input from market participants, and are generally consistent with the established error trade procedures for option transactions. 

These policy revisions will provide an improved mechanism for addressing manifest errors in the submission of metals orders.

2)         Regarding stop and limit orders for all products, the policy will be modified to state that if a trade is re-priced to a level that is higher/lower than the limit price or the trigger price of the sell/buy stop order, the customer cannot reject the trade.  The trade will be cleared at the re-priced level and allocated to the customer’s account. 

Consistent with the current policy, parties to these transactions are permitted to make cash adjustments to settle losses that occur as a result of an asserted error trade or an actual error trade.  Should parties to a disputed transaction be unable to mutually resolve financial disputes, arbitration facilities are available through the Exchange.

These policy revisions are designed to enhance trade certainty without compromising the remedies available to market participants if they incur financial loss as a result of another party’s error.

Questions regarding these policy revisions may be directed to e-cbot Market Operations (telephone 312-347-4600).