Accurate Submission of Customer Type Indicator (CTI) Codes and New Regulatory Portal for Clearing Firms to monitor CTI Code

This Advisory Notice is being issued to inform the marketplace of revisions to Rule 536.D. (“Customer Type Indicator (CTI) Codes”) which clarify that privately negotiated transactions executed as block trades pursuant to Rule 526 (“Block Trades”) or EFRP transactions executed pursuant to Rule 538 (“Exchange for Related Positions”) are subject to accurate Customer Type Indicator (“CTI”) Code reporting by clearing member firms.  The text of revised Rule 536.D. is printed below.

As a reminder, carrying firms must ensure that all give-up trades accepted by the firm contain the correct CTI code by the end of the trading day.  In circumstances where an executing firm knows or is apprised of account ownership at order receipt time, the executing firm is also expected to submit the correct CTI code on the original execution record.  In a give-up scenario wherein the executing firm does not know the account ownership of a trade intended to be given up to another firm, the executing firm should submit a CTI code 4 on the execution record.  In this circumstance, the carrying firm must ensure that the correct CTI code appears on the trade by the end of the trading day.

For give-up trades where the execution information is submitted to the Exchange by a party other than the executing firm that party is expected to submit the correct CTI code on the original execution record where such party knows or is apprised of account ownership at the time the trade is being submitted.  If the party does not know the account ownership of a trade intended to be given up, then the party should submit a CTI code 4 on the execution record.  In this circumstance, the carrying firm must ensure that the correct CTI code appears on the trade by the end of the trading day.

Additionally, Market Regulation is pleased to announce the release of new functionality within the Firm Regulatory Portal that will provide CME, CBOT, NYMEX and COMEX clearing member firms with the ability to monitor the accuracy of the CTI codes on transactions of the clearing member.  

Firm Regulatory Portal

Clearing member firms are now able to access CTI Code Reports within the Firm Regulatory Portal.  Clearing member firms have the ability to generate daily and monthly summary reports, and account level detailed reports, regarding the submission of inaccurate CTI codes for electronic, pit and ex-pit transactions submitted by that clearing firm.

The Firm Regulatory Portal can be accessed using a registered SMART Click ID. To register for a SMART Click ID, complete the SMART Click Registration Form.  For further instruction please consult the SMART Click Registration Guide.
 
To request Firm Regulatory Portal access, please send an email with your SMART Click ID to
CTIAccessRequest@cmegroup.com.


Detailed instructions concerning navigating and generating CTI Code reports are included in a manual that can be accessed under the ‘Help’ menu once logged in to the Firm Regulatory Portal.

Questions regarding this Advisory Notice may be directed to the following individuals in CME Group Market Regulation:
    
Terrence Quinn, Manager, Data Investigations, 312.435.3753
Jeffrey Nierman, Data Investigator, 312.341.3195
Andrew Carr, Data Investigator, 312.435.3610

CME Rule 536.D. Customer Type Indicator (CTI) Codes
Each clearing member must identify each transaction 1) executed on the trading floor, 2) executed on the Globex platform or 3) privately negotiated as a block trade pursuant to Rule 526 or an EFRP pursuant to Rule 538 on the record of the transaction submitted to the Exchange with the correct customer type indicator (CTI) code. The CTI codes are as follows:
CTI 1: Electronic Trading, Open Outcry and Privately Negotiated – Applies to transactions initiated and executed by an individual member for his own account, for an account he controls, or for an account in which he has an ownership or financial interest. However, transactions initiated and executed by a member for the proprietary account of a member firm must be designated as CTI 2 transactions.
CTI 2: Electronic Trading, Open Outcry and Privately Negotiated – Applies to orders entered or trades executed for the proprietary accounts of a member firm, including Rule 106.H., I., N., R. and S. firms.
CTI 3: Electronic Trading – Applies to orders entered by a member or a nonmember terminal operator for the account of another individual member or an account controlled by such other individual member.
CTI 3: Open Outcry and Privately Negotiated – Applies to orders that a member executes on behalf of another individual member, or for an account such other member controls or in which such other member has an ownership or financial interest.
CTI 4: Electronic Trading, Open Outcry and Privately Negotiated – Applies to all orders and transactions not included in CTI categories 1, 2 or 3. These typically are orders entered by or on behalf of nonmember entities.

CBOT Rule 536.D. Customer Type Indicator (CTI) Codes
Each clearing member must identify each transaction 1) executed on the trading floor, 2) executed on the Globex platform or 3) privately negotiated as a block trade pursuant to Rule 526 or an EFRP pursuant to Rule 538 on the record of the transaction submitted to the Exchange with the correct customer type indicator (CTI) code. The CTI codes are as follows:
CTI 1: Electronic Trading, Open Outcry and Privately Negotiated – Applies to transactions initiated and executed by an individual member for his own account, for an account he controls, or for an account in which he has an ownership or financial interest. However, transactions initiated and executed by a member for the proprietary account of a member firm must be designated as CTI 2 transactions.
CTI 2: Electronic Trading, Open Outcry and Privately Negotiated – Applies to orders entered or trades executed for the proprietary accounts of a member firm, including Rule 106.H., I., J., R. and S. firms.  
CTI 3: Electronic Trading – Applies to orders entered by a member or a nonmember terminal operator for the account of another individual member or an account controlled by such other individual member.
CTI 3: Open Outcry and Privately Negotiated – Applies to orders that a member executes on behalf of another individual member, or for an account such other member controls or in which such other member has an ownership or financial interest.
CTI 4: Electronic Trading, Open Outcry and Privately Negotiated – Applies to all orders and transactions not included in CTI categories 1, 2 or 3. These typically are orders entered by or on behalf of nonmember entities.

NYMEX Rule 536.D. Customer Type Indicator (CTI) Codes
Each clearing member must identify each transaction 1) executed on the trading floor, 2) executed on the Globex platform or 3) privately negotiated as a block trade pursuant to Rule 526 or an EFRP pursuant to Rule 538 on the record of the transaction submitted to the Exchange with the correct customer type indicator (CTI) code. The CTI codes are as follows:
CTI 1: Electronic Trading, Open Outcry and Privately Negotiated – Applies to transactions initiated and executed by an individual member for his own account, for an account he controls, or for an account in which he has an ownership or financial interest. However, transactions initiated and executed by a member for the proprietary account of a member firm must be designated as CTI 2 transactions.
CTI 2: Electronic Trading, Open Outcry and Privately Negotiated – Applies to orders entered or trades executed for the proprietary accounts of a member firm.
CTI 3: Electronic Trading – Applies to orders entered by a member or a nonmember terminal operator for the account of another individual member or an account controlled by such other individual member.
CTI 3: Open Outcry and Privately Negotiated – Applies to orders that a member executes on behalf of another individual member, or for an account such other member controls or in which such other member has an ownership or financial interest.
CTI 4: Electronic Trading Open Outcry and Privately Negotiated – Applies to all orders and transactions not included in CTI categories 1, 2 or 3. These typically are orders entered by or on behalf of nonmember entities.