The Exchange has received questions recently regarding the permissibility of using “suspense accounts” in lieu of actual account numbers when entering orders into CME® Globex®, and the method by which floor brokers could relay customer orders to CME Globex terminal operators when requested to do so by the customer.  The following procedures define the permissible use of suspense accounts in CME Globex order entry and provide guidelines to allow a desk or floor broker to relay a customer’s order to a terminal operator, and allow that terminal operator to enter the order using a suspense account.

Suspense Accounts

Use of suspense accounts is acceptable for clearing firms, for execution operations that give-up orders to other clearing firms, and for entry of bunched orders by Eligible Account Managers which are to be allocated in accordance with CFTC Regulation 1.35(a-1)(5) and NFA’s Interpretive Notice related to Compliance Rule 2-10.  While orders which are immediately entered into CME Globex upon receipt do not require other documentation as long as the specific account number is entered into CME Globex at the time of order entry, clearing firms are reminded that whenever suspense accounts are used on an order input into CME Globex, the firm must create a contemporaneous written and timestamped record of the order bearing the correct account designation.  Additionally, by the end of the trading day, the ultimate customer account designation must be entered into the clearing system.

Procedures to be followed for Relay of Customer Orders to CME Globex Terminal Operators

In CME products in which there are active side-by-side pit and electronic markets, non-member customers are increasingly requesting that desks or floor brokers use their expertise to determine the venue of execution.  In these circumstances, a customer’s order may be relayed to a CME Globex terminal operator for entry into CME Globex by the firm or its floor broker.  If the customer specific account number is communicated to and entered into CME Globex at the time of original order entry, or if clearing firm personnel enter the order into CME Globex immediately, there are no additional recordkeeping requirements.  However, when there is a relay and a customer-specific account number is not communicated to the terminal operator, the following procedures must be followed.

1. The clearing firm initially receiving the order must continue to create a written and timestamped record of the customer’s order which must include all the required information: price, quantity, commodity, contract month, account number, and for options, the strike price, and a “put” or “call,” designation.
2. If the floor broker fills the order or any part of the order in the pit, he must record the transactions on a card or order in the usual fashion, with all the required information.
3. If the desk or the floor broker decides to relay the order or any part of the order to another party for entry into CME Globex, they shall make a written record of the order communicated (e.g. B 100 EDH5 at 50), the house number for which the execution is being done, the acronym or name of the person to whom the order is being communicated (this will likely be a person in the pit on a headset, or a terminal operator), and the time of the communication to the nearest minute.  A copy of this record—which should clearly denote that it is a record of a CME Globex order execution—must be returned to and/or retained by the executing clearing firm.  The firm should attach a copy of this record to the written order ticket.  
4. If a headset is used to communicate the order to a terminal operator, the person on the headset will be considered to have received and processed a customer order.  Also, it is required that every headset holder ensure that he has filed an up-to-date headset application with the CME Telecommunications Department (312.648.3648) that identifies the intended use of the headset.   Further, any changes in the headset usage must be updated with CME Telecommunications. 
5. The terminal operator or execution group that receives the customer order for input into CME Globex must input a GUS suspense give-up account number that will specifically identify the broker or broker group and the clearing firm for which the order is executed. 
6. The carrying clearing firm must input the customer-specific account number into the give-up system when claiming the trade.  The trade must be claimed within the submission guidelines of the Clearing House. 
7. Entities providing execution services should have the appropriate give-up agreements and arrangements in place with the carrying clearing firms. 

Should you have any questions on this procedure or other recordkeeping rules, please contact one of the trading floor investigators, or any of the following individuals in the Market Regulation Department:  Jim Moran (312.930.8520), Bob Sniegowski (312.648.5493), or Eric Wolff (312.930.3255).