Managing Trades

Use the Trade form (Add Deal) to submit OTC Options and Future Deals for various strategies, including custom deals.

 

Note: The form is not used to submit orders for options into a market, but rather to submit a completed deal for clearing.

 

  1. To display a Trade form:

From the Strategies Grid or other applicable view, right-click a row, and select Add Deal,

-Or-

From the Trade Book or other applicable view, click the Add Deal button .

Note: Depending on how you access the form, fields will populate automatically. For example, when accessing the form via the Trade Book, only the Broker fields will populate until you select a Product. From the Trading Grid, fields auto-populate based on the Product and Term of the row you select.

 

Adding a Deal

The following procedure illustrates adding a deal to a Trade form without any pre-populated fields.

  1. To add a new deal:
  2. Click the Add Deal button from any applicable window, and a blank Trade form appears.
  3. In the Product field, select a product from the list or type a product name or code directly in the field.

Note: When typing a product name, a list of matching products displays as you type.

After selecting a product, several fields automatically populate.

  1. In the top section of the form, complete the following fields as needed:

  • Strategy - Includes pre-defined strategies such as None (Outright), Period Spread, Butterfly, Future Condor, and Custom Future.

The Legs pane updates automatically based on the selected strategy. In the example below, the user selected a Vertical Call Spread.

  • Trade Type - Displays trade types based on product and clearing house.

Based on the Product you selected, the Trade Type field populates automatically with the available options. For example, the available trade types for 3.5% FO Fob Rdam Bgs (UV) are Block and EFS.

  • Term(s) - Defaults to the nearest term to maturity. When adding a spread, the second term defaults to one month following the first term.

Note: Options strategies can also be stripped across a series of terms (e.g. a Q1 Call would be a strategy that includes a Jan Call, Feb Call, and March Call).

  • Price/Quantity - The behavior of the Price and Quantity fields depends on the product you select. The illustrations below show price differences when UV and 1N are selected.

3.5% FO Fob Rdam Bgs (UV):

Sing Mogas 92 (1N):
  • Clearing - Defines the clearing house for the trade.
  • Strike(s) - Defines the Option strike price.
  • Ratio - The price ratio.
  • Ref - The Reference price for a strike. Typically the At the Market (ATM) price.
  • Delta - Change in price ratio. Can be + or - depending on the type of option.
  1. Use the Add buttons to add additional Call, Put, or Hedge legs.

  1. Complete the Leg fields as needed. For a detailed explanation of Legs, refer to Managing Trade Legs.
  2. Complete Buyer and Seller fields as detailed below.
  3. To require the approval of information on the trade entry form before it is sent to clearing, click to enable Requires Affirmation.

Note: Trade affirmation is often requested by Brokers when a trade is manually entered.

A post clearing status displays for all trades that do not require affirmation. Trades that require affirmation can only progress to display a post-clearing status once the trade has been affirmed on both sides and sent to clearing.

Pending deals can be affirmed using the button on the Trade Book's toolbar, or by editing the trade ticket directly and clicking the Affirmed checkbox.

  1. To add an additional deal, click to enable Add Another.

A new Add Deal Trade form appears once the current form is saved or submitted, and remains populated with details from the last trade entered, which allows for quick trade entry of multiple trades for the same counterparties (or product).

  1. Click Pre-confirm.
  2. To store a form without submitting, click Save Draft, or press the F5 key.
  3. Click Submit to Clearing, or press the F12 key.

 

Buyer and Seller

The Add Deal Trade form includes fields for Buyer and Seller information. Complete these fields prior to submitting the form to clearing.

The Buyer and Seller fields include lists of traders, brokers, and accounts separated into the following categories:

  • Recent - Lists the most recent buyers/sellers of deals
  • Favourite - Lists buyers/sellers included in your Favourite Traders.
  • Other - Lists all applicable buyers/sellers who are not recent for favourites.

Note: Type directly in a field, and the list filters as you type.

After selecting a Buyer or Seller, the form defaults automatically to the last trade made with that Buyer/Seller.

Complete the following fields as needed:

  • Buyer/Seller - Select from a list of Traders with whom the Broker adding the deal has a relationship.
  • Account - The account associated with the selected Trader.
  • Broker - The Broker adding the deal.
  • Company - Allows Brokers to specify an entity reference when recording a trade for the Broker companies.
  • Aggressor - The one who aggressed the deal.

 

Managing Trade Legs

CME Direct includes pre-defined strategies such as None (Outright), Period Spread, Butterfly, Future Condor, and Custom Future. Based on the strategy you select, the Legs pane adjusts accordingly. For example, an Outright strategy displays a single leg.

A Period Spread displays multiple legs.

 

Leg Pricing

The Leg Price tool auto-populates leg prices for a multi-legged CME ClearPort deal submission. Legs price based on the strategy value and can be updated by a user prior to submission.

 

Reversing Over/Premium Leg

The Trade Entry form allows you to reverse the direction of all option legs for a strategy by changing the Over/Premium Leg. By specifying the premium leg, via the Over field, users can avoid the confusion created when for example, that user negotiates a deal "to the 2", but must book the deal "to the 1" and then reverse the counterparties (rather than just reversing the legs).

Changing the premium leg reverses the Side on each leg. For example, in the above scenario changing the Over (premium) “to the 2” will change Leg #1 to a Sell, and Leg #2 to a Buy.

Note: The Over field enables after you select a ratio.

Note: You cannot reverse individual non-hedge legs or the direction of legs on a future strategy.

 

Specifying Leg Ratios

Users can specify leg ratios independent of the strategy selected on the Trade Entry form. This feature eliminates the confusion of potentially mismatched strategies and ratios, and simplifies trade entry. For example, the ratios of the Vertical Call Spread, Vertical Put Spread, and Fence strategies will be specified independently of the strategy, resulting in a reduced set of option strategies, while supporting the entry of any ratio the user defines.

Ratios can be entered in the Ratio field and display in the Ratio column accordingly. The Ratio field is empty by default, meaning the ratios are set to 1 on all legs (i.e. 1x1). When entering a custom ratio, use the format {Ratio1}{Separator}{Ratio2} (i.e. 1,2).

Note: The Ratio field is hidden for strategies that do not include a ratio, and are therefore only visible when entering a Vertical Call Spread, Vertical Put Spread, or Fence strategy.

The Ratio column allows you to view and edit the ratio on each leg of the strategy, and is populated based on the value entered in the Ratio field. Plus/ Minus buttons to the left and right of the field allows you to quickly change the ratio of a leg.

Changing the ratio via the grid automatically updates the Ratio field (see procedure below).

  1. To change the ratio via the grid:
  2. In the Ratio field, enter a ratio of 1x2.

The leg ratios are populated with 1st and 2nd legs respectively.

  1. Click the “+” button on the 2nd leg to increase the ratio from 2 to 3.

The Ratio field updates to display 1x3.

 

Edit, Copy, and Cancel a Deal

Use toolbar items to Edit, Copy, or Cancel a deal.

Note: Only non-cleared deals can be edited.

 

  1. To Edit, Copy, and Cancel a deal:
  2. From the OTC Trade Book or comparable view, click Open Deal to edit a non-cleared deal
  3. From the Edit Deal window, make changes as needed and click Save Draft or Submit to Clearing.
  1. To copy a deal, highlight a row and click the Copy Deal button.

The Add Deal form appears containing identical information to the row you highlighted.

  1. To cancel a deal, highlight a row and click the Cancel Deal button.

A Cancel Deal message appears.

  1. Click Yes to cancel.

 

Block Trade Timestamps

Add time fields to the Trade form from the User Preferences window by selecting Deal Entry>Show Additional Timestamps, and users can add time fields to the Trade Form. This provides users with an alternative to the paper ticket process for block trade booking. More specifically, the Trade Form provides three timestamp fields, which assist users in meeting their price reporting obligations. Timestamp fields include:

  • Order Time - The time the order was received
  • Match Time - The time a match occurred
  • Execution Date - The date the trade was consummated
  • Execution Time - The time the trade is consummated, which is the time that the parties agree to the trade in principle

Note: Regardless of Trade Type, all deals will have an Execution Time that is sent to CME ClearPort. The definition of the Execution Time can be found on the Market Regulation Advisory Notice on Block Trades.

Note: Time fields populate automatically when a Trade Form is opened and display the time at which the form was opened. You can however clear the Execution and Match time and then save the trade. Trade Forms opened via Click and Clear will display the time Click and Clear was selected in the Execution Time and Match Time fields, while the Order Time is determined by the timestamp of the IM.

Users can edit all timestamp fields for spreads and strategies. However, only the Order Time and Match Time fields are editable for trades that are not spreads/strategies. For non-spreads/strategies, the Execution Time field updates automatically to mirror the Match Time.

 

Execution (Exec.) Time

The Execution Time field displays by default in every Trade Form and represents the time at which the deal was consummated. Users need to make sure to report the accurate execution time of the block trade in this field.

Note: Only the Execution Time is sent to CME ClearPort.

 

Order Time and Match Time

Order Time and Match Time are optional fields. The Order Time represents the time an order was received, and Match Time indicates the time at which a match was found.

Users have the option of formatting timestamps to display as either hh:mm:ss or hh:mm.

 

Editing Timestamps

Users can edit each of the timestamp fields prior to submitting a trade to clearing, and can then refresh those timestamps to the current time using the refresh button .

The following rules apply when adjusting Time fields:

  • If the Order Time field is displayed, then it must be populated. The Execution Time and Match Time fields can remain blank.
  • Order Time cannot be later than Match Time.
  • Match Time cannot be later than Execution Time.

Note: When switching from an option/spread to an outright, the Execution Time matches the Match Time and cannot be edited. When editing/refreshing the timestamps, users need to make sure to reflect the execution time of the trade accurately in the Execution Time field.

 

  1. To edit a timestamp field.
  2. From the Trade Form, select a Time field, and click the down arrow .

Note: You can also type directly in the date/time field or copy and paste a date/time from one of the timestamp fields.

A calendar appears.

  1. Use the left and right arrow buttons to select a month, and click a date directly.
  2. Using the time field's arrow keys, adjust the time as needed.
  3. Click OK.