As a reminder,
the following policy is in effect for trading in the Treasury and Swap futures pit. Failure to adhere to this policy may result in the
issuance of charges for violation of Rule 514 (“Trading Infractions”), which will be heard by a
Panel of the Floor Conduct Committee. A Panel may impose fines of up to $10,000 per
offense, or in the case of an egregious violation, may impose fines of up to $20,000 per offense. Further, the Market Regulation Department may refer
particularly egregious matters to the Probable Cause Committee.
The policy is
described below:
1. Members
located outside of the designated section for trading a specific product may trade against bids and
offers
initiated from within the appropriate section of the pit.
Members
located outside of the designated section for trading a specific product may bid or offer in
response to a request for quote that originates from within the appropriate section of the pit and
may subsequently consummate a trade.
For example, a
bid/offer or a request for quote in the Ten-Year Note contract must originate in the Ten-Year Note
section of the pit
(except as provided for in Section 2 below);
however, individuals located in any section of the pit may hit a bid, lift an offer or respond to a
request for quote that originated in the Ten-Year Note section of the pit.
2. Members
located outside of the designated section for trading a specific product may request a market in
products trading outside of their section. However, in order to trade opposite bids or offers
received in response to the request, the member requesting the bid or offer must move to the
designated section of the pit in order to execute a trade.
For example,
an individual in the Ten-Year section of the pit may request a market in the Five-Year contract. In order to trade opposite any bids or offers
received in response to the request for a market, the individual in the Ten-Year section of the pit
must subsequently move to the Five-Year section of the pit in order to execute a trade.
Please be
advised that a broker who asks another individual to request a market in a product outside of their
designated section and then executes brokerage opposite bids and offers made in response to that
request for a market without moving to the designated section will be charged with a violation of
Rule 514. Further, any other similar attempts to circumvent
this policy will result in charges being issued pursuant to Rule 514.
This policy
applies to outright orders, calendar spreads and intermarket spreads. The intermarket spread locations are as
follows:
SPREAD
ORIGINATING LOCATION
2-Year
Note/T-Bond
2-Year Note section
2-Year
Note/10-Year Note
2-Year Note section
2-Year
Note/5-Year Note
2-Year Note section
5-Year
Note/T-Bond
5-Year Note section
5-Year
Note/10-Year Note
5-Year Note section
10-Year
Note/T-Bond
10-Year Note section
10-Year
Note/T-Bond Tandem
10-Year Note section
SPREAD
ORIGINATING LOCATION
5/10/30-Year
Swaps/T-Bonds
Swaps section
5/10/30-Year
Swaps/10-Year Notes
Swaps section
5/10/30-Year
Swaps/5-Year Notes
Swaps section
5/10/30-Year
Swaps/2-Year Notes
Swaps section
Any
multi-legged spreads involving the yield curve that are not specified above
must originate from the section of the pit in which the product at the shortest end of the
yield curve involved in the spread is traded.
Members are
reminded to ensure that all trades are promptly and accurately reported to the market reporters and
checked with the opposing party.
Questions
regarding this notice may be directed to the following contacts in Market Regulation:
Jennifer
Baum, Associate Director 312.341.3124
Market
Regulation Hotline
312.930.3333
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