Client Management Advisory Notice
From | Client Management
Subject | Important Reminder: Trade Entry Procedures for Block Trades
Effective Date | 05/24/01
Notice Number | NP#0111
Several users have indicated that they are unfamiliar with the trade entry procedures for block trades on future, options on futures and FLEX options. As a reminder, the trade entry procedures are detailed below (this is an excerpt from an earlier Q&A on Block Trades). Please provide all Data Entry Staff with a copy of this memorandum to ensure familiarity with these trade entry procedures. Q16: What are the trade entry procedures for submitting block trades to the clearing system? A16: There is a major difference in the trade entry requirements for blocked futures, blocked standard option and blocked flex option transactions as summarized below � BLOCKED FUTURES trades must be submitted through the Clearing 21 on-line EFP system and distinguished from EFPs by entering an order type "B" in the order type field on the entry screen. Consistent with the "seller" reporting procedure described in Question 11, the seller is responsible for inputting the trade and allocating it to the buyer. The buyer will then claim its side of the trade on the system�s claim screen. Upon a successful claim, confirmation records will be routed back to firms for bookkeeping purposes. Note that, when reporting spread transactions, each leg must be entered individually. (Blocked options cannot be entered via the online EFP system like blocked futures trades.) BLOCKED STANDARD OPTION trades � must be entered via the Trade Entry System (TES) or submitted as TREX messages from a firm�s back-office trade entry terminal. Like block futures trades, however, the trade type must be reported as a type "9" and the order type must be reported as a type "B." Block option trades are subject to exchange trade matching. Block options can only match with other block options (order type "B"). BLOCKED FLEX OPTION trades must be entered by trading floor staff using the same entry terminals currently used for (non-blocked) flex options. An Order Type "B" will be entered to distinguish it as a block traded FLEX option. Block trades on flex options are restricted to Regular Trading Hours (RTH) of stock index futures, i.e., 8:30 a.m. to 3:15 p.m. weekdays. Note that block flex option trades must be reported to trading floor staff � not to the GCC � within the normal 5 minutes window. For firms that receive outbound TREX confirmation records, block futures, standard option and flex option trades will be identified as Trade Type "1" instead of "9" so that the block is not reported in bookkeeping and customer statements as an EFP. Firms that do not accept TREX confirmation records must ensure that block trades are not reported to customers as EFP trades. Q17: May block trades be given-up? A17: Yes � but with the following distinction between futures, standard options and flex options. Block futures trades may be given-up through the EFP system in the same manner as EFPs are currently given-up. Block standard option trades, however, can only be given up through the Give-Up System ("GUS") and can only be submitted as "memo-adds." This is because GUS currently does not accept trades designated as type "9." Utilizing the "memo-add" process, however, ensures that the TREX routing record to the claiming firm�s bookkeeping system will be designated as a type "1" or "6" � which is necessary so that the block standard option trade is not described as an EFP on the customer statement. Block flex option trades are not eligible to be given-up. These restrictions are technical in nature. If you have any questions, please contact Lisa Amato at (312) 338-2654. Thank you.