A number of members have called with questions about the recordkeeping requirements for flashed orders between a member trading for himself at a GLOBEX®2 terminal and the pit.  CME Rule 536.D (“Member Trading for Another Member on Trading Floor or for Account Controlled by Such other Member”) generally requires that when one member gives another a verbal or hand signaled order, the member giving the order must immediately write the order instructions and the time the order was placed on his next sequenced card.  However, the rule provides an exception to this requirement for those members who personally execute one or more legs of their spreads and give verbal orders to other members for the remaining leg(s).

The Division has applied the exception to the recording requirements for members engaged in arbitrage between the E-Mini and a related pit traded contract.  Accordingly, when a member, trading for his or her own account enters an order on GLOBEX2, and then flashes the offset to the pit, that member does not need to record an instruction on a sequenced card.  The same would apply for a member in a pit who flashes an arbitrage/offset to another member (or employee thereof) at a screen.  Members who flash outright orders to the pit or screen without doing a corresponding arbitrage type activity, must record the flashed order instruction on a sequenced card.                                                                                                         

In all cases, the pit broker filling a verbal order must record the time of execution to the nearest minute on the card on which he has endorsed the fill. The screen-based broker who enters the order immediately does not have to record the order; however, GLOBEX2 orders not immediately entered must be written and timestamped in accord with Rule 571. 

If you have any questions concerning the above, please contact Richard Gustafson, Manager, Regulatory Programs at (312) 930-8512.