Revisions to CME Rule 20102.D. ("Random Length Lumber Futures Call - Daily Price Limits")

CME plans to adopt revisions to CME Rule 20102.D. (“Random Length Lumber Futures Call – Daily Price Limits”) that will modify the circumstances under which daily price limits would be expanded in CME Random Length Lumber (“Lumber”) futures.  The revisions are in connection with the adoption of a modification to the manner in which settlement prices are determined in Lumber futures that are scheduled to take effect on August 15, 2011. 

Under the proposed revisions to CME Rule 20102.D., if the contract subject to a daily price limit is quoted at the limit bid or limit offer as the last price in the designated settlement period on CME Globex or via open outcry for two successive days, the price limit will be expanded.  For example, a limit bid on CME Globex on the first day and a limit bid in open outcry on the second day would result in price limits being expanded.

The revisions to CME Rule 20102.D. have been self-certified by CME with the Commodity Futures Trading Commission (“Commission”) and will become effective on August 15, 2011, unless stayed by the Commission.

Additional information on the revised settlement price methodology for Lumber futures is set forth in today’s release of CME Group Special Executive Report S-5870.

The revisions to Rule 20102.D. are set forth below, with additions underscored and deletions overstruck.

Chapter 201 – Random Length Lumber Futures

Rule 20102. FUTURES CALL                                                                                                                                                                 

20102.D. Daily Price Limits

There shall be no price limit in the spot month.

There shall be a daily price limit of $10.00 per thousand board feet above or below the previous day's settlement price.

If the contract nearest to expiration that is subject to a daily limit is quoted at the limit bid or limit offer as the last price in the designated settlement period, without regard to CME trading venue, settles on the limit bid for two successive days or on the limit offer for two successive days, then the price limit shall be raised to $15.00 per thousand board feet for all contracts subject to a daily limit.

UnlessIf the contract nearest to expiration that is subject to a daily price limit of $15.00 is quoted at the limit bid or limit offer as the last price in the designated settlement period, without regard to CME trading venuedoes not settle at a limit bid or limit offer, and without regard to market direction, the price limits shall revert to $10.00 per thousand board feet on the next business day.

Questions regarding this Special Executive Report may be directed to Jack Cook, Associate Director, Commodity Research & Product Development, at 312.930.3295.

For media inquiries concerning this Special Executive Report, please contact CME Group Corporate Communications at 312.930.3434 or news@cmegroup.com.