Client Management Advisory Notice
From | Systems Liaison
Subject | Update #3: Class IV Milk futures, options on futures and Flex options to be listed July 10th.
Effective Date | 07/07/00
Notice Number | NP#0003
CONTRACT NAME: Class IV Milk Futures, Options on Futures and FLEX Options. LISTING DATE: Monday, July 10, 2000 for futures, with Options on Futures and FLEX Options following on Tuesday, July 11, 2000. DESCRIPTION: Class IV Milk is used to manufacture butter and non-fat dry milk. CONTRACT SIZE: Futures: 200,000 lbs. of milk, or 2,000 hundredweight Options: One option to buy, in the case of the call, or to sell, in the case of the put, one Class IV Milk Futures contract. TRADING HOURS: Futures: 9:00 a.m. to 1:10 p.m. CDT, except the termination of trading day, when trading closes one hour earlier, at 12:10 p.m. Options (Standard & FLEX) 9:00 a.m. to 1:12 p.m. CDT, except the termination of trading day, when options trading closes one hour earlier, at 12:12 p.m. VALID CONTRACT MONTHS: All twelve contract months. INITIAL CONTRACT MONTHS: The first contract month will be October 2000 listing through September 2001. TCC COMMODITY CODE/TICKER SYMBOL: DK for Futures, DZ for Options (QES code). FLEX Options symbol: 8x for American Style, 9x for European Style. MINIMUM PRICE INTERVALS: Minimum price fluctuations shall be in multiples of $.01 per hundredweight, or $20 per contract. DOLLAR VALUE PER TICK: $20/contract PRICE LIMITS: There shall be no trading at a price more than $1.00 per hundredweight above or below the previous day�s settlement price. POSITION LIMITS: No person shall own or control a combination of options and underlying futures that exceeds: 1. 1000 futures equivalent contracts net on the same side of the market in any contract month; 2. 250 futures equivalent net on the same side of the market in the expiring contract month as of the close of business on the business day immediately preceding the first business day of the contract month. For the purpose of this rule, the futures equivalent of an option contract is 1 times the previous business day�s IOM risk factor for the option series. Also for purposes of this rule, a long call option, a short put option, and a long underlying futures contract are on the same side of the market; similarly, a short call option, a long put option, and a short underlying futures contract are on the same side of the market. TERMINATION OF TRADING: Trading shall terminate on the business day immediately preceding the day on which the USDA announces the Class IV price for that contract month. FINAL SETTLEMENT: All contracts open as of the termination of trading shall be cash-settled based upon the USDA Class IV Price for milk used manufacturing butter/powder and also used for the purpose of setting minimum monthly prices for such milk in federal milk marketing orders, at 3.5% butterfat for fluid milk for the particular month. EXPIRATION: Options trading shall terminate on the same date and time as the underlying futures contract. EXERCISE: An option may be exercised by the buyer on any business day the option is traded. Exercise of an option is accomplished by the clearing member representing the buyer presenting an Exercise Notice to the Clearing House by 7:00 p.m. on the day of exercise. An option that is in-the-money and has not been liquidated or exercised prior to the termination of trading shall, in the absence of contrary instruction delivered to the Clearing House by 7:00 p.m. on the day following the termination of trading by the clearing member representing the option buyer, be exercised automatically. Flex Options: Flexible options may be specified to have either American-style or European-style exercise. If American-style, the option may be exercised by the buyer on any business day that the option is traded and also on its expiration day. If European-style, the option may be exercised by the buyer only on the day that the option expires. To exercise the option, the clearing member representing the buyer shall present an exercise notice to the Clearing House by 7:00 p.m. on the day of exercise. EXERCISE PRICE INTERVALS: The exercise prices shall be stated in terms of dollars per hundredweight. For all contract months, exercise prices shall be at intervals of $.25; e.g., $11.75, $12.00, $12.25, etc. At the commencement of option trading in a contract month, the Exchange shall list put and call options in a range of $4 above and below the previous day�s settlement price of the underlying futures contract. When a sale, bid, offer or settlement price in the underlying futures contract occurs at, or passes through an exercise price, the Exchange shall list on the next trading day put and call option contracts at the next higher (or next lower) exercise price within a $4 range above (or below) the exercise price at which or through which the underlying futures sale, bid, offer, or settlement price occurred. New options may be listed for trading up to and including the termination of trading. FLEX OPTIONS MINIMUM TRADING UNIT: The minimum size for requesting a quote and/or trading in a flexible option series is 10 contracts. FLEX OPTIONS EXERCISE PRICE INTERVALS: Exercise prices shall be stated in terms of the Class IV Milk futures contract that is currently deliverable upon exercise of the option and may be at intervals of $.05 per hundredweight for all levels from .05 to 1,000; e.g., 11.05, 11.10. DELIVERY: Not deliverable, cash-settled. MINIMUM REPORTABLE LEVEL: 25 contracts or greater. CFTC REPORTABLE NUMBER: Contact Judy Sepsey, CFTC, at (312) 353-9028. PERFORMANCE BOND REQUIREMENTS: To be published by the Clearing House. CLEARING FEES: Waived through December 29, 2000. ELIGIBLE MEMBERSHIP DIVISIONS: All divisions are eligible. PRICE CONVENTIONS:
| Trade Price | Premium (Trade Price) | Exercise Price
Actual Price: | 9.38 | 0.50 | 9.25
TREX/TES Format: | 0938 | 50 | 0925
Trade Register: | 9.38 | 0.50 | 9.25
Recap Ledger: | N/A | N/A | 0925
Unmatched Trade Notice: | 0938 | 50 | 0925
Cabinet Price Format: | N/A | CAB or 9999999 | 0925
Trade Register File: | 0.938 | 0.050 | 0925
Settlement Price File: | 0938 | 50 | 0000925
SPAN File (SPAN): | 0938 | 50 | 0000925
GLOBEX Price Entry Format | 0938 | 50 | 9.25
GLOBEX Cabinet Price Format: | N/A | 0 | 9.25
APS/GUS File Format: | 0938 | 50 | 0000925
FOR FURTHER INFORMATION: Please contact one of the following for further information: Settlement/Delivery Information: John Verde (312) 930-3185 & Linda Elliott (312) 930-3174 Performance Bond Information: Risk Management Department (312) 648-3888 Position Limits: Ken Lovett (312) 648-3259 GLOBEX Information John Restivo (312) 649-5475 General Information Steve Mazur (312) 930-2035 & Lisa Amato (312) 338-2654