Chicago Mercantile Exchange

Clearing House Advisory Notice

99-75

August 24, 1999

# TO: Clearing Member Firms

Chief Financial Officers

Back Office Managers

# FROM: CME Clearing House

RE: New Letter of Credit Format

On Thursday, August 19, 1999, the CME Performance Bond Committee approved a new letter of credit format for use at the CME. This new letter of credit format, a copy of which is attached for informational purposes, was developed by the Unified Clearing Group, which encompasses leading clearing organizations and depositories for both the futures and securities industries in the U.S. This new letter of credit format should be utilized for any new letter of credit that your firm intends to post to the CME in satisfaction of performance bond requirements on or after September 1, 1999.

Please note that two sets of instructions are included with the letter of credit format. A four-page set of “General Instructions” is included that explains general aspects of the new letter of credit format. Also included is a two-page set of “Instructions”, which pertains primarily to how the cover page of the letter of credit should be executed, so as to be in compliance with CME requirements.

Please also note that the letter of credit format attached is not to be utilized for pass-through letters of credit. The CME is in the process of adapting the standard form of the Unified Clearing Group letter of credit format to meet the needs of pass-through letters of credit. A new standard pass-through letter of credit format utilizing the Uniform Clearing Group standard will be available in the near future.

Please also note that a new letter of credit format has been devised for the purposes of the CME/OCC/NYBOTCC cross-margin program. This new letter of credit format has been adapted from the standard form of the Unified Clearing Group letter of credit format. Consistent with CME/OCC/NYBOTCC cross-margin program procedures, this new letter of credit format must be utilized on and after September 1, 1999 for the purpose of the CME/OCC/NYBOTCC cross-margin program.

Questions concerning any of the above can be addressed to Mr. Tim Golomb, Financial Manager, at 312-930-3194, or to Ms. Dora De La Paz, Financial Project Manager, at 312-930-3171.