• Exchange Rules 930. C. Acceptable Performance Bond Deposits

      • To
      • Chief Executive Officer, Cheif Compliance Officer, Chief Financial Officer
      • From
      • Audit Department, Clearing House Division
      • #
      • 12-07
      • Notice Date
      • 25 June 2012
      • Effective Date
      • 25 June 2012
    • In a continuing effort to harmonize rules among CME, CBOT, NYMEX and COMEX and to broaden the acceptability of deposits for customers trading at multiple exchanges under CME Group Inc., the rules regarding acceptable performance bond deposits were recently amended. 
       
      For futures and options on futures, the rule amendments allow warrants, shipping certificates and warehouse receipts, registered as deliverable on commodities traded at CME, CBOT, NYMEX and COMEX to be considered acceptable performance bond deposits at all exchanges, at the account holder level. For example, a clearing member may accept COMEX warrants, registered as deliverable, to satisfy the customer’s performance bond requirements for open positions at CME, CBOT, NYMEX and COMEX. Further the valuation of such deposits was clarified within the rule.
       
      In addition, the rules were clarified regarding the acceptability of certain performance bond deposits where the account holder or an affiliate of the account holder has issued, sponsored or otherwise guaranteed such deposits.
       
      In the attached formal rule changes, additions are underlined and deletions are struck-out. The rule amendments were effective June 14, 2012.
       
      If you have any questions, please call the Audit Department at (312) 930‑3230.
       
       
       
       
       
       


       
      CME, CBOT and NYMEX Rulebooks
       
      Chapter 9. CLEARING MEMBERS
       
      CME Rulebook
       
      Rule 930.C ACCEPTABLE PERFORMANCE BOND DEPOSITS
       
      1. Non-Security Futures and OTC Derivatives
       
      Clearing members may accept from their account holders as performance bond cash currencies of any denomination, readily marketable securities (as defined by SEC Rule 15c3-1(c)(11) and applicable SEC interpretations), money market mutual funds allowable under CFTC Regulation 1.25, bank–issued letters of credit, warrants, warehouse receipts and shipping certificates that are registered as deliverable for commodities traded on Chicago Mercantile Exchange Inc., Chicago Board of Trade Inc., New York Mercantile Exchange, Inc. or Commodity Exchange, Inc., and "London Good Delivery" gold, as defined by the London Bullion Market Association.
       
      Clearing members shall not accept as performance bond from an account holder securities that have been issued, sponsored or otherwise guaranteed by the account holder or an affiliate of the account holder unless the clearing member files a petition with and receives permission from Clearing House staff.
       
      Bank-issued letters of credit must be in a form acceptable to the Clearing House. Such letters of credit must be drawable in the United States. Clearing members shall not accept as performance bond from an account holder letters of credit issued by the account holder, an affiliate of the account holder, the clearing member, or an affiliate of the clearing member.
       
      All assets deposited by account holders to meet performance bond requirements must be and remain unencumbered by third party claims against the depositing account holder.
       
      Except to the extent that Clearing House staff shall prescribe otherwise, cash currency performance bond deposits shall be valued at market value. All other performance bond deposits other than letters of credit, warrants, warehouse receipts and shipping certificates shall be valued at an amount not to exceed market value less applicable haircuts as set forth in SEC Rule 240.15c3-1. Warrants, warehouse receipts and shipping certificates shall be valued at an amount not to exceed the market value of the commodities represented by the warrants, warehouse receipts or shipping certificates, less a deduction in the same amount as the inventory haircut specified in Commission Regulation 1.17(c)(5)(ii).
       
      2. Security Futures
       
      a. Clearing Members may accept from their Customers as performance bond (or “margin”) for Security Futures held in a futures account, deposits of cash, margin securities (subject to the limitations set forth in the following sentence), exempted securities, any other assets permitted under Regulation T of the Board of Governors of the Federal Reserve System (as in effect from time to time) to satisfy a performance bond deficiency in a securities margin account, and any combination of the foregoing, each as valued in accordance with CFTC Regulations 41.46(c) and 41.46(e); and, SEC Regulations 242.404(c) and 242.404(e). Shares of a money market mutual fund that meet the requirements of CFTC Regulation 1.25 may be accepted as a performance bond deposit from a Customer for purposes of this Rule.
       
      b. A Clearing Member shall not accept as performance bond from any Customer securities that have been issued by such Customer or an Affiliate of such Customer unless such Clearing Member files a petition with and receives permission from the Exchange for such purpose.
       
      c. All assets deposited by a Customer to meet performance bond requirements must be and remain unencumbered by third party claims against the depositing Customer.
       
       
      CBOT Rulebook
       
      Rule 930.C ACCEPTABLE PERFORMANCE BOND DEPOSITS
       
      Clearing members may accept from their account holders as performance bond cash currencies of any denomination, readily marketable securities (as defined by SEC Rule 15c3-1(c)(11) and applicable SEC interpretations), money market mutual funds allowable under CFTC Regulation 1.25, bank–issued letters of credit, deliverable warrants, warehouse receipts and shipping certificates that are registered as deliverable for commodities traded on Chicago Mercantile Exchange Inc., Chicago Board of Trade Inc., New York Mercantile Exchange, Inc. or Commodity Exchange, Inc., and "London Good Delivery" gold, as defined by the London Bullion Market Association.
       
      Clearing members shall not accept as performance bond from an account holder securities that have been issued, sponsored or otherwise guaranteed by the account holder or an affiliate of the account holder unless the clearing member files a petition with and receives permission from Clearing House staff.
       
      Bank-issued letters of credit must be in a form acceptable to the Clearing House. Such letters of credit must be drawable in the United States. Clearing members shall not accept as performance bond from an account holder letters of credit issued by the account holder, an affiliate of the account holder, the clearing member, or an affiliate of the clearing member.
       
      All assets deposited by account holders to meet performance bond requirements must be and remain unencumbered by third party claims against the depositing account holder.
       
      Except to the extent that Clearing House staff shall prescribe otherwise, cash currency performance bond deposits shall be valued at market value. All other performance bond deposits other than letters of credit, warrants, warehouse receipts and shipping certificates shall be valued at an amount not to exceed market value less applicable haircuts as set forth in SEC Rule 240.15c3-1. Warrants, warehouse receipts and shipping certificates shall be valued at an amount not to exceed the market value of the commodities represented by the warrants, warehouse receipts or shipping certificates, less a deduction in the same amount as the inventory haircut specified in Commission Regulation 1.17(c)(5)(ii).
       


      NYMEX Rulebook
       
      Rule 930.C ACCEPTABLE PERFORMANCE BOND DEPOSITS
       
      Clearing members may accept from their account holders as performance bond cash currencies of any denomination, readily marketable securities (as defined by SEC Rule 15c3-1(c)(11) and applicable SEC interpretations), money market mutual funds allowable under CFTC Regulation 1.25, bank–issued letters of credit, deliverable warrants, warehouse receipts and shipping certificates that are registered as deliverable for commodities traded on Chicago Mercantile Exchange Inc., Chicago Board of Trade Inc., New York Mercantile Exchange, Inc. or Commodity Exchange, Inc. the Exchange provided that such receipts will be valued as margin as no more than 75% of the value of the commodity, and "London Good Delivery" gold, as defined by the London Bullion Market Association.
       
      Clearing members shall not accept as performance bond from an account holder securities that have been issued, sponsored or otherwise guaranteed by the account holder or an affiliate of the account holder unless the clearing member files a petition with and receives permission from Clearing House staff.
       
      Bank-issued letters of credit must be in a form acceptable to the Clearing House. Such letters of credit must be drawable in the United States. Clearing members shall not accept as performance bond from an account holder letters of credit issued by the account holder, an affiliate of the account holder, the clearing member, or an affiliate of the clearing member.
       
      All assets deposited by account holders to meet performance bond requirements must be and remain unencumbered by third party claims against the depositing account holder.
       
      Except to the extent that Clearing House staff shall prescribe otherwise, cash currency performance bond deposits shall be valued at market value. All other performance bond deposits other than letters of credit, warrants, warehouse receipts and shipping certificates shall be valued at an amount not to exceed market value less applicable haircuts as set forth in SEC Rule 240.15c3-1. Warrants, warehouse receipts and shipping certificates shall be valued at an amount not to exceed the market value of the commodities represented by the warrants, warehouse receipts or shipping certificates, less a deduction in the same amount as the inventory haircut specified in Commission Regulation 1.17(c)(5)(ii).

       

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