Identification and Registration of Globex Operator IDs (Tag 50 IDs)

This Advisory Notice supersedes CME & CBOT Market Regulation Advisory Notice RA0810-3 from May 16, 2008, and is being reissued to clarify that 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.” Additionally, 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. With respect to NYMEX and COMEX, the need to register the Tag 50 IDs in the Fee System is a new requirement. NYMEX and COMEX clearing members now have the functionality to enter required NYMEX and COMEX user data into the Fee System and must comply with this new requirement by April 1, 2009.

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

General Information

      1. What is an Automated Trading System (“ATS”)?

          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.”

      2. Does each exchange require a Tag 50 ID to be submitted for each ATS

          order?

          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.

      3. How do I identify Tag 50 IDs when more than one individual is administering

          or monitoring the operation of the ATS at the same time?

          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.

      4. If a trader enters manual orders, but also has an ATS, can all of the trader’s

          orders be entered under a single Tag 50 ID?

          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.

      5. Under what circumstances may a trader use a single Tag 50 ID for the entry

          of both manual and automated orders?

          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

          CME Group RA0901-5 February 23, 2009 Page 5 of 7

          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.

        7. Is the Tag 50 ID submitted on an order visible to other market participants?

            No, the exchanges do not make any counterparty information available on trade

            confirmations or market data messages.

        8. If there are multiple shifts of people that operate an ATS around the clock,

            can one Tag 50 ID be used for all these individuals?

            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.

         9. If an ATS administrator/monitor (employee, clerk, programmer) initiates,

             disables or adjusts an ATS at the request of an account owner or an

             account controller acting with discretion, who should be identified in the

             Tag 50 ID as the ATS operator?

             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.

         10. How does Tag 50 ID assignment and registration work if one operator or

               one team of operators administers multiple ATS systems or multiple ATS

               algorithms?

               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.

         11. Is there a limit on the number of ATSs an entity may have?

               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 efsadmin@cmegroup.com.

           12. Is there a limit on the number of ATSs one individual may have?

                 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 efsadmin@cmegroup.com.

ATS Registration

           13. When does each exchange require registration of Tag 50 IDs for ATSs?

                 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.

            14. If the ATS is operated by a person who is not eligible for preferential

                  fees, does the Tag 50 ID of the ATS operator still need to be registered

                  with the Exchange?

                  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.

             15. How do I register the Tag 50 ID of the ATS operator?

                   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.

             16. What information is required when registering a Tag 50 ID?

                   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.

              17. If a Tag 50 ID of an ATS operator is currently registered, but is not

                    identified as an ATS, do I need to re-register or edit the Tag 50 ID

                    registration?

                    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.

ATS Messaging

              18. How do the exchanges monitor, measure, and control the amount of

                    messaging submitted to Globex?

                    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

               19. How does the messaging policy apply to ATSs?

                     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.

               20. Who do I call for more information on the Messaging Policy?

                     Please contact Globex Account Management at

                     GlobexAccountManagement@cmegroup.com, or 312.634.8700, or at     

                     44-207-623-2550 in Europe.

Questions regarding this Advisory 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

Fee-related questions should be directed to the Fee System Hotline at 312.648.5470 or via email at efsadmin@cmegroup.com.