Chicago Mercantile Exchange Inc. (“CME^®”) Rule 530 (“Priority of Customers’ Orders”) prohibits members from buying (selling) for accounts they own or in which they have a financial interest when they are in possession of an executable buy (sell) order for pit execution for another person and prohibits any person from trading for an account such person owns or controls (on either side of the market) when they are in possession of an order specified for entry on the CME^® Globex^® electronic trading platform which the platform is capable of accepting.  Please be reminded that the prohibition in Rule 530 applies to all fungible or related products and applies regardless of the venue of execution.  A copy of CME Rule 530 is printed on the back of this advisory.

For example, it would be impermissible for a floor broker who receives an executable order (a market order or other contingent order that is able to be executed such as a limit order where the market has reached the limit price) to buy NASDAQ-100 Index^® futures (“ND”) to trade or place an order to buy any pit-traded or CME Globex-traded contract (including, but not limited to, ND or E-mini™ Nasdaq-100 Index futures) for his own account or any account in which he has a financial interest prior to the execution of the customer order.  In this example, the prohibition would apply regardless of whether the broker executed the order in the pit himself, handed it off to another pit broker for execution, or transmitted the order to a CME Globex terminal operator for electronic execution. 

Additionally, no person may enter an order into the CME Globex electronic trading platform for an account such person owns, controls, or in which such person has a financial interest when such person is in possession of any order (without regard to either the product or the side of the market) for another person that is capable of being entered on the platform until such order has been entered, except as provided in Rule 539.C. (“Prearranged, Pre-Negotiated and Noncompetitive Trades Prohibited – Pre-Execution Discussions Regarding GLOBEX Trades”).

If you have any questions concerning this advisory, please contact Eric Wolff, Managing Director, Regulatory Affairs, at 312.930.3255, James Moran, Director, Market Regulation Department, at 312.930.8520, or Robert Sniegowski, Associate Director, Market Regulation Department, at 312.648.5493.

RULE 530.      PRIORITY OF CUSTOMERS' ORDERS

A member shall not buy a futures contract, buy a call option or sell a put option for his own account or for an account in which he has a direct or indirect financial interest, when he is in possession of any executable order to buy a futures contract, buy a call option or sell a put option for another.

A member shall not sell a futures contract, sell a call option or buy a put option for his own account or for an account in which he has a direct or indirect financial interest, when he is in possession of any executable order to sell a futures contract, sell a call option or buy a put option for another.

A member shall not trade with discretion or execute a discretionary order, including, without limitation, an order allowing the member discretion as to time and price when he is in possession of any executable customer order on the same side of the market.

A member may trade for his own account without violating this rule while holding a DRT order provided the customer has previously consented in writing and evidence of such general consent is indicated on the order with the “WP” (with permission) designation.  In the case of a floor broker holding an order open as to time and price for an account described in Rule 547, the "WP" designation on such order shall constitute sufficient prior written consent.

No person shall enter an order into the GLOBEX platform for his own account, an account in which he has a direct or indirect financial interest or an account over which he has discretion, including, without limitation, an order allowing discretion as to time and price, when such person is in possession of any order for another person that the GLOBEX platform is capable of accepting except as provided in Rule 539.C.

Violation of this rule shall be a major offense.