This Advisory Notice supersedes CME Group Market Regulation Advisory Notice RA0901-5 from February 23, 2009. RA0901-5 included a requirement that NYMEX and COMEX clearing members register certain Tag 50 IDs in the Fee System by April 1, 2009. However, given that the NYMEX Trade Management System (“TMS”) does not capture Globex Tag 50 ID information, Clearing Members will be unable to verify this information for NYMEX and COMEX products on cleared trade records until the migration to CME Clearing, at which time clearing members will be able to view and verify Tag 50 submissions for all CME, CBOT, NYMEX and COMEX products.
Clearing Members are expected to currently be in the process of populating required Tag 50 registration data via the Fee System’s Globex registration screens. While Market Regulation will monitor clearing members’ progress in this regard, it is recognized that firms will not have all the tools in place to check the accuracy of the registrations until migration to CME Clearing. Additionally, please note that NYMEX and COMEX Exchange fees do not include analysis of Tag 50 IDs at this time (which differs from the process currently in place at CME and CBOT).
The requirements of CME and CBOT Rule 576 and NYMEX/COMEX Rule 11G.576 (“Identification of Globex Terminal Operators”) are identical and apply to each of the exchanges. The rules require that each Globex operator be identified to the exchanges by the submission of a unique operator ID, also referred to as the “Tag 50 ID.” In certain circumstances detailed in this Advisory Notice, the Tag 50 ID is required to be registered in the Exchange Fee System (“Fee System”) for Globex activity occurring at any of the exchanges. All clearing members have the functionality necessary to enter required NYMEX and COMEX user data into the Fee System.
It is the responsibility of the clearing member to ensure that such Tag 50 IDs are properly registered and kept updated within the Fee System. The text of Rules 576 and 11G.576 is set forth below and an FAQ regarding the use of Tag 50 IDs in connection with Automated Trading Systems (“ATSs”) begins on page 4.
576/11G.576. IDENTIFICATION OF GLOBEX TERMINAL OPERATORS
Each Globex terminal operator shall be identified to the Exchange, in the manner prescribed by the Exchange, and shall be subject to Exchange rules. If user IDs are required to be registered with the Exchange, it is the duty of the clearing member to ensure that registration is current and accurate at all times. Each individual must use a unique user ID to access Globex. In no event may a person enter an order or permit the entry of an order by an individual using a user ID other than the individual’s own unique user ID.
Operator Identification for Manual Traders
EOS Trader and Galax-C Tag 50 IDs are issued by the Globex Control Center (“GCC”) upon submission of a signed request by a clearing member. iLink Tag 50 IDs are issued by the clearing member, the clearing member’s Independent Software Vendor or the clearing member’s client. Clearing members are responsible for ensuring that each iLink Tag 50 ID is unique at the clearing firm level, is no more than 18 bytes (characters), and that the Tag 50 ID is properly submitted with each order message.
Upon request by the Market Regulation Department (“Market Regulation”), a clearing member must be able to identify the person assigned to a particular Tag 50 ID. Clearing members must maintain historical records identifying each Tag 50 ID for five years.
A person who manually enters Globex orders should have a single Tag 50 ID for orders entered through a particular front-end system.
Each individual operator is required to enter orders using his own Tag 50 ID and may not under any circumstances permit another person to enter orders under his ID.
Operator Identification for Automated Trading Systems
An Automated Trading System, or ATS, is a system that automates the generation and routing of orders to Globex. The individual who administers and/or monitors the ATS is considered to be the ATS operator. The person in this role typically initiates or disables particular algorithms or strategies, adjusts the parameters of the automated program(s), or monitors the live trading of the ATS. All ATS orders must be submitted with a Tag 50 ID that identifies the person who operates, administers and/or monitors the ATS.
If there are multiple individuals who simultaneously work together to operate the ATS, they may qualify to be an “ATS Team” and assigned a single Tag 50 ID that represents all of individuals on the team. For example, a firm may have one person who adjusts pricing parameters, but others who continuously monitor positions or risk or adjust trading size parameters. In these situations, the individuals on the ATS Team may use a single Tag 50 ID. If registration of the Tag 50 ID is required, the individuals who comprise the ATS Team must be registered as discussed in the section on Registration Requirements.
A single Tag 50 ID may be used to represent multiple operators only in true ATS Team situations. Entities may not bundle all their ATS operators under one Tag 50 ID if certain operators are primarily responsible for different ATSs or for the same ATS on different shifts.
If an ATS operator or an ATS Team is responsible for multiple trading models, algorithms, programs, or systems which trade the same product, and which potentially could trade opposite one another, then each model, algorithm, program, or system must be assigned a unique Tag 50 ID.
Exception for Manual Traders Who Use Automated Spreading Functionality
If a trader primarily enters orders manually, but also uses automated spreading functionality, a separate Tag 50 ID is not required for the automated spreading activity as long as the use of the spreading functionality is ancillary to the trader’s manual trading. However, if the automated spreading functionality accounts for the majority of the trader’s transactions then a separate Tag 50 ID must be assigned to distinguish these transactions from the trader’s manually entered orders.
Required Registration of Tag 50 IDs
Registration of Tag 50 IDs is required for individual members, employees of individual members, all employees or contractors of a clearing or corporate member and any other party receiving preferential fees in accordance with programs offered by any of the exchanges. Additionally, irrespective of whether a party is eligible for preferential fees, Market Regulation or the GCC reserve the right to require the registration of any market participant. Such registration is typically required when the participant generates significant messaging traffic.
For the Chicago Mercantile Exchange Inc. (“CME”), the special fee categories requiring registration include CME Clearing Members, CME Corporate Equity Members, individual members, CME Rule 106.H. (“Trading Member Firm”) members, CME Rule 106.I. (“Affiliate Member Firm”) members, CME Rule 106.R. (“Electronic Corporate Member Firm”) members, CME Rule 106.S. (“Family of Funds Member Firm”) members, Asian Incentive Program (“AIP”) participants, Emerging Market Incentive Program (“EMIP”) participants and International Incentive Program (“IIP”) participants.
For the Chicago Board of Trade Inc. (“CBOT”), the special fee categories requiring registration include CBOT Clearing FCMs, CBOT Clearing Closely Held Corporate Members, CBOT Clearing Corporate Members, CBOT Sole Proprietor Clearing Members, CBOT Rule 106.H. (“Trading Member Firm”) members, including Corporate Trading Firms and Trading FCMs, CBOT Rule 106.I. (“Affiliate Member Firm”) members, CBOT Rule 106.J. (“Equity Member Firm”) members, including Equity Closely Held Corporate Member Firms, CBOT Equity Corporate Member Firms and Equity FCMs, CBOT Rule 106.R. (“Electronic Corporate Member Firm”) members, and CBOT Rule 106.S. (“Family of Funds Member Firm”) members, including Family of Funds Equity Member Firms and Family of Funds Trading Member Firms and AIP, EMIP and IIP participants.
For the New York Mercantile Exchange Inc. (“NYMEX”), the special fee categories requiring registration include Clearing Members, Corporate Equity Members, individual members and AIP, EMIP and IIP participants.
For Commodity Exchange Inc. (“COMEX”), the special fee categories requiring registration include Clearing Members, Corporate Equity Members and individual members.
When registering the Tag 50 ID for an ATS in the Fee System, there will be an ATS indicator on the fee registration screen that must be selected to identify that the Tag 50 ID represents an ATS. Each ATS operator must provide accurate and up-to-date Tag 50 ID information to his clearing member in accordance with the requirements described above. The Tag 50 ID that is registered in the Fee System must exactly match the Tag 50 ID that is submitted on CME Globex orders entered through iLink connections.
Clearing members must ensure that all Tag 50 IDs, including ATS Tag 50 IDs, which require registration are appropriately and accurately registered in the Fee System and
must promptly make any necessary updates to Tag 50 ID registrations. Failure to transmit Tag 50 IDs to Globex in accordance with this Advisory may result in disciplinary action and may also result in a reassessment of fees.
For ATS Team registrations, the Fee System allows for the input of the relevant individual registration information for each team member and also requires designation of each team member’s role. The available roles include Desk Manager/Head Trader, Trader, Risk Monitor, Trading Monitor and “Other.” If there are changes to the composition of the Team, it is the responsibility of the trading entity and the clearing member to ensure that those changes are promptly and accurately reflected in the Fee System.
The Fee System also supports the registration of persons who are not otherwise required to register if the person elects to register in the Fee System.
Frequently Asked Questions
ATS Identification, Registration and Messaging
An ATS is a system that automates the generation and routing of orders to Globex. This type of system is often referred to as a “black box.”
Yes, each ATS order must be submitted with a unique Tag 50 ID that identifies the person or persons who operate and/or administer the ATS. Further, if the operator(s) is responsible for multiple trading models, algorithms, programs, or systems which trade the same product, and which potentially could trade opposite one another, then each model, algorithm, program or system must be assigned a unique Tag 50 ID.
When two or more people work together simultaneously to operate an ATS, those individuals must use an ATS Team identifier. All individuals associated with the Team must be accurately registered in the Fee System when such registration is required. The Exchange recognizes that ATSs are still developing and that there are different models for administering these systems. If you believe that your method of administering your ATS is unique and may not fit the requirements set forth in this Advisory and FAQ, please contact Market Regulation. Market Regulation may allow for some flexibility if an arrangement can be reached which meets the needs of your business and appropriately identifies the specific individuals who operate the ATS.
No, there should be separate Tag 50 IDs for the manual orders and for the ATS orders. There is one exception as detailed in question #5 below.
Many front-end trading systems supply automated spread functionality which gives traders the ability to automate spread strategies. The exchanges do not require a separate Tag 50 ID for this activity as long as the use of the spreading software is ancillary to the trader’s manual trading. However, if the automated spreading functionality accounts for the majority of the member’s transactions, separate Tag 50 IDs must be assigned to distinguish these transactions from the manually entered orders.
6. Does the Tag 50 ID need to be unique to the clearing firm?
Yes. The clearing firm that guarantees the Globex connection must ensure that each Tag 50 ID used through its connection is unique to the individual and clearing firm and is not used by multiple parties at the firm. Additionally, Tag 50 IDs are not case sensitive and clearing members must therefore ensure that uniqueness is achieved by means other than solely modifying the letter case between different Tag 50 IDs. For example, “ABC” and “abc” would be viewed as the same Tag 50 ID.
No, the exchanges do not make any counterparty information available on trade confirmations or market data messages.
No. A single Tag 50 ID can be used to represent individuals who work together to operate an ATS during the same shift. However, if a different individual or group takes over at the shift change time, that individual or team of individuals must be represented by a different Tag 50 ID.
An ATS operator is an individual who enables, disables, adjusts or actively monitors the ATS. In this example, the person who makes the change to the system must be identified as the ATS operator in the Tag 50 ID even though the change was directed by the account owner.
If the different systems or algorithms are used in the same product, and potentially could trade opposite one another, then each system or algorithm must be assigned a unique Tag 50 ID.
There is no limit to the number of ATSs that an entity can use to trade its proprietary account. If the entity receives preferential fees in connection with the trading of a proprietary account, all ATS operators must be employees or contractors eligible to trade the proprietary account and receive the preferential fee rate.
If you have questions on the eligibility of an ATS operator to trade a proprietary account at preferential rates, please contact the Fee System Hotline at 312.648.5470 or via email at email@example.com.
There is not a specific limit to the number of ATSs that an individual can use to trade his personal account. However, if an individual member has an ATS and other individuals are operating, administering, or monitoring the ATS, each of those individuals must be identified with his own Tag 50 ID. This may have fee implications for the individual member’s activity. If you have questions about the possible fee implications, please contact the Fee System Hotline at 312.648.5470 or via email at firstname.lastname@example.org.
Each exchange requires that all ATS Tag 50 IDs be registered in the Fee System if they are individual members or employees or contractors of a member, clearing member or corporate member, or in any other preferential fee programs offered by the exchanges. As a rule of thumb, if a person is an individual member or an employee or independent contractor of an entity that will receive member or other preferential fees, the person will be in a category for which Fee System registration of the Tag 50 ID is required. Market Regulation or the GCC may also require ATS systems to register, even if registration is not otherwise required.
To register the ATS operator, clearing members must select the corresponding ATS attribute on the Fee System’s Globex Registration screen. A separate Tag 50 ID must be registered for each different model, algorithm, program, or system.
The exchanges do not generally require the registration of ATS Tag 50 IDs for individuals or entities which are not members, employees or contractors of members, or in other preferential fee programs. However, as noted above, each exchange reserves the right to require the registration of ATS operators and commonly do so if the ATS generates a large amount of messaging traffic.
The Fee System supports the registration of persons not otherwise required to be registered if the individual or entity wishes to register.
The clearing member is responsible for registering the ATS Tag 50 IDs in the Fee System. Each entity must provide accurate and up-to-date information to their clearing firm to allow for accurate entry of the information in the Fee System. All changes in personnel or entity structure that impact fee registration will require prompt updates to registration in the Fee System.
The person’s name, date of birth, country of primary address, email address and last 4 characters of the person’s tax ID or equivalent unique identification number from the person’s country of origin. If the registration is for an ATS or ATS Team, the appropriate indicators must be selected in the Fee System. Also, if the individual is a member or is in a special fee incentive program, the appropriate classifications will need to be selected in order to successfully register the Tag 50 ID in the Fee System.
Yes. Clearing members must verify that all Tag 50 IDs are appropriately and correctly registered. Incorrect Tag 50 ID data may result in disciplinary action and may also result in the reassessment of trading fees.
CME Group has a messaging policy that is administered at the clearing member level. The policy measures message quality and liquidity provided by calculating a “volume ratio.” When the volume ratio exceeds a specified threshold, the firm is issued a surcharge.
Clearing members are issued reports which show the specific users and accounts which caused the messaging surcharges and will generally pass those surcharges on to the specific client.
More detailed information on the messaging policy can be found on the CME Group web site at http://www.cmegroup.com/globex/resources/cme-globex-messaging-policy.html
ATSs are treated like any other market participant and are subject to the messaging policy that applies to all message flow other than that of registered market makers who may be subject to different volume ratio benchmarks.
Please contact Globex Account Management at GlobexAccountManagement@cmegroup.com, or 312.634.8700, or at 44-207-623-2550 in Europe.
Questions concerning this Advisory Notice may be directed to the following individuals in Market Regulation:
CME & CBOT NYMEX & COMEX
Lou Abarcar 312.341.3236 Russell Cloughen 212.299.2880
Terrence Quinn 312.435.3753 Wing Cheng 212.299.2908
James Moran 312.435.3671 Michael Cerar 212.299.2895
For assistance with fee-related questions, please contact the Fee System Hotline at 312.648.5470 or via email at email@example.com.