Clearing House Advisory Notice
To | Back Office Managers, Chief Financial Officers
From | CME Clearing House
Subject | CME Managed Fund Program Expansion and Security Deposit
Effective Date | 02/05/02
Notice Number | 02-09
Within the coming weeks, the Chicago Mercantile Exchange Inc. (�CME�) Clearing House plans to announce the acceptance of several new money funds as a part of the IEF2 Program. When the Clearing House determines a start date for each new fund that is to be supported through the IEF2 Program, a separate memo will be circulated to each CME clearing firm. Each such memorandum will specify the particular fund(s) to be supported, and will also include a copy of the fund prospectus and any other information, such as unique share purchase/redemption timeframes, pertinent to the operation of the fund in the IEF2 Program. As a part of the expansion of the IEF2 Program, the Clearing House will introduce the concept of �core funds�. Core funds are as follows: BBH Common Settlement II Fund Harris Insight Money Market Fund J.P. Morgan Prime Money Market Fund � Institutional Class Nations Cash Reserves � Capital Shares One Group Institutional Prime Money Market Fund Distinctive attributes of core funds are as follows: Firms utilizing IEF2 in satisfaction of security deposit required may only utilize core funds. Clearing firms� aggregate investments in CME managed fund programs must adhere to the following new investment criteria: The term �aggregate investments� means the firm�s investments made in its customer segregated, house non-segregated, and security deposit accounts, on a combined basis. The firm�s first $100 million can be invested in any IEF2 fund. 50% of the firm�s next $400 million must be invested in core funds or in IEF units. No restriction on amounts invested over $500 million. Finally, as a reminder, the Clearing House does set limits on the amount of funds that any one firm may invest in any one money fund supported through the IEF2 Program. Generally, the Clearing House sets single firm investment limits in individual money funds at an amount equal to 5% of the fund�s total assets. The Clearing House realizes that it may take some time for firms participating in the IEF2 Program to orient their operations to comply with the new investment criteria listed above. Therefore, the security deposit and investment criteria requirements listed above will take effect on March 1, 2002. Questions can be directed to Tim Doar, Director, Financial Management at 312-930-3162; or to Tim Golomb, Associate Director, Financial Management at 312-930-3194.