Coming Summer of 2005: Enhanced Electronic Options

CME® will be implementing several enhancements to CME® Globex® to support upcoming options trading initiatives during the summer of 2005.

Options trading at CME employ two different market models. Equity and FX options utilize streaming, actionable quotes directly from designated Market Makers. To enhance Equity and FX options trading, CME is introducing mass quoting functionality in the summer of 2005, with enhanced market maker protections added in the fall.

CME Globex Eurodollar options employ a hybrid market model combining streaming, actionable quotes and streaming, indicative quotes from designated Market Makers. Under this hybrid model, Eurodollar options market makers provide continuous actionable quotes for outrights and continuous indicative quotes for more than 80,000 unique spreads. Upon viewing the streaming indicative quotes for complex spreads, customers send RFQs to request actionable quotes from designated Market Makers. Previously, the Enhanced Options System for Eurodollar options was accessible only via the CME provided front end; in the summer 2005 release, customers will now be able to access these contracts via CME iLink 2.0 and view indicative quotes via the MD API.

Release 1: New Mass Quote Functionality: July 2005

The new Mass Quoting functionality will allow CME-approved Market Makers (for Equity and FX markets) to submit single, multiple and two-sided quotes during a regular trading session.

Release 2: CME Eurodollar Options Functionality Available via iLink and MD API: late July 2005

Access to CME Eurodollar Options was previously only available via the Enhanced Options System (EOS). With this release customers will now be able to access these contracts via CME iLink 2.0. Indicative quotes will be disseminated via MD API 2.x and MDN with a new Indicative Price Message Type (MX).

The Fall 2005 release will provide added risk protection functionality for Market Makers who use Mass Quote functionality (Equity and FX options only).

The addition of a new Indicative Price Message Type (MX), opening up EOS to customers via iLink 2.0 and MD API, and the addition of Mass Quote functionality and enhanced risk protection for Market Makers all imply that Market Data Distributors need to be prepared to handle a surge in message traffic due to increased options trading and bid/ask volume.

In conjunction with and in preparation for the anticipated rise in options trading activity, CME network engineers are currently re-evaluating minimum bandwidth requirements. Consequently, new minimum bandwidth requirements will be forthcoming. We will advise you of these new requirements as soon as possible.