Chapter 12
CME Spot Market Trading – Electronic
1200.

1201.

1202.

ENFORCEMENT OF RULES
1200.A.

GENERAL PROVISIONS

1200.B.

THE CHIEF REGULATORY OFFICER

1200.C.

SANCTIONS

1200.D.

EMERGENCY ACTIONS

1200.E.

INVESTIGATIONS

1200.F.

CONSENT TO EXCHANGE JURISDICTION

1200.G.

CONTRACT MODIFICATION

1200.H.

GENERAL OFFENSES

1200.I.

STRICT LIABILITY FOR THE ACTS OF AGENTS

1200.J.

EFFECT OF SUSPENSION OR EXPULSION

1200.K.

MEMBER’S INDEMNIFICATION LIABILITY

1200.L.

CLAIMS BY MEMBERS

1200.M.

NOTIFICATION OF SIGNIFICANT EVENTS

1200.N.

SANCTIONS AND RESTITUTION ORDERS

TRADING QUALIFICATIONS AND PRACTICES
1201.A.

REQUIREMENT FOR SPOT TRANSACTIONS TO BE EXECUTED ON CME
DIRECT AUCTION PLATFORM

1201.B.

PRIORITY OF CUSTOMERS’ ORDERS

1201.C.

TRADING AGAINST CUSTOMERS’ ORDERS

1201.D.

DISCLOSING ORDERS PROHIBITED

1201.E.

SIMULTANEOUS BUY AND SELL ORDERS FOR DIFFERENT BENEFICIALOWNERS

1201.F.

WASH TRADES PROHIBITED

1201.G.

PREARRANGED, PRE-NEGOTIATED AND NONCOMPETITIVE TRADES
PROHIBITED

1201.H.

RESPONSIBILITY FOR CUSTOMER ORDERS

1201.I.

DISCRETIONARY ORDERS

1201.J.

PRIORITY OF EXECUTION

1201.K.

RECORDKEEPING REQUIREMENTS FOR CME SPOT MARKET TRADING

1201.L.

TRADE DATA SUBMITTED TO THE EXCHANGE

1201.M.

DISRUPTIVE PRACTICES PROHIBITED

1201.N.

SPOT MARKET TRADING AGREEMENT

1201.O.

ERROR TRADES

ARBITRATION
1202.A.

DISPUTES SUBJECT TO CME ARBITRATION© Copyright Chicago Mercantile Exchange, Inc. All rights reserved.

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1203.

1204.

1202.B.

INITIATING AN ARBITRATION CLAIM

1202.C.

ANSWERING AN ARBITRATION CLAIM

1202.D.

FAILURE TO ANSWER

1202.E.

COUNTERCLAIMS, CROSS-CLAIMS AND THIRD-PARTY CLAIMS

1202.F.

REVIEW OF ARBITRABILITY

1202.G.

CONSOLIDATION OF ARBITRATION DISPUTES

1202.H.

WITHDRAWAL OF CLAIMS

1202.I.

PERIOD OF ELIGIBILITY FOR ARBITRATION

1202.J.

PARALLEL PROCEEDINGS

1202.K.

REQUESTS FOR DOCUMENTS, INFORMATION OR TESTIMONY

1202.L.

DOCUMENTS AND WITNESSES TO BE PRESENTED AT HEARING

1202.M.

ADDITIONAL PROCEDURES

1202.N.

ARBITRATION PANEL

1202.O.

HEARING PROCEDURES

1202.P.

AWARDS

1202.Q.

CORRECTION OF AWARD

1202.R.

SATISFACTION OF AWARD

1202.S.

RIGHT TO COUNSEL

1202.T.

COMPUTATION OF TIME

1202.U.

SUBMISSIONS TO OR COMMUNICATIONS WITH THE PANEL

1202.V.

ARBITRATION FEES

1202.W.

CONFIDENTIALITY

DELIVERY FACILITIES AND DELIVERY PROCEDURES
1203.A.

SCOPE OF RULE

1203.B.

DECLARATIONS OF FORCE MAJEURE

1203.C.

REGULAR WAREHOUSES

1203.D.

REVOCATION, EXPIRATION OR WITHDRAWAL OF REGULARITY

1203.E.

LIABILITY FOR NEGLIGENCE OF GRADERS

1203.F.

FINALITY OF USDA OR OTHER REQUIRED GRADING CERTIFICATE ORCERTIFICATE OF ANALYSIS

1203.G.

APPENDIXSPOT CALL NONFAT DRY MILK
1204.A.

COMMODITY SPECIFICATIONS

1204.B.

SPOT CALL

1204.C.

SETTLEMENT PROCEDURES

1204.D.

DEVIATIONS AND ALLOWANCES

1204.E.

PACKAGING© Copyright Chicago Mercantile Exchange, Inc. All rights reserved.

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1205.

1206.

1204.F.

INSPECTION

1204.G.

DELIVERY PROCEDURES

1204.H.

ASSOCIATED COSTS

1204.I.

SETTLEMENT OF DISPUTES

1204.J.

CME SPOT MARKET FEES

1204.K.

FAILURE TO PERFORM

SPOT CALL BUTTER
1205.A.
1205.B.
1205.C.

COMMODITY SPECIFICATIONSSPOT CALLSETTLEMENT PROCEDURES

1205.D.

DEVIATIONS AND ALLOWANCES

1205.E.

PACKAGING

1205.F.

INSPECTION

1205.G.

DELIVERY PROCEDURES

1205.H.

ASSOCIATED COSTS

1205.I.

SETTLEMENT OF DISPUTES

1205.J.

CME SPOT MARKET FEES

1205.K.

FAILURE TO PERFORM

SPOT CALL CHEESE
1206.A.
1206.B.
1206.C.
1206.D.
1206.E.
1206.F.
1206.G.
1206.H.
1206.I.
1206.J.
1206.K.

1207.

COMMODITY SPECIFICATIONSSPOT CALLSETTLEMENT PROCEDURES
DEVIATIONS AND ALLOWANCESPACKAGING
INSPECTION
DELIVERY PROCEDURES
ASSOCIATED COSTSSETTLEMENT OF DISPUTESCME SPOT MARKET FEESFAILURE TO PERFORM

SPOT CALL DRY WHEY
1207.A.
1207.B.
1207.C.
1207.D.
1207.E.
1207.F.
1207.G.
1207.H.

COMMODITY SPECIFICATIONSSPOT CALLSETTLEMENT PROCEDURES
DEVIATIONS AND ALLOWANCESPACKAGING
INSPECTION
DELIVERY PROCEDURES
ASSOCIATED COSTS© Copyright Chicago Mercantile Exchange, Inc. All rights reserved.

Page 3 of 44

1207.I.
1207.J.
1207.K.
1208.

SETTLEMENT OF DISPUTESCME SPOT MARKET FEESFAILURE TO PERFORM

LIMITATION OF LIABILITY© Copyright Chicago Mercantile Exchange, Inc. All rights reserved.

Page 4 of 44

Chapter 12
CME Spot Market Trading – Electronic
Electronic trading of a spot commodity contract on the CME Spot Market via the CME Direct Auction Platform(“CDAP”) is facilitated by Chicago Mercantile Exchange Inc. and governed by the Rules of this Chapter. Unlessotherwise specified in this Chapter, CME Spot Market trades are not subject to the Rules applicable to trading ofother contracts offered by CME or any of the CME Group Designated Contract Markets. Defined terms of this
Chapter are included in the Definitions Section of the CME Rulebook.
DISCLAIMER
CME SPOT MARKET IS NOT REGISTERED WITH, OR DESIGNATED, RECOGNIZED, LICENSED OR
APPROVED BY THE CFTC.

1200.

ENFORCEMENT OF RULES
1200.A.

General Provisions

The Board has adopted Rules, and from time to time adopts amendments and supplements to such
Rules, to promote a free and open market on CME Spot Market and to maintain appropriate businessconduct. The Board has delegated responsibility for the investigation and imposition of penalties forviolations of CME Spot Market Rules to staff of the CME Group Market Regulation Department (“Market
Regulation Department”) and to certain committees as set forth in these Rules. The delegation of such
responsibility and authority shall in no way limit the authority of the Board with respect to all Ruleviolations.
For purposes of Chapter 12, the term "Member" shall mean: 1) individuals or entities trading in CME
Spot Market, including individuals and entities described in CME Rule 106; 2) employees, authorized
representatives, contractors, and agents of a Member in regard to the CME Spot Market related
activities of such individuals or entities; 3) warehouses and plants deemed regular for delivery of CME
Spot Market contracts; and 4) individuals and entities that have agreed in writing or via electronic
signature to comply with the Rules of CME Spot Market.
Members are deemed to know, consent to and be bound by all CME Spot Market Rules. Former
Members shall be subject to the continuing jurisdiction of the Board and the Market Regulation
Department including, without limitation, the application of Rule 1200.H., with respect to any conductthat occurred while a Member.
1200.B.

The Chief Regulatory Officer

It shall be the duty of the Chief Regulatory Officer of the Market Regulation Department to enforce CME
Spot Market Rules, and he shall have available to him at all times the resources of the Market
Regulation Department and such other resources as may be necessary to conduct investigations ofpotential or alleged Rule violations and market conditions. The Chief Regulatory Officer shall have theauthority to inspect the books and records of all parties subject to the jurisdiction of CME Spot Market
pursuant to CME Spot Market Rule1200.F. and the authority to require any such party to appear before
him and produce his or its books and records and answer questions regarding alleged violations of
CME Spot Market Rules, at the time, place and in the manner he designates. The Chief Regulatory
Officer may also delegate his authority to staff of the Market Regulation Department.
1200.C.

Sanctions

If the Market Regulation Department finds that a party, including a Member, has violated a CME Spot
Market Rule, the Market Regulation Department may take one or more of the following actions:
1.

Order the party to cease and desist from the conduct found to be in violation of these Rules;

2.

Restrict, suspend or terminate the party’s access to CME Spot Market, the CME Direct Auction
Platform (“CDAP”), the Globex platform, the Trading Floor or any other trading or clearing platformor facility owned or controlled by CME Group, or right to supervise the entry of any orders into suchplatforms by others;© Copyright Chicago Mercantile Exchange, Inc. All rights reserved.

Page 5 of 44

3.

Impose a fine upon the party not to exceed $100,000 per violation;

4.

Order a party to disgorge any monetary benefit resulting from a violation of a CME Spot Market
Rule whether by that party or another party. For purposes of this provision benefit includes, without
limitation, profit, whether realized or unrealized, and avoided losses,

5.

Prescribe limitations on transactions of the party as may be appropriate;

6.

Order a party to make restitution to the account of anyone damaged by the conduct;

7.

Order a party or its legal counsel or other representative to pay out of pocket expenses incurred by
the Market Regulation Department in connection with the matter if such party or counsel engaged
in vexatious, frivolous or bad faith conduct during the course of an investigation or enforcement
proceeding; and/or

8.

Order such action as is necessary to prevent a threat to the contract or violation of these Rules.

1200.D.

Emergency Actions

1. The Chief Regulatory Officer, or his designee, is authorized to determine whether an emergency
exists and whether emergency action is warranted. The following events and/or conditions may
constitute emergencies:a.

Any actual, attempted, or threatened market manipulation;b.

Any actual, attempted, or threatened corner, squeeze, congestion, or undue concentration of
positions;c.

Any action taken or considered by the United States or any foreign government or any state or local
government body, any other contract market, board of trade, or any other exchange or tradeassociation (foreign or domestic), which may have an impact on trading on CME Spot Market;d.

The actual or threatened bankruptcy or insolvency of any Member or the imposition of any
injunction or other restraint by any government agency, self-regulatory organization, court or
arbitrator upon a Member which may affect the ability of that Member to perform on its contracts;e.

Any circumstance in which it appears that a Member or any other Person or entity has failed toperform contracts or is in such financial or operational condition or is conducting business in such amanner that such Person or entity cannot be permitted to continue in business without jeopardizing
the safety of Members or CME Spot Market;f.

Any other circumstance which may have a severe, adverse effect upon the functioning of CME
Spot Market, except that declarations of Force Majeure and actions taken with respect to suchdeclarations will be governed by the provisions of CME Spot Market Rule 1203.B.

2. In the event that the Chief Regulatory Officer determines, in the good faith exercise of his sole
discretion, that an emergency exists, he may take any of the following emergency actions or any otheraction that may be appropriate to respond to the emergency:a.

Suspend, curtail or terminate trading in any or all spot contracts;b.

Restrict, suspend or terminate a party’s access to the CDAP, the Globex platform, the Trading
Floor, or any other trading or clearing platform or facility owned or controlled by CME Group, orright to supervise the entry of any orders into such platforms by others;c.

Order liquidation or transfer of delivery obligation when a holder is unwilling or unable to make ortake delivery;d.

Modify the trading days or hours;e.

Modify conditions of delivery; and/orf.

Order any other action or undertaking to address or relieve the emergency.

The Market Regulation Department shall give appropriate notice of such action. As soon as practicable,
the Board shall be notified of the emergency action. Nothing in this section shall in any way limit theauthority of the Board, other committees, or other appropriate officials to act in an emergency situation
as defined by these Rules.

© Copyright Chicago Mercantile Exchange, Inc. All rights reserved.

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1200.E.

Investigations

The Market Regulation Department shall investigate potential or alleged Rule violations. Investigations
and all information and documents obtained during the course of an investigation shall be treated as
non-public and confidential and shall not be disclosed by any party, except as necessary to further aninvestigation by the Market Regulation Department or as required by law. The Market Regulation
Department is authorized to take recorded interviews pursuant to an investigation. Parties andwitnesses being interviewed shall have the right to representation, at their own cost, by legal counsel oranyone other than a member of the Board or an employee of CME Group or a Person related to theinvestigation.
Upon conclusion of an investigation, the Market Regulation Department may issue a warning letter toany party as a result of the investigation. Such letter shall not constitute either the finding of a Ruleviolation or a penalty. The Market Regulation Department may also impose one or more of the
sanctions set forth in CME Spot Market Rule 1200.C. on the party. The decision of the Market
Regulation Department shall be final and the party sanctioned shall not have any right to appeal.
Investigation File
The Market Regulation Department shall maintain a file once an investigation is initiated. The file shall
include any materials in the possession of the Market Regulation Department that are relevant to the
conduct being investigated.
1200.F.

Consent to Exchange Jurisdiction

Any Member initiating or executing a transaction on or subject to the Rules of CME Spot Market directlyor through an intermediary, and any Member for whose benefit such a transaction has been initiated or
executed, agrees to be bound by and comply with the Rules of CME Spot Market in relation to suchtransactions, including, but not limited to, Rules requiring cooperation and participation in investigatoryand disciplinary processes, and expressly consents to the jurisdiction of the Exchange and its Market
Regulation Department in order to enforce such Rules.
1200.G.

Contract Modification

All deliveries must conform to government regulations in force at the time of delivery. Unlessspecifically provided otherwise in the applicable product section of this chapter, if any duly authorized
U.S. government agency or body with appropriate jurisdiction issues an order, ruling, directive or law
that conflicts with the requirements of these Rules, such order, ruling directive or law shall be construed
to take precedence and become part of these Rules, and all contracts shall be subject to suchgovernment orders.
1200.H.

General Offenses

It shall be an offense:1.

a.

to engage in fraud or bad faith;b.

to engage in conduct or proceedings inconsistent with just and equitable principles of trade;2.

to engage in dishonest conduct;3.

to create or report a false or fictitious trade;4.

to extort or attempt extortion;5.

to buy or sell any CME Spot Market contracts with the intent to default on such purchase or sale;6.

to engage in, or attempt to engage in, the manipulation of prices of CME Spot Market contracts; tocorner or squeeze, or attempt to corner or squeeze, the market; or to purchase or sell, or offer topurchase or sell CME Spot Market contracts for the purpose of upsetting the equilibrium of themarket or creating a condition in which prices do not or will not reflect fair market values;

7.

to make a verbal or written material misstatement to a committee, or any Market Regulation
Department employee;

8.

to knowingly disseminate false, misleading or inaccurate information concerning market informationor conditions that affect or may affect the price of any CME Spot Market contract.

© Copyright Chicago Mercantile Exchange, Inc. All rights reserved.

Page 7 of 44

9.

a.

to fail to appear before Market Regulation Department staff or any committee at a duly
convened hearing, scheduled staff interview or in connection with any investigation;b.

to fail to fully answer all questions or produce all books and records at such hearing or inconnection with any investigation, or to make false statements;c.

to fail to produce any books or records requested by duly authorized Market Regulation
Department staff, in the format and medium specified in the request, within 10 days after such
request is made or such shorter period of time as determined by the Market Regulation
Department in exigent circumstances;

10. to use or disclose, for any purpose other than the performance of an individual's official duties as amember of any committee any non-public information obtained by reason of participating in any
committee meeting or hearing;
11. for a Member to permit the use of facilities in a manner that is detrimental to the interest or welfareof CME Spot Market or results in a violation of CME Spot Market Rules;
12. to commit an act which is detrimental to the interest or welfare of CME Spot Market or to engage inany conduct which tends to impair the dignity or good name of CME Group;
13. to fail to submit to arbitration any dispute which Market Regulation Department staff or an
arbitration panel decides should be arbitrated pursuant to the Rules of this Chapter; or to fail tocomply with a final arbitration award;
14. to fail to comply with an order of the Market Regulation Department staff or any hearing committee;
15. to engage in dishonorable or uncommercial conduct;
16. except where a power of attorney or similar document has been executed, for any party to accept
or transmit a customer order which has not been specifically authorized;
17. for any party to fail to diligently supervise its employees and agents in the conduct of their business
relating to CME Spot Market; and/or
18. to aid or abet the commission of any violation of CME Spot Market Rules.
1200.I.

Strict Liability for the Acts of Agents

Notwithstanding Rule 1200.H.17., the act, omission, or failure of any official, agent, or other Person
acting for any party within the scope of his employment or office shall be deemed the act, omission or
failure of the party, as well as of the official, agent or other Person who committed the act.
1200.J.

Effect of Suspension or Expulsion

Unless otherwise determined by the Market Regulation Department with jurisdiction over such matters,a suspended or expelled Member shall not be entitled to any of the privileges of membership during theperiod of such suspension or expulsion, including, but not limited to, the right to access any trading floor
or electronic trading platform owned or controlled by CME Group.
1200.K.

Member’s Indemnification Liability

A Member or former Member shall indemnify and hold harmless Chicago Mercantile Exchange Inc.,
including each of its respective affiliates (collectively, the indemnified parties) and their officers,
directors, employees, and agents, for any and all losses, damages, costs and expenses (including
attorneys’ fees) incurred by the indemnified parties as a result (directly or indirectly) of such Member’s
use of the CDAP and any violation or alleged violation of these Rules or state or federal law.
Any monetary obligations arising out of this Rule shall be subject to liens as provided in CME Rule110(a).
1200.L.

Claims by Members

A Member who commences a legal action against Chicago Mercantile Exchange Inc., its directors,
officers, employees, or agents, or another Member of the Exchange without first resorting to andexhausting the procedures and the mandatory arbitration provisions of CME Spot Market Rule 1202, or
any other Rules relating to settlement of disputes arising out of transactions or matters pertaining to© Copyright Chicago Mercantile Exchange, Inc. All rights reserved.

Page 8 of 44

CME Spot Market shall be deemed to have committed an act detrimental to the interest or welfare of the
CME Spot Market.
1200.M.

Notification of Significant Events

Each Member shall provide immediate notice to the Market Regulation Department in writing upon
becoming aware of any of the following events relating to such Member:1.

any suspension, expulsion, revocation or restriction of such Member’s trading privileges or any finein excess of $25,000, through an adverse determination, voluntary settlement or otherwise, by any
court, commodity or securities exchange or related clearing organization, the Securities andExchange Commission, the Commodity Futures Trading Commission or the securities commission
or equivalent authority of any state, territory, the District of Columbia or foreign country, theNational Futures Association, the Financial Industry Regulatory Authority, Inc. or any self-regulatory
or regulatory organization;2.

any indictment of the Member or any of its officers for, any conviction of the Member or any of its
officers of, or any confession of guilt or plea of guilty or nolo contendere by the Member or any of
its officers to 1) any felony or 2) any misdemeanor involving, arising from, or related to thepurchase or sale of any commodity, security, futures contract, option or other financial instrument
or involving or arising from fraud or moral turpitude; and/or

3.

any filing of a bankruptcy petition or insolvency, receivership or equivalent proceeding of which theMember is a subject. In the case of a voluntary bankruptcy, insolvency, receivership or equivalent
proceeding, the Member also shall notify the Market Regulation Department when such Member
forms a definite intention to file such proceeding.

Nothing in this Rule shall limit or negate any other reporting obligations that any Member may have to
CME, the other CME Group exchanges or any other regulator or Person.
1200.N.

Payments of Disciplinary Fines, Disgorgement Orders and Restitution

Disciplinary fines, disgorgement and restitution amounts ordered by the Market Regulation Department
must be submitted to the Market Regulation Department no later than the date specified in the notice ofdecision. An individual who fails to provide proof of payment within the time prescribed will forfeit thefollowing privileges until the payment has been received: 1) access to all CME Group markets; 2)access to the Globex platform; and 3) access to any other electronic trading or clearing platform or
facility owned or controlled by CME Group. Any Member Firm that fails to make the required payment
within the time prescribed will automatically forfeit preferred fee treatment for its proprietary trading until
the payment has been received. Any party that fails to make the required payment shall immediately
forfeit eligibility for any incentive or rebate program until the amount is paid in full. Any party that fails to
pay a disciplinary fine, disgorgement order or restitution within the prescribed time period may also be
subject to sanctions pursuant to CME Spot Market Rule 1200.H.14.
Parties may, subject to a determination by the sanctioning entity, be liable for unpaid fines or unpaid
disgorgement and restitution orders imposed upon their employees.

1201.

TRADING QUALIFICATIONS AND PRACTICES
1201.A.

Requirement for Spot Transactions to be Executed on CME Direct Auction Platform

All CME Spot Market transactions must be executed electronically on the CME Direct Auction Platform(“CDAP”).
1201.B.

Priority of Customers’ Orders

All CME Spot Market transactions shall be made competitively on the CDAP designated for the tradingof CME Spot Market contracts. No bid or offer shall be specified for acceptance by a particular trader.
CME Spot Market transactions may take place only at the best price available on the CDAP at the time
the trade occurs.
A member shall not buy (sell) a CME Spot Market contract for his own account, an account in which hehas a direct or indirect financial interest, or an account over which he has discretionary trading authority© Copyright Chicago Mercantile Exchange, Inc. All rights reserved.

Page 9 of 44

when he is in possession of an executable order for another Person to buy (sell) a CME Spot Market
contract.
The foregoing shall not apply to DRT orders provided that the customer has previously consented inwriting and evidence of such general consent is indicated on the order with the “WP” (with permission)
designation. In the case of a party holding a discretionary order for an account described in Rule1201.N., a "WP" designation on the order shall constitute sufficient evidence of prior consent.
1201.C.

Trading Against Customers’ Orders

No Person in possession of a customer order shall knowingly take, directly or indirectly, the opposite
side of such order for his own account, an account in which he has a direct or indirect financial interest,or an account over which he has discretionary trading authority, unless the customer order has beenentered immediately upon receipt and has first been exposed on the CDAP for a minimum of 5
seconds.
Exceptions
The foregoing restriction shall not apply to transactions where the customer has consented in writing no
more than 12 months prior to the transaction to waive the application of CME Spot Market Rule 1201.F..
Such transactions shall further be subject to the following requirements: (i) the member complies withthe requirements set forth in Rule 1201.H.; (ii) the member clearly identifies, by appropriate descriptive
words, all such transactions, and (iii) the member ensures that it is reported to Exchange price reporting
staff for entry into the Exchange Price Reporting System as a cross trade.
1201.D.

Disclosing Orders Prohibited

No Person shall disclose another Person's order to buy or sell except to a designated Exchange official
and no Person shall solicit or induce another Person to disclose order information. No Person shall takeaction or direct another to take action based on non-public order information, however acquired. The
mere statement of opinions or indications of the price at which a market may open or resume trading
does not constitute a violation of this Rule.
1201.E.

Simultaneous Buy and Sell Orders for Different Beneficial Owners

Opposite orders for different beneficial owners that are simultaneously placed by a party with discretionover both accounts may be entered into the CDAP provided that one order is exposed for a minimum of
5 seconds. An order allowing for price and/or time discretion, if not entered immediately upon receipt,
may be knowingly entered opposite another order entered by the same firm only if this other order has
been entered immediately upon receipt and has been exposed on the CDAP for a minimum of 5
seconds
1201.F.

Wash Trades Prohibited

No Person shall place or accept buy and sell orders in the same contract where the Person knows orreasonably should know that the purpose of the orders is to avoid taking a bona fide market position
exposed to market risk (transactions commonly known or referred to as wash sales). Buy and sell orders
for different accounts with common beneficial ownership that are entered with the intent to negate market
risk or price competition shall also be deemed to violate the prohibition on wash trades. Additionally, no
Person shall knowingly execute or accommodate the execution of such orders by direct or indirectmeans.
1201.G.

Prearranged, Pre-Negotiated and Noncompetitive Trades Prohibited

No Person shall prearrange or pre-negotiate any CME Spot Market purchase or sale ornoncompetitively execute any transaction.
1201.H.

Responsibility for Customer Orders

Standard of Responsibility
A Member shall exercise due diligence in the handling and execution of customer orders. Failure to act
with due diligence shall constitute negligence. In the case of a dispute as to whether a Member has
exercised due diligence, the appropriate arbitration panel or Chief Regulatory Officer or his designee is© Copyright Chicago Mercantile Exchange, Inc. All rights reserved.

Page 10 of 44

authorized to determine whether the Member was negligent and, if so, whether an adjustment is due tothe customer. The panel or Chief Regulatory Officer or his designee may take into consideration thenature of the order and existing market conditions at the time the Member acted or failed to act.
However, no market condition nullifies a Member's responsibility to exercise due diligence.
A Member is prohibited from directly or indirectly guaranteeing the execution of an order or any of its
terms such as the quantity or price. A Member may only report an execution that has been effected
through the CDAP. This rule shall not be construed to prevent a Member from assuming or sharing in
the losses resulting from an error or the mishandling of an order.
Liability for Negligence
A Member may not adjust the price at which an order was executed or be held responsible for executing
or failing to execute an order unless such Member was negligent or is settling a bona-fide dispute
regarding negligence.
A Member Firm may not compel an adjustment from a Member in the absence of a bona-fide dispute
regarding negligence.
1201.I.

Discretionary Orders

Other than DRT orders, no Member shall accept an order that gives more latitude than price and time in
execution of the order.
The above restriction shall not apply to those orders:1.

placed by another member for an account owned by such member;

2.

placed by the member’s immediate family which includes a spouse, parent, child, grandparent,
grandchild, brother, sister, aunt, uncle, nephew, niece or in-law;3.

placed for proprietary accounts of Member Firms.

1201.J.

Priority of Execution

A member shall not execute a discretionary order, including, without limitation, an order allowing themember discretion as to time and price, while in possession of an executable customer order. No
Person shall allocate executions in any manner other than an equitable manner.
Non-discretionary customer orders received by a CDAP terminal operator shall be entered into CDAP in
the sequence received. Non-discretionary orders that cannot be immediately entered into CDAP must
be entered when the orders become executable in the sequence in which the orders were received.
1201.K.

Recordkeeping Requirements for CME Spot Market Trading

General Requirements
Each CDAP terminal operator entering orders into the CDAP shall accurately input for each order: a)
the user ID b) the price, quantity, product, and account number.
With respect to orders received by a CDAP terminal operator which are capable of being immediately
entered into CDAP, no record other than that set forth above need be made. However, if CDAP terminal
operator receives an order which cannot be immediately entered into CDAP, the CME Spot Market
terminal operator must prepare a written order and include the account designation, date, time ofreceipt. The order must be entered into CDAP when it becomes executable.
Retention of Records
Each member must keep full, complete and systematic records, including records created or transmitted
electronically, together with all pertinent data and memoranda, of all transactions relating to its businessof dealing in spot contracts and related cash or forward transactions. Written and electronic records
must be retained for a minimum of five years in permanent form. Oral communications must berecorded and must be retained for a minimum of one year past the date on which the oral
communication occurred. All records required to be retained shall at all times be open to inspection by
Exchange staff.
1201.L.

Trade Data Submitted to the Exchange© Copyright Chicago Mercantile Exchange, Inc. All rights reserved.

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Subject to each market participant's rights with respect to its own data, the Exchange and CME Spot
Market shall own all rights, title and interest, database rights and trade secret rights in and to all trade
data and related information submitted in connection with trading on CME Spot Market. CME Spot
Market has the exclusive right to use, distribute, sub-license, disclose and sell anonymized trade data
and derivative works in any manner, media and jurisdiction. Market participants shall not redistributetrade data or derivative works based thereon unless licensed by the Exchange. The restriction on
redistribution shall not apply to a market participant's own data.
1201.M.

Disruptive Practices Prohibited

All orders must be entered for the purpose of executing bona fide transactions. Additionally, all nontradeable messages must be entered in good faith for legitimate purposes.
1. No Person shall enter or cause to be entered an order with the intent, at the time of order entry, tocancel the order before execution or to modify the order to avoid execution;
2. No Person shall enter or cause to be entered an actionable or non-tradeable message or messages
with intent to mislead other market participants;
3. No Person shall enter or cause to be entered an actionable or non-tradeable message or messages
with intent to overload, delay, or disrupt the systems of the Exchange or other market participants; and4. No Person shall enter or cause to be entered an actionable or non-tradeable message with intent to
disrupt, or with reckless disregard for the adverse impact on, the orderly conduct of trading or the fair
execution of transactions.
1201.N.

Spot Market Trading Agreement

All users must submit a completed and signed spot market trading agreement to the Exchange before
gaining trading access to the CDAP.
1201.O.

Error Trades

If a participant consummates a CME Spot Market trade in error, such participant must adhere to thefollowing procedures to attempt to transfer the trade and the corresponding delivery obligation toanother party:
1.

The participant must report the erroneous trade execution to Market Regulation and CME Clearing
no later than 30 minutes after execution.

2.

The participant must make every effort to find another party willing to accept the trade and thecorresponding delivery obligation, which must occur prior to the delivery deadline established by
CME Spot Market.

3.

The party accepting the trade and delivery obligation must assume the trade at the original
execution price.

4.

The error maker must notify the Exchange of the identity of the party willing to accepting the trade
and the corresponding delivery obligation.

The error maker will be assessed a fee of $500.00.
All error notifications are subject to review and approval by the Exchange. Notwithstanding the error
procedures set forth above, if an error maker does not identify another party willing to accept the trade
and the corresponding delivery obligation, all deliveries must be completed within the delivery timelines
established by CME Spot Market.

1202.

ARBITRATION
1202.A.

Disputes Subject to CME Spot Market Arbitration

Disputes Among Members
Disputes between and among Members that are described below and that are based upon facts andcircumstances that occurred at a time when the parties were Members shall be subject to mandatory
arbitration in accordance with the Rules of this Chapter:1.

claims between Members that relate to or arise out of any transaction on or subject to the Rules of© Copyright Chicago Mercantile Exchange, Inc. All rights reserved.

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CME Spot Market;
2.

claims between or among Members relating to trading rights on CME Spot Market; and3.

claims against the Exchange, CME Group and any subsidiaries and affiliates related to CME Spot
Market.

Permissive Arbitrations
The following may be submitted for arbitration under this Rule and, in the event such a claim is
submitted against a Member, that Member is required to arbitrate the dispute under these rules, unlessotherwise provided:1.

claims of a customer against a Member that relate to or arise out of any transaction on or subject to
the Rules of CME Spot Market;

2.

claims of a customer against a Member responsible for the spot-call delivery performance of atransaction on or subject to the Rules of CME Spot Market;

3.

At the discretion of the Chief Regulatory Officer, any claim involving the interests of CME Spot
Market, its Members, their business relations or CME Spot Market trading in general not otherwise
arbitrable under these Rules, provided the parties have consented to such arbitration.

Waiver of Any Objection to Jurisdiction
Any party who submits a claim or grievance to arbitration shall be conclusively presumed to havevoluntarily recognized and agreed to the jurisdiction of the arbitration panel to hear and determine theclaim.
A customer who submits a claim for arbitration in accordance with these Rules consents thereby to thejurisdiction of the arbitrators and agrees to the arbitration of any counterclaims, cross-claims or thirdparty claims by any respondent which arise out of the transaction that is the subject of the customer's
claim. The claim shall comply with the requirements of this Rule.
Hearing Panel
Any arbitration, whether mandatory or permissive, shall be heard by a Member Panel and its decision
shall be rendered in accordance with this Rule. A Member Panel shall mean an arbitration panel
consisting of a co-chairman of the subcommittee of the CME and CBOT Arbitration Committee
established for hearing arbitrations under this Rule and three Member panelists from suchsubcommittee.
Refusal to Hear Certain Disputes
A chairman may, but shall not be required to, order that a dispute that is otherwise arbitrable underthese Rules not be arbitrated hereunder if the dispute requires for adjudication the presence of essential
witnesses or third parties over whom the Panel has no jurisdiction or who are not otherwise available, orif the dispute requires the application of the rules of another exchange.
1202.B.

Initiating an Arbitration ClaimIn the event that a complaint is received it shall be referred to the Market Regulation Department, whichshall, when appropriate, forward to the complainant a Consent Form for arbitration under this Rule.
Such form shall inform the claimant, by attachment of all pertinent Rules, of his or her rights andobligations, including costs associated with arbitration.
A claimant may initiate a claim by submitting a written description of the dispute, a completed Arbitration
Cover Sheet and depositing the appropriate arbitration fee with the Market Regulation Department
within the period of eligibility for arbitration claims. The written claim shall include a clear description of
the facts and circumstances involved in the dispute, including the transaction(s) or agreement(s)complained of, the names of the Persons and firms alleged to be responsible for any loss to theclaimant, the dates of all acts or omissions relevant to the claim, a detailed calculation of the amountclaimed and any other information necessary to fully describe the dispute. In the case of a request for
punitive damages, the claim shall set forth the facts the party intends to present in support of the claimthat the misconduct was willful and wanton.

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Notice shall then be given by the Market Regulation Department to the party against whom the claim isasserted, who shall respond to the claim in accordance with this Rule.
The Market Regulation Department shall reject for filing any claim that does not fully describe thedispute, is clearly filed after the period of eligibility has expired or is clearly not arbitrable under thisRule. Such a claim will be promptly returned to the filing party with a notice describing the deficiency. A
claimant seeking to correct the deficiency and file an amended claim may do so within 30 days ofreceiving notice describing the deficiency despite any expiration of the period of eligibility prescribed bythis Rule during that 30-day period. The acceptance for filing by the Market Regulation Department
shall not preclude a challenge to the arbitrability of the claim nor create a presumption that the claim isarbitrable.
1202.C.

Answering an Arbitration Claim

Each respondent shall file a written response within 21 days after receipt of the written claim. However,
if a party has timely filed a challenge to the arbitrability of the dispute, its response shall be due 21 days
after receipt of the written decision confirming the arbitrability of the dispute.
The written answer must admit the claim or describe the respondent’s basis for denying liability to theclaimant(s). The answer may include an admission or denial of each specific allegation contained in theclaim and/or the respondent’s narrative description of the facts and circumstances involved in thedispute. A respondent may assert in an answer any defense that would be available in a court of law orequity, including any affirmative defense.
1202.D.

Failure to Answer

A respondent’s unexcused failure to file a timely answer shall constitute an admission of the facts
alleged in a claim.
1202.E.

Counterclaims, Cross-Claims and Third-Party Claims

A respondent may assert any counterclaim, cross-claim and/or third-party claim to the extent such claim
would be allowable as an original claim under these Rules and, in response to claims by a customer
against a Member, the Member may assert any counterclaim, cross-claim and/or third-party claim
arising out of the same transaction or incident that is the subject of the customer’s claim. Each
respondent must file any counterclaim, cross-claim or third-party claim at the same time an answer to aclaim is due. Initiating counterclaims, cross-claims, third-party claims and answers thereto shallconform to the requirements for initiating and answering original claims.
A respondent who believes that another Member may have a claim to any money or property which isthe subject of a dispute in arbitration and that the failure of that other Member to assert a claim in thepending arbitration could prejudice the interests of the respondent may submit a request to thechairman to compel the participation of the other Member. If a Member fails to file such claim after
being ordered to assert that claim in the pending arbitration, then notwithstanding any other Rule, that
Member shall be barred from asserting in the future any claim against the respondent that is based on
the same transaction, occurrence or subject.
1202.F.

Review of Arbitrability

Any party may file a challenge to the arbitrability of a dispute submitted for arbitration under this Rule. A
party’s failure to file a timely challenge to arbitrability shall waive any right to object thereafter to thearbitrability of the dispute.
A challenge to arbitrability by a claimant must be filed no later than 5 days after the claim is submitted
for arbitration. A challenge to arbitrability by a respondent must be filed no later than 10 days after the
respondent has received notice of the claim. The request must be in writing and state the reasons why
the dispute is not arbitrable. Any other party may file a written response in support of or opposition to
the challenge no later than 10 days after receiving notice of the challenge to arbitrability.
The chairman may decide the arbitrability of a dispute based on his consideration of the written
submissions of the parties. The chairman’s decision shall be final and is not appealable.
1202.G.

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If a chairman receives notice that two or more arbitration disputes are related, the chairman may orderthat any or all of the disputes be consolidated for purposes of conducting a hearing on the disputes. In
determining whether to consolidate the disputes the chairman may consider the efficiencies of
consolidation as well as the burdens and benefits to the parties in consolidating the disputes.
Withdrawal of Claims

1202.H.
A.

A party may voluntarily withdraw its claim, counterclaim, cross-claim or third-party claim without
prejudice at any time before an answer thereto has been filed by notifying the Market Regulation
Department in writing of such withdrawal.

B.

After an answer to any claim, counterclaim, cross-claim or third-party claim has been filed, theclaimant seeking to withdraw the claim, counterclaim, cross-claim or third-party claim must submit
to the chairman a written request to withdraw with prejudice or upon such terms and conditions as
may be imposed by the chairman.

C.

A withdrawal with prejudice under this Rule shall bar the claimant from re-filing any claim based on
the same acts, transactions or omissions as the dismissed claim.
Period of Eligibility for Arbitration

1202.I.

An arbitration must be initiated within one year of the date the claimant knew or should have known of
the dispute on which the claim is based.
Counterclaims, cross-claims and third-party claims must be submitted no later than the date on which
the answer is due.
Parallel Proceedings1202.J.

No claim will be accepted for arbitration if the Market Regulation Department receives notice that
another arbitration, reparations action or civil court proceeding based on the same act, transaction oromission as the arbitration claim is pending at the time of filing.
No claim, counterclaim, cross-claim or third party-claim will be accepted for arbitration against a
respondent if the Market Regulation Department has received notice that a stay exists due to thependency of any bankruptcy proceeding against that respondent. If such a stay arises after a claim is
accepted for arbitration or if the Market Regulation Department subsequently learns that such a stay ispending, the claim shall be dismissed without prejudice as to each respondent who is the subject of thestay. Nothing in this Rule shall prevent a claim in arbitration from proceeding against any remaining
respondent.
Requests for Documents, Information or Testimony

1202.K.
A.

The initial schedule for document requests by parties and responses will be set by the Market
Regulation Department. The chairman may require any Member, or any Person employed by or
associated with a Member to produce relevant documents in his possession or control at any timeafter a claim has been filed.
Upon the failure of a party or Member to voluntarily produce relevant documents in its possession
or control upon request by a party, the party seeking the documents may submit a written request
to the chairman for an order compelling the production of such documents.
1.

2.

Any request for an order compelling production of documents must:a.

identify each document or type of document sought with as much specificity as possible;b.

explain the relevance of each document or type of document sought; andc.

include a representation that the requesting party has attempted to obtain the documentsfrom the responding party before resorting to a request to the chairman.

The party or Member against whom an order compelling production is sought shall:© Copyright Chicago Mercantile Exchange, Inc. All rights reserved.

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C.
D.

E.

a.

produce copies of the requested documents to the requesting party and the Market
Regulation Department; orb.

represent in writing that the documents are not in his possession or control and explain
the basis for such representation, and, if applicable, identify who is in possession orcontrol of the requested documents; orc.

object in writing to a request and provide the basis for each objection.

The chairman may require any Member, or any Person employed by or associated with a Member,to appear and to testify at a hearing.
Whenever such production or appearance results from the request of a party, all reasonable costs
and expenses incurred shall be borne by the party making the request, unless directed otherwise
by the panel. A party who incurs costs and expenses recoverable under this Rule may, no later
than the close of the last hearing date in the matter, submit an application to the panel for suchcosts and expenses. Such application shall contain a detailed explanation of amounts claimed.
The panel may grant or deny all or any portion of the application.
Any Member or employee thereof failing to appear, testify or produce documents in accordancewith this Rule may be charged with a violation of Rule 1200.H.

1202.L.

Documents and Witnesses to be Presented at Hearing

No later than 10 business days prior to the first scheduled hearing, each party must provide every otherparty and the Market Regulation Department with copies of all documents that the party intends to offer
into evidence and a list of the names of all witnesses, including party-witnesses, who the party intends
to call at the hearing in support of a claim or defense. Parties are not required under this Rule toprovide copies of those documents that they may use, or to identify any witnesses whom they may call,
only in cross-examination or rebuttal.
1202.M.

Additional Procedures

The chairman may establish any procedures not otherwise contemplated by these Rules necessary toestablish a just, equitable and efficient method of resolving a particular dispute, except that motions to
dismiss and motions for summary judgment are not permitted under these Rules.
1202.N.

Arbitration Panel

Appointment of Arbitration Panel
The Market Regulation Department shall select a Member Panel as set forth in Rule 1202.A. to hearand decide a dispute.
Requests to Remove an Arbitrator
1.

Each party may request the removal of any arbitrator(s) from a panel for good cause shown. Such
request must be made at least 7 days before the start of the first scheduled hearing. Failure of aparty to timely request the removal of any arbitrator(s) will be deemed a waiver of that party’s rightto any further objection to the arbitrator’s participation in the hearing and decision of the dispute.

2.

The chairman, after considering a request to remove an arbitrator, another party’s objections
thereto and/or the statements of an arbitrator whose removal is sought, may deny the request or
excuse the arbitrator. The chairman’s decision shall be final and may not be appealed.

3.

If an arbitrator is excused prior to the date of the first scheduled hearing, the Market Regulation
Department shall select another Arbitration Committee member to replace the excused arbitrator at
the hearing. Parties may make any appropriate request for the removal of the replacement
arbitrator under this Rule.

4.

If an arbitrator is excused on or after the date of the first scheduled hearing, the dispute may, at theelection of the non-requesting party and with the consent of the chairman be heard and decided by
the remaining arbitrators.

1202.O.

Hearing Procedures

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Arbitration claims, cross-claims third-party claims or counterclaims that do not exceed $10,000 may, in
the interests of efficiency and economy, be resolved without hearing. The panel shall render its
decision based upon the parties’ written submissions and any other relevant information obtained andprovided to the panel and the parties at the direction of the chairman and/or the panel.
Chairman
The panel chairman shall preside over the proceeding and shall make such determinations on
relevancy and procedure as will promote a fair and expeditious adjudication of any claim. The chairman
may administer oaths or affirmations by witnesses. Upon request of the panel chairman, the Market
Regulation Department shall submit any documents to the panel and parties that are relevant andreadily available.
Arbitrators
The arbitration panel shall consider all relevant, probative testimony and documents submitted by theparties. The panel shall be the sole judge of the law and the facts, but if the panel is in doubt as to anyquestions of law, it may refer the question to its legal counsel who shall be one of the Market Regulation
Department’s Enforcement Counsel for an opinion. The panel shall not be bound by the formal rules ofevidence. The final decision of the panel shall be by majority vote of the arbitrators, and the chairman
shall vote only to resolve a tie.
Parties and their Representatives
Each party and his representative has the right to examine all relevant documents prior to and during
the hearing, to present all relevant evidence in support of a claim or defense or as rebuttal to a claim or
defense, and to question during the hearing witnesses presented in connection with a claim or defense.
An entity may have one corporate representative of the entity, in addition to any counsel of record,
attend the arbitration hearing. Such corporate representative is not precluded from testifying in thematter.
Witnesses
All testimony offered to the panel will be under oath or affirmation. Witnesses will be permitted in the
hearing room only while providing testimony to the panel. Witnesses shall testify in person at thehearing, except that for good cause shown and in the discretion of the chairman, a witness may beallowed to testify by telephone or other appropriate means.
Hearing Record
An audio recording or transcription of the proceeding shall be made by the Market Regulation
Department. Unless otherwise ordered by a chairman of the CME and CBOT Arbitration Committee, acopy of the audio recording or transcript will be released to a party only for the purpose of an application
to confirm, vacate, modify or correct an award in a court of law. The requesting party shall bear the costof copying the recording or transcript.
1202.P.

Awards

Decision by Panel
After a hearing, or, on customer claims that do not exceed $10,000 upon consideration of the pleadings
and other relevant information, the arbitration panel shall issue a written decision signed by the panel
chairman and at least a majority of the panel. The panel may decide any matter in controversy andissue any order the panel deems necessary to fully resolve the dispute. The Market Regulation
Department shall promptly serve copies on all parties. The decision of the panel shall be final and notappealable. A monetary award made by the panel may include the following:
1.

Actual damages;

2.

Interest thereon;

3.

Punitive damages of no more than two times the amount of actual damages.;

4.

The arbitration fee incurred by a prevailing party, or a portion thereof; and5.

All or any portion of the administrative costs of the proceeding and any other reasonable and© Copyright Chicago Mercantile Exchange, Inc. All rights reserved.

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necessary expenses, including, but not limited to, attorneys' fees (a) incurred by a party by reasonof another party's frivolous or bad faith claim, defense, or conduct during the arbitration or(b) where a statutory or contractual basis exists for awarding such fees. Requests for attorneys'
fees and costs incurred in the arbitration proceeding must be raised in the proceeding or they arewaived.
Failure to Prosecute
The chairman may order a party who fails to prosecute or defend a claim to pay all or a portion of its
administrative costs incurred in connection with the arbitration claim.
1202.Q.

Correction of Award

Any party may, within three days after receipt of the notice of decision, request the arbitration panel tomodify or correct its decision where there has been an obvious material miscalculation or misdescription
or where the notice is imperfect in a matter of form not affecting the merits of the dispute or decision.
1202.R.

Satisfaction of Award

A party directed to pay an award shall submit payment of the amount due directly to the party receiving
the award. An arbitration award must be satisfied within 15 days of receipt of the notice of decision. If arequest is made to correct an award pursuant to Rule 1202.Q., the award must be satisfied within 15
days of receipt of the corrected notice of decision.
A party making payment must submit proof of payment to the Market Regulation Department no later
than the business day following payment. An individual member who fails to provide proof of payment
within the time prescribed will forfeit the following privileges until proof of payment has been provided: 1)
access to all CME Group markets; 2) access to the Globex platform; and 3) access to any otherelectronic trading or clearing platform owned or controlled by CME Group. A Member Firm that fails toprovide proof of payment within the time prescribed will forfeit preferred fee treatment for its proprietary
trading. Any Member that fails to pay an arbitration award within the time prescribed may be subject tosanctions pursuant to Rule 1200.H.13. and may be immediately removed from any trading floor owned
or controlled by CME Group.
1202.S.

Right to Counsel

Every Person is entitled to represent his own interests, be represented by an attorney at law of hischoosing and at his own expense who is admitted to practice before the highest court in any State, orbe represented by any other non-compensated representative at any stage of an arbitration proceeding.
An entity must be represented by an officer or owner of the entity or by an attorney at law.
1202.T.

Computation of TimeFor the purposes of Rule 1202, when a period of time is prescribed by a number of days, and not a
specific date, the first day counted for the time prescribed is the day after notice is received or otherevent giving rise to the period of time occurs. Any submission is due or the time to take action shalllapse by the close of business on the last day counted, unless the last day is a weekend or CME Groupexchange holiday, in which case the due date shall be the next following day the CME Group exchange
is open for business.
For time periods of five days or less, only days the CME Group exchange is open for business will becounted. For all other time periods calendar days will be counted.
1202.U.

Submissions to or Communications with the Panel

Any submission for consideration by a chairman or panel must be submitted to the Market Regulation
Department with copies simultaneously served on each other party or designated representative of aparty.
After a dispute has been submitted for arbitration, a Person filing the claim or required to respond to theclaim and any Person asked to provide documents, information or testimony in connection with suchclaim shall not contact any member of a panel appointed to hear the claim for any purpose related tothe dispute described by the claim.

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1202.V.

Arbitration Fees

Any Person submitting an arbitration claim shall remit the applicable fees as may be determined by theMarket Regulation Department at the time of submission in order for such action to be effective.
1202.W.

Confidentiality

Any and all documents, data, testimony, or other information obtained as part of an arbitration pursuant
to this Rule shall be treated as strictly confidential by the parties to the Arbitration and the Member
Panel. Such documents, data, testimony or other information may only be used for purposes of thearbitration or to confirm, vacate, modify or correct an award in a court of law and for no other purpose.

1203.

DELIVERY FACILITIES AND DELIVERY PROCEDURES
1203.A.

Scope of Rule

Deliveries and delivery facilities shall be governed by this Rule and, where applicable, the Section ofChapter 12 which includes contract specifications for the commodities being delivered and such otherrequirements as CME Spot Market may prescribe.
1203.B.

Declarations of Force Majeure

If a determination is made by the Chief Executive Officer, President of Global Operations, Technology &Risk or Chief Operating Officer, or their designee, that delivery or final settlement of any spot contract
cannot be completed as a result of Force Majeure, he shall take such action as he deems necessary
under the circumstances, and his decision shall be binding upon all parties to the contract.
It shall be the duty of Members and regular facilities to notify CME Spot Market of any circumstancesthat may give rise to a declaration of Force Majeure.
Nothing in this Rule shall in any way limit the authority of the Chief Regulatory Officer to act in a Force
Majeure situation pursuant to CME Spot Market Rule 1200.D.
1203.C.

Regular Warehouses

Conditions for Approval
Warehouses (hereafter “facilities”) may be declared regular for delivery with the approval of CME Spot
Market. Persons operating facilities who desire to have such facilities made regular for delivery shallmake application for a declaration of regularity annually on a form prescribed by CME Spot Market priorto October 31.
Initial regularity shall be effective either thirty days after CME Spot Market posts a notice that a bonafide application has been received or the day after the application is approved by CME Spot Market,
whichever is later.
CME Spot Market may establish such requirements and conditions for approval of regularity as it deems
necessary. The application for regularity prescribed by CME Spot Market shall set forth conditions ofregularity as well as other agreements with which the operator of the regular facility shall comply. In
addition to any conditions and agreements contained in such application or in the relevant productsection, the following shall constitute conditions for regularity and requirements with which the operator
of a regular facility shall comply:
1.

Facilities shall be a licensed, public, cold and/or dry storage warehouse and meet all local, stateand federal requirements.

2.

The operator of such facility shall be in good financial standing and credit. Financial statements
must be reviewed or audited in accordance with U.S. Generally Accepted Accounting Principles orother international financial standards as deemed acceptable by CME Spot Market. On an annual
basis, the facility shall provide CME Spot Market with copies of reviewed or audited financial
statements of the facility, and its parent company (as applicable), as the reviewed or audited
financial statements become available. Additionally, the facility must provide CME Spot Market
with notice of any substantial reduction in capital as compared to the most recent filing of a financial
report.

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3.

The operator of the facility shall promptly advise the Registrar of any issues at the facility which
may cause damage to product held in store by it, whenever such damage shall occur to an extent
that will render the product undeliverable.

4.

The operator of the facility shall make such reports, keep such records and permit such facility
visitation as CME Spot Market, or any other applicable government agency may require.

5.

No facility shall be declared regular unless it has in force and effect warehouseman’s legal liability
insurance issued by such insurance companies and upon such terms and conditions as are
satisfactory to CME Spot Market.

6.

Facilities shall provide such guarantees, bonds or other financial instruments to CME Spot Market
as may be required to guaranty the performance of its obligations pursuant to these Rules and any
conditions set forth in the conditions for approval.

7.

The facility is not required to own the storage facility and may lease the storage facility from theowner upon such terms and conditions as are satisfactory to CME Spot Market. The facility may
also enter into a service arrangement pursuant to which an agent or contractor performs the daily
operations of the storage facility upon such terms and conditions as are satisfactory to CME Spot
Market. The facility shall be responsible for the conduct of its agents or contractors.

8.

All officers, directors, employees and agents of a facility shall be prohibited from revealing any
information regarding customers who have dealings with the facility except as permitted by CME
Spot Market.
In the event the facility or any of its respective parent, subsidiaries or affiliates, engage in any
trading activity, whether directly or indirectly, for which the facility has received approval for
regularity, the facility shall institute such controls as CME Spot Market, at its discretion, deems
necessary to protect the confidentiality of the users of the facility.

9.

The operator of the facility shall not engage in unethical or inequitable practices, and shall comply
with all applicable federal or state statutes, rules or regulations.

10. Members operating regular facilities shall be subject to CME Spot Market Rules and shall abide by
and comply with the terms of any disciplinary decision imposed against it pursuant to CME Spot
Market Rules.
11. Members operating regular facilities shall consent to the disciplinary jurisdiction of CME Spot
Market for five years after such regularity lapses, for conduct which occurred while the facility wasregular.
CME Spot Market, in its sole discretion, may determine not to approve facilities for regularity, regardlessof whether such facilities meet the preceding requirements and conditions.
1203.D. Revocation, Expiration or Withdrawal of Regularity
The Chief Regulatory Officer or his designee may revoke a declaration of regularity whenever a regularfacility fails to comply with the conditions specified in this section, any other conditions to which it has
agreed in its application for regularity, or any other CME Spot Market Rule.
Unless a shorter notification period is otherwise authorized by CME Spot Market, a facility shall give six(6) months prior written notice to withdrawing from regularity.
If the designation of a facility as regular is withdrawn or revoked, a notice shall be posted announcing
such revocation and also the period of time.
1203.E.

Liability for Negligence of Graders

CME Spot Market shall not be liable for any error or negligence of any grader, and all claims for liability
relating to grading or certificates of analysis shall be waived.
1203.F.

Finality of USDA or Other Required Grading Certificate or Certificate of Analysis

CME Spot Market assumes no responsibility and disclaims all liability on account of the grade, quantity
or specifications of any commodity delivered on the basis of a USDA or other required grading
certificate or certificate of analysis.

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1203.G.

AppendixService Providers
1204.

SPOT CALL NONFAT DRY MILK
1204.A.

Commodity Specifications

The nonfat dry milk shall be free flowing and manufactured using the spray process with a low heat
treatment classification. It shall not show less than 6.0 milligrams undenatured whey protein nitrogen
per gram. On the day of sale, the nonfat dry milk shall be less than 180 days old. All nonfat dry milk
shall be certified Kosher by a Rabbinical Service that provides Kosher classification. The methods ofanalysis shall be those specified by the USDA.
All nonfat dry milk sold on CME Spot Market shall have been produced in facilities that at the time of
production have been surveyed and approved by the Grading Service of the USDA and are on theeligible list of that Service or on the U.S. Department of Health and Human Services, Public HealthService, Food and Drug Administration IMS List, Sanitation Compliance and Enforcement Ratings ofInterstate Milk Shippers.
Definitions
1.

The "spot call" is the procedure for trading and delivering nonfat dry milk as more fully set forth in
this Rule.

2.

The "day of sale" is the day on which trading on the spot call is conducted.

3.
4.
5.
6.

The ‘day of tender’ is the first business day after the day of sale.
The "day of invoice” is the second business day after the day of sale.
The "day of delivery” is the sixth business day after the day of sale.
A "carlot" consists of between 41,000 and 45,000 pounds, net weight, of nonfat dry milk which must
be manufactured on or before the day of sale. No carlot shall consist of more than 3 sublots andeach carlot shall be manufactured by a single plant.

7.

“Certificate of Analysis” means a legible document, endorsed by a lab technician and/or quality
manager, certifying the following with respect to the Grade A Nonfat Dry Milk being offered for sale:(a) the warehouse or plant location; (b) the storage lot, and if applicable, release number; (c) the
number of bags in each sublot and total number of bags in the warehouse lot and the marked
weight; (d) the date in storage and storage type; (e) that the butterfat content of the nonfat is not
more than 1.25%; (f) a moisture content of not more than 4.00%; (g) its titratable acidity shall be notmore than 0.15%; (h) its solubility index shall be not more than 1.2 milliliters; (i) that it shall have abacterial estimate of not more than 10,000 per gram; (j) coliform of less than 10 per gram; (k) its
scorched particle content shall be not more than 15.0 grams; (l) yeast and mold; (m) salmonella; (n)whey protein nitrogen; (o) and heat process.

1204.B. Spot Call
Trading Schedule
Contracts shall be scheduled for trading and delivery during such hours and days as may be
determined by CME Spot Market.
Price Fluctuations
The minimum price fluctuation shall be $.0025 per pound.
The first posted bid (offer) of each trading session shall not be more than $.01 higher (lower) than thelast market price noted for the previous session. Subsequent bids (offers) that would establish orchange the market price for the current session, or any responses to posted offers (bids) higher (lower)
than the last market price, shall be made in price increments not to exceed $.01 per pound from the lastmarket price.
Posting Bids and Offerings
A spot load can only be sold on CME Spot Market when, at the time of offering, the seller has© Copyright Chicago Mercantile Exchange, Inc. All rights reserved.

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documented possession/ownership of a deliverable load.
Quantities Bid and Offered
An offer to sell or bid to buy more than one carlot may be accepted in part or in full.
Contract Modifications
All deliveries must conform to government regulations in force at time of delivery. If any federal
governmental agency issues an order, ruling, directive or law that conflicts with the requirements ofthese Rules, such order, ruling, directive or law shall be construed to take precedence and become partof these Rules.
1204.C.

Settlement Procedures

Seller's Duties
1.
2.

3.

The seller shall provide details about the nonfat dry milk, i.e., Certificate of Analysis, to the Clearing
House and Buyer, by 3:00 p.m. (Chicago time) on the day of tender.
The seller shall, by 3:00 p.m. (Chicago time) on the day of tender, deliver to the Clearing House thefollowing:
Any other documentation required by CME Spot Market.
Upon receipt of buyer's instructions, seller shall immediately make shipment in accordance
therewith. If the seller is unable to obtain shipping facilities, seller shall promptly notify buyer of its
inability to obtain shipping facilities and ship at the earliest opportunity. Nonfat dry milk shall be
loaded on truck and shipped as directed by the buyer. All other transportation charges shall beborne by the buyer.

Buyer's Duties
1. The buyer shall, by 5:00 p.m. (Chicago time) on the day of tender, notify the Clearing House if thenonfat dry milk is to be inspected.
2.

The buyer shall be responsible for arranging and providing transportation for the nonfat dry milk.
The buyer shall deliver instructions for shipping and routing to final destination via the Clearing
House’s online deliveries system by 12:00 noon (Chicago time) on the third business day after the
day of sale. If the buyer fails to deliver such instructions within the required time or if the buyer fails
to pick up the nonfat dry milk at the specified date and time, the seller shall either store the nonfat
dry milk and charge the buyer the generally accepted commercial monthly rate or ship the nonfat
dry milk by truck or rail to the buyer at the buyer's main warehouse.

3.

The buyer’s clearing firm shall make payment by certified check or wire transfer of same day funds
to the seller’s clearing firm in the amount due as shown by the seller’s tender notice by 3:00 p.m.
(Chicago time) on the first business day after the day of invoice.

Clearing House Responsibilities
The Clearing House shall make available an invoice that specifies the date and price of sale. The
freight differential, if any, shall be credited to the buyer on the invoice.
1204.D.

Deviations and Allowances WeightThe delivered carlot may vary between 41,000 and 45,000 pounds in net weight. Payment shall bemade on the basis of the exact net weight delivered.
Delivery Points
Delivery may be made only from approved plants or approved warehouses within the 48 contiguous
states. Par delivery of nonfat dry milk shall be made from approved warehouses or approved plants in
Chicago. Deliveries made from approved warehouses or approved plants outside of Chicago shall be
subject to a freight allowance determined by CME Spot Market as follows: up to 400 miles outside
Chicago with a discount of $.0125 per pound; between 400 and 800 miles outside Chicago with a
discount of $.025 per pound; between 800 and 1200 miles outside of Chicago with a discount of $.0325
per pound; between 1200 and 1600 miles outside Chicago with a discount of $.040 per pound; andbeyond 1600 miles outside Chicago with a discount of $.055 per pound. The allowance shall be© Copyright Chicago Mercantile Exchange, Inc. All rights reserved.

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calculated on the net weight delivered.
1204.E.

Packaging

The nonfat dry milk shall be packaged in multiwall paper bags of 25 kilogram net capacity. The bagshall be constructed of a minimum of 3 walls of flat or extensible kraft paper and a minimum 2.0 mil(guaranteed) low density polyethylene food grade liner. The total basis weight of the walls of paper
shall be a minimum of 160 pounds when flat kraft or extensible paper is used. All bags shall show thename and location of the manufacturing plant or a USDA plant number, the manufacturer's lot andsublot number, net weight, the date of manufacture, and the grade.
The closure for the bag shall meet one of the two following descriptions:
1. The bottom and top closures of the bag shall be closed by sewing through all walls of the outer bagwith 12/6 needle and 12/5 cotton looper thread, or a comparable strength or with a single thread chain
stitch with a 12/6 thread. The stitches shall be spaced 3.0 to 3.6 to the inch and not less than 3/8 inch
and not more than 3/4 inch from the top and bottom ends of the bag. The stitches along the bottom andtop of the bag shall be covered with not less than 70-pound basis weight flat extensible or low stretch
creped kraft tape.
2. The bottom and top of the bag shall be closed to provide a tight seal using hot-melt orthermoplastic adhesive applied along the top edge of the long side of the bag extending downward atleast 1-3/8 inches. The fold line of the closure shall be 1-5/8 inches plus or minus 3/8 inch below the
top edge of the long side of the bag. The outer wall of the bag shall be stepped at the bottom and top
foldover flap beyond all inner walls in order to provide a positive seal over the ends of the inner walls.
1204.F.

Inspection

Buyer or seller may demand inspection of nonfat dry milk for grade before it is shipped. Suchinspection shall be made prior to shipment at seller's facilities or at a warehouse near the seller’sfacilities and cost to be borne by the party requesting the grade. Such inspection shall be made by anindependent lab and the results of such inspection shall be final and binding to both parties.
If an inspection is requested the following deadlines shall apply.
1.

Buyer shall pay 90% of the amount invoiced within one (1) business day after the day of invoice,and the balance when inspection is complete.

2.

Buyer or seller shall enter the grading results into the Clearing House’s online deliveries system
within one business day of grading issuance.

If the buyer inspects and accepts the nonfat dry milk or if he waives inspection, he cannot thereafter
dispute the grade of the nonfat dry milk delivered to him.
Any nonfat dry milk in dispute shall be properly stored by the Person having possession.
1204.G.

Delivery Procedures

The buyer must pick up the nonfat dry milk no later than 6 business days after the date of sale, unless
an inspection is called for by the buyer or seller, in which case, the buyer will receive an additional 16
calendar days for pick up.
For loads that receive a failing grade, the following will take place:1.

Nonfat dry milk failing to meet the requirements will be replaced with nonfat dry milk meeting therequirements as stated in these Rules.

2.

A seller will have a replacement load available for pick up 3 business days after issuance of theinspection certificate.

3.

The buyer shall submit shipping and routing instruction by 12:00 p.m. (Chicago Time) within one (1)business day of receipt of a replacement load or a passing grading result.

4.

A buyer will pick up the replacement load 3 business days after the load is made available from theseller.

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5.

Documentation of replacement and pick up will be sent to the Clearing House within two businessdays after pick up.

Any claim regarding performance by the buyer or seller of the Rules of this Section shall be reporting to
the Clearing House within Ten (10) calendar days of delivery.
The Market Regulation Department has the authority to perform audits of all market participants.
Proper Handling by the Seller
If an inspection is requested at buyer's location, the seller shall be responsible for loading according toindustry practice. The bill of lading shall be prepared by the seller. The seller and the driver shall jointly
seal the truck promptly upon completion of loading. The buyer may, at his option, request checkloading by the USDA at origin.
Proper Handling by the Buyer
If an inspection is requested at buyer's location, the buyer shall be accountable for proper handlingduring transit and storage until the conclusion of the grading at the buyer's location and appeal grading,if any. Upon arrival at the buyer's location, the buyer and the driver shall jointly unseal the truck. The
seller may, at his option, request check loading by the USDA at the buyer's location.
Appeal Grading
Following an inspection at the buyer's location, the buyer shall enter the grading results into theClearing House’s online deliveries system within one (1) business day of grading issuance. A request
may then be made by the seller for an appeal inspection. Requests for such appeal must be presented
to the Clearing House no later than 11:00 a.m. (Chicago time), one business day after notification to theseller of the results of the inspection at the buyer's location.
Appeal inspections shall be conducted by an independent lab. Applications for appeal inspections will
be accepted or rejected in accordance with industry regulations and the results of the appeal inspection
shall be final.
Revocation of Plant Approval
If upon valid inspection at the buyer's location according to these Rules, portions of three or more
carlots which have been shipped directly from the same manufacturing plant fail to meet the contract
requirements within a single 12 month period, then the delivery approval of the plant may be revoked.
Any nonfat dry milk originating in such plant after the date of such revocation and put into storage shallalso be ineligible for delivery on the spot call.
1204.H.

Associated Costs

Delivery from Warehouse
The seller shall assume storage charges until 5:00 p.m. on the fifth business day after the day of tender.
If an inspection is requested, and it indicates that the product is not equal to or better than therequirements specified by the terms of sale, the seller shall be responsible for storage charges until theseller or buyer provides the Clearing House with a certificate of analysis indicating that the product isequal to or better than the requirements specified by the terms of sale. At that point, the buyer shall be
responsible for storage charges for the remainder of the storage month. The buyer's share shall becomputed by dividing the prevailing monthly storage rate by 30, raising the quotient to the nearest five
cents and multiplying by the number of days remaining until the next expiration date (all months figured
as 30 days). Storage charges shall be paid in advance by the seller and the pro rata share due fromthe buyer shall be added to and shown on the tender notice. All charges for handling prior to the daythat the seller or buyer provides the Clearing House with a certificate of analysis indicating that the
product is equal to or better than the requirements specified by the terms of sale shall be borne by theseller. All charges incurred thereafter shall be borne by the buyer.
Delivery from Plant
If the buyer does not remove the nonfat dry milk from the plant of the seller on or before 3:00 p.m. local
time on the fifth business day after the day of tender, the buyer shall be obligated to pay $.005 perpound for each subsequent calendar day, up to and including the day the nonfat dry milk is removed.
The seller must, within two business days after removal of the nonfat dry milk, invoice such amounts to© Copyright Chicago Mercantile Exchange, Inc. All rights reserved.

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the buyer and send a copy of such invoice to CME Spot Market. The buyer shall make payment to theseller.
Only the original manufacturing plant can deliver the carlot from its plant. If that carlot is to be resold on
CME Spot Market it must be moved to an approved warehouse before it can be sold.
Costs of Grading and Appeal Grading
The costs of all examinations, documentation and related services performed by independent labs forinspection at the buyer's or seller’s location and appeal grading, if any, and the costs of CME Spot
Market documentation and related services, such as repackaging after examination, shall be borne by
the buyer if the requirements for each sublot specified by the terms of sale is upheld, and by the seller if
it is not.
Container and Pallet Charges
Nonfat Dry Milk must be loaded on pallets for shipping. Buyer must make payments at $12.50 per
pallet.
1204.I.

Settlement of Disputes

All disputes arising from the operation of this Section shall be arbitrated under the provisions of theRules of CME Spot Market.
1204.J.

CME Spot Market Fees

A fee of $25.00 per carlot shall be paid to CME Spot Market by both the buyer and the seller.
1204.K.

Failure to Perform

If the seller fails to deliver at the required time, he shall be in default, except that the Chief Regulatory
Officer or his designee may extend the time to deliver for good cause shown, an additional three hours.
In the event a seller defaults, he shall be penalized $.10 per pound plus the advance, if any, from thepurchase price to the full market price on the day of tender. The Chief Regulatory Officer or his
designee, at its sole discretion, shall determine such market price by taking account of bona fide sales
and quotations on such date including any purchase by the buyer to replace the defaulted delivery.
If the buyer fails to accept delivery, he shall be penalized $.10 per pound plus the decline, if any, fromthe purchase price to the full market price on the day of tender, as determined by the Chief Regulatory
Officer or his designee in the above stated manner. Payment shall be made as above.
With the exception of Force Majeure, any failure to meet the deadlines set forth within this Section will
subject one or both parties to a penalty of $500 per contract, per calendar day payable to CME Spot
Market at the close of each day. Repeated failure may result in suspension of trading privileges or
expulsion for one or both parties.
Sellers or Buyers who submit late, materially incomplete or erroneous delivery information or who causematerial adjustments to delivery information shall be fined $200 per contract per day, payable to thebuyer or seller depending on the party that is harmed.

1205.

SPOT CALL BUTTER
1205.A.
Commodity Specifications
Definitions
1. The "spot call" is the procedure for trading and delivering cash butter as more fully set forth in thischapter.
2. “Butter means salted butter that conforms to the definition of butter contained in 21 U.S.C. ∫ 321a,
is made entirely from sweet cream, and, if graded by USDA, would be certified Grade AA Butter. All
butter shall be certified Kosher by a Rabbinical Service that provides Kosher classification.
3. A "carlot" consists of between 40,000 and 43,000 pounds, net weight, of salted butter in not morethan four churn lots, produced by a single plant. The butter must be uniform in color and salt. The
butter must be manufactured on or before the date of sale. All butter sold on CME Spot Market
shall have been produced in facilities that at the time of production have been surveyed andapproved by the Grading Service of the USDA and are on the eligible list of that Service or on the
U.S. Department of Health and Human Services, Public Health Service, Food and Drug
Administration IMS List, Sanitation Compliance and Enforcement Ratings of Interstate Milk
Shippers.

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“Certificate of Analysis” means a legible document, endorsed by a lab technician and/or quality
manager, certifying the following with respect to the butter being offered for sale: (a) the warehouseor plant location; (b) the storage lot, and if applicable, release number; (c) the number of boxes ineach churn, total number of boxes in the warehouse lot and the marked weight; (d) the date instorage and storage type; (e) that the butterfat content of the butter is equal to or greater thaneighty (80) percent by weight of milkfat; (f) that the moisture content is less than or equal toeighteen (18) percent by weight; (g) that the salt content is not less than 1.2 percent nor more thantwo (2) percent by weight; (h) that the standard plate count is less than five thousand (5,000) per
gram; (i) that coliforms are less than 10 per gram; and that the yeast and mold count is less thantwenty (20) per gram.
5. "Fresh Butter" shall be butter that, on the day of sale, has been in cooler rooms or freezer rooms ofapproved plants for 15 calendar days or less, or cold storage warehouses for 24 calendar days orless from date of manufacture of the earliest churning in the carlot at temperatures not to exceed
45 degrees Fahrenheit.
6. "Storage Butter" shall be butter that, on the day of sale, has been in cold storage or an approved
plant 25 calendar days or longer from the date of manufacture of the earliest churning in the carlot
at temperatures not to exceed 45 degrees Fahrenheit. Commencing on the 30th calendar day after
the date of manufacture of the earliest churning in the carlot, the butter shall be held attemperatures not to exceed 0 degrees Fahrenheit. Storage butter may not be delivered if the dayof sale is later than the 10th business day of the 12th month after the month of manufacture of theearliest churning in the carlot. Effective March 1, 2001, to be eligible for sale on or after March 1 ofa given year, the butter shall not have been produced or stored prior to December 1 of the previous
year.
7. The “day of sale” is the day on which trading on the spot call is conducted.
8. The “day of tender” is the first business day after the day of sale.
9. The “day of invoice” is the second business day after the day of sale.
10. The “day of delivery” is the fourth business day after the day of sale.
1205.B.
Spot Call
Trading Schedule
Contracts shall be scheduled for trading and delivery during such hours and days as determined by
CME Spot Market.
Price Fluctuations
The minimum price fluctuation shall be $.0025 per pound.
The first posted bid (offer) of each trading session shall not be more than $.01 higher (lower) than thelast market price noted for the previous session. Subsequent bids (offers) that would establish orchange the market price for the current session, or any responses to posted offers (bids) higher (lower)
than the last market price, shall be made in price increments not to exceed $.01 per pound from the lastmarket price.
Posting Bids and Offerings
A spot load can only be sold in CME Spot Market when, at the time of offering, the seller has
documented possession/ownership of a deliverable load.
Quantities Bid and Offered
An offer to sell or bid to buy more than one carlot may be accepted in part or in full.
Contract Modifications
All deliveries must conform to government regulations in force at time of delivery. If any federal
governmental agency issues an order, ruling, directive or law that conflicts with the requirements ofthese Rules, such order, ruling, directive or law shall be construed to take precedence and become partof these Rules.
1205.C.
Settlement Procedures
Seller's Duties
1. The seller shall provide details about the butter, i.e. Certificate of Analysis, to the Clearing Houseby 3:00 p.m. (Chicago time) on the day of tender.
2. The seller shall make the butter available for shipment on the day of sale.
3. The seller shall, by 3:00 p.m. (Chicago time) on the day of tender deliver to the Clearing House the4.

© Copyright Chicago Mercantile Exchange, Inc. All rights reserved.

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following:
Any other documentation required by the Spot Call Market.
4. A keeping quality test shall not be necessary for delivery on the spot call. However, the seller of a
carlot of Fresh Butter warrants that, should a 7–day 72 degree Fahrenheit keeping quality test becompleted by the USDA within 14 calendar days of day of tender, the tendered carlot would passsuch test. Failure to pass such test, if conducted within the prescribed period, shall result in
replacement of the failed churnings by the seller and compensation to the buyer for expenses andlosses, according to normal industry practices. If the seller elects to have USDA conduct such test
the results shall be final and binding on both the Buyer and the Seller.
Buyer's Duties
1. The buyer shall, by 5:00 p.m. (Chicago time) on the day of tender, notify the Clearing House if thebutter is to be inspected.
2. The buyer shall be responsible for arranging and providing transportation for the butter.
3. The buyer's clearing firm shall make payment by certified check or wire transfer of same day funds
to the seller's clearing firm in the amount due as shown by the seller's tender notice by 3:00 p.m.
(Chicago time) on the first business day after the day of invoice.
Clearing House Responsibilities
The Clearing House shall make available an invoice that specifies the date and price of sale. The freight
differential or discount, if any, shall be credited to the buyer on the invoice.
1205.D.
Deviations and Allowances
Discounts for Frozen and for Storage Butter
If the carlot tendered is fresh butter located in a freezer room, it shall be discounted $.005 per pound. If
the carlot tendered is storage butter located in a cooler room, it shall be discounted $.005 per pound. If
the carlot tendered is storage butter located in a freezer room, it shall be discounted $.01 per pound.
Discount for In-Plant Delivery
If the carlot tendered is located in a plant, it shall be discounted $.03 per pound.
Weight
The delivered carlot may vary between 40,000 and 43,000 pounds in net weight. Payment shall bemade on the basis of the exact weight delivered.
Delivery Points
Delivery may be made only from approved locations in the contiguous 48 states.
Par delivery of butter shall be made from approved warehouses or approved plants in Chicago.
Deliveries made from approved warehouses or approved plants outside of Chicago shall be subject to a
freight allowance determined by the CME Spot Market as follows: up to 400 miles outside Chicago witha discount of $.0125 per pound; between 400 and 800 miles outside Chicago with a discount of $.025
per pound; between 800 and 1200 miles outside Chicago with a discount of $.0325 per pound; between
1200 and 1600 miles outside Chicago with a discount of $.040 per pound; and beyond 1600 miles
outside Chicago with a discount of $.055 per pound. The allowance shall be figured on the net weightdelivered plus a two pound per box tare.
1205.E.
Packaging
Butter shall be packaged to conform to the packaging specifications of the Commodity Credit
Corporation for bulk butter in force on the date of manufacture, as contained in "Announcement DAIRY7, Purchase of Bulk Dairy Products", as amended, or in such other document or announcement as may
supersede this publication. In addition, each carlot shall contain only one type and marked weight ofbox 25 kilograms or 68 pounds net capacity; all the boxes in a churning shall be consecutively
numbered; the butter in each box shall be one solid piece and no bulging or misshapen boxes shall bepermitted.
1205.F.
Inspection
Buyer may require that seller obtain an inspection for grade of the butter before it is shipped. Suchinspection for grade shall occur prior to shipment at seller’s facilities or at a warehouse near the seller’sfacilities. Inspection for grade shall include completion of keeping quality test, and may be performed
either by a USDA grader or by an independent laboratory chosen or agreed to by the buyer. The resultsof such grading shall be final and binding on both parties.
If buyer requires that the butter be inspected for grade, the following deadlines shall apply:© Copyright Chicago Mercantile Exchange, Inc. All rights reserved.

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1.

Buyer shall pay 90% of the amount invoiced one (1) business day after the day of invoice, and thebalance when inspection is complete.
2. Seller shall contact USDA grading service or the independent laboratory within one (1) business
day of buyer’s demand and shall arrange for the inspection for grade. Seller shall notify buyer andClearing House of the date on which the inspection for grading is scheduled to occur.
3. If the butter fails inspection for grade:a. Seller shall make a replacement load available for pick-up not later than three (3) businessdays after USDA or independent laboratory discloses the results of the inspection forgrade. Seller shall enter the grading result into the Clearing House’s online delivery’ssystem within one business day of grading issuance.
b. Buyer shall pick up the replacement load not later than three (3) business days after theload is made available by the seller; andc. Buyer shall send documentation of replacement and pick-up to the Clearing House within
two (2) business days after pick-up.
The costs of all inspections, documentation and related services performed by USDA grading services
or by the independent laboratory, the costs of CME Spot market documentation, and the costs of any
related services, such as repackaging after inspection, shall be borne by the buyer if USDA certifies thebutter Grade AA, or if the independent laboratory certifies that the butter meets the standards in seller’sCertificate of Analysis; or by the seller, if USDA or inspection service, whichever has been chosen, does
not certify.
If the buyer inspects and accepts the butter or waives inspection, the buyer cannot therefore dispute thegrade of the butter delivered.
Any butter in dispute shall be properly stored by the person having possession.
A USDA grading certificate shall not be valid for delivery if the butter has been moved from the location
indicated on the certificate. The USDA grading certificate shall indicate state(s) of manufacture. Sample
containers shall be drawn randomly in conformance with DA Instruction 918 00 of the Dairy Division,
Agricultural Marketing Service (AMS), USDA, or in such other document or announcement as may
supersede this publication.
1205.G.
Delivery Procedures
The buyer shall have the right to call for one grading of the carlot at the buyer's destination, either by a
USDA grader or by an independent laboratory. The buyer shall within one (1) business day, request
USDA or independent laboratory to conduct the grading at the buyer's destination and notify the seller.
Grading at destination shall be completed within 16 calendar days of the day of tender, including
completion of a keeping quality test.
Failure of any churning to meet all the requirements of this Section shall result in replacement of thefailed churnings by the seller and compensation to the buyer for expenses, or reimbursement to thebuyer of the entire contract priceAny claim regarding performance by the buyer or seller of the Rules of this Section shall be reporting to
the Clearing House within Ten (10) calendar days of delivery.
Proper Handling by the Seller
The seller shall be responsible for loading according to industry practice. The bill of lading shall be
prepared by the seller and shall provide instructions regarding trailer precooling and temperature
maintenance during transit. In addition, the bill of lading shall state the time of completion of loading
and shall be signed by the seller and the driver, with the seller retaining one copy and the driver threecopies. The seller and the driver shall jointly seal the truck promptly upon completion of loading. The
buyer may, at his option, request check loading by the USDA at origin.
Proper Handling by the Buyer
The buyer shall be accountable for proper handling during transit and storage until the conclusion of thegrading at destination and appeal grading, if any.
In particular, the truck shall be a properly refrigerated vehicle and shall be cooled prior to loading to atemperature not to exceed 45 degrees Fahrenheit if the butter is fresh and to a temperature not toexceed 0 degrees Fahrenheit if the butter is frozen.
The bill of lading shall state that the truck was properly pre-cooled and that the applicable temperature
was maintained throughout transit. Transit time between origin and destination, as evidenced by ICC
logs, shall be normal for the weather and other conditions prevailing. Upon arrival at destination, the© Copyright Chicago Mercantile Exchange, Inc. All rights reserved.

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buyer and the driver shall jointly unseal the truck. The seller may, at his option, request check loadingby the USDA at destination.
The driver's copies of the bill of lading shall be endorsed by both the driver and the buyer upon arrival
stating the time of arrival at destination, the time unloading commenced and the time unloading wascompleted. The buyer shall indicate the condition of the butter upon arrival at destination on the bill of
lading and the driver shall indicate the place of unloading (i.e. dock, cooler or freezer). The buyer shallkeep one copy, the driver one copy and one copy shall be sent by the buyer to the Clearing House.
The buyer shall be able to produce evidence in the form of affidavits that unloading into proper
refrigerated storage with temperatures prevailing as above was prompt and according to normalindustry practice. The buyer shall be able to produce evidence in the form of affidavits that storage
thereafter until completion of grading at destination and appeal grading, if any, was within applicabletemperatures as above and in all other ways conformed to normal industry practice.
Failure by the buyer to meet the conditions of Rule 1205.G shall result in forfeiture of the right tocompensation for expenses and losses.
Appeal Grading
Following grading at destination, the buyer shall enter the grading results into the Clearing House’s
online deliveries system within one business day of grading issuance. A request may then be made by
the seller for appeal grading. Requests for such appeal must be presented to the Clearing House nolater than 11:00 a.m. Chicago time, one business day after notification to the seller of the results of thegrading at destination.
Appeal grading shall be conducted by a grader(s) assigned by the Regional Director of Dairy Inspection
and Grading, AMS, USDA. Applications for appeal grading will be accepted or rejected in accordancewith AMS regulations. The results of the appeal grading shall be final.
Revocation of Plant Approval
If upon valid grading at destination according to these Rules, portions of three or more carlots from thesame manufacturing plant grade lower than USDA Grade AA within a single 12 month period, then thedelivery approval of the plant may be revoked. Any butter originating in such plant after the date ofsuch revocation and put into storage shall also be ineligible for delivery on the spot call.
1205.H.
Associated Costs
Delivery from Warehouse
The seller shall assume storage charges until 5:00 p.m. on the third business day after the date of
tender. The buyer shall be responsible for charges for the remainder of the storage month. The buyer's
share shall be computed by dividing the prevailing monthly storage rate by 30, raising the quotient to
the nearest five cents and multiplying by the number of days remaining until the next expiration date (allmonths figured as 30 days). Storage charges shall be paid in advance by the seller and the pro rata
share due from the buyer shall be added to and shown on the tender notice. All charges for handlingprior to the date of tender shall be borne by the seller. All charges incurred thereafter shall be borne by
the buyer.
Delivery from Plant
If the buyer does not remove the butter from the plant of the seller on or before 3:00 p.m. local time on
the third business day after the day of tender, the buyer shall be obligated to pay $.005 per pound foreach calendar day subsequent thereto, up to and including the day the butter is removed. The seller
must within two business days after removal of the butter invoice such amounts to the buyer and send a
copy of such invoice to CME Spot Market. The buyer shall make payment through CME Spot Market.
The original manufacturing plant can only deliver the carlot from its plant. If that carlot is to be resold on
CME Spot Market it must be moved to an approved warehouse before it can be sold.
Costs of Grading and Appeal Grading
The costs of all examinations, documentation and related services performed by the USDA grader forgrading at destination and appeal grading, if any, and the costs of CME Spot Market documentation andrelated services, such as repackaging after examination, shall be borne by the buyer if the original
grade for each churning is upheld, and by the seller if it is not.
1205.I.
Settlement of Disputes
All disputes arising from the operation of this shall be arbitrated under the provisions of CME Spot
Market.
The Market Regulation Department has the authority to perform audits of all market participants.

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1205.J.
CME Spot Market Fees
A fee of $25.00 per carlot shall be paid to CME Spot Market by both the buyer and the seller.
1205.K.
Failure to Perform
If the seller fails to deliver at the required time, he shall be in default, except that CME Spot Market
Chief Regulatory Officer or his designee may extend the time to deliver for good cause shown, an
additional three hours. In the event a seller defaults, he shall be penalized $.10 per pound plus theadvance, if any, from the purchase price to the full market price on the day of tender. The Chief
Regulatory Officer or his designee, at its sole discretion, shall determine such market price by taking
account of bona fide sales and quotations on such date including any purchase by the buyer to replace
the defaulted delivery.
If the buyer fails to accept delivery, he shall be penalized $.10 per pound plus the decline, if any, fromthe purchase price to the full market price on the day of tender, as determined by the Chief Regulatory
Officer or his designee in the above stated manner. Payment shall be made as above.
With the exception of Force Majeure, any failure to meet the deadlines set forth within this Section will
subject one or both parties to a penalty of $500 per contract, per calendar day payable to the CME Spot
Market at the close of each day. Repeated failure may result in suspension of trading privileges or
expulsion for one or both parties.
Sellers or Buyers who submit late, materially incomplete or erroneous delivery information or who causematerial adjustments to delivery information shall be fined $200 per contract per day, payable to thebuyer or seller depending on the party that is harmed.

1206.

SPOT CALL CHEESE
1206.A.
Commodity Specifications
Definitions
1. The "spot call" is the procedure for trading and delivering cash cheese as more fully set forth in thisRule.
2. A "carload" consists of between 40,000 and 44,000 pounds, gross weight.
3. The "day of sale" is the day on which trading on the spot call is conducted.
Varieties
The following "Varieties" of cheese, as defined in the standards of identity established by the Food &Drug Administration in Code of Federal Regulations, Title 21, Part 133 (21 CFR 133), as amended fromtime to time, may be traded on the spot call:
Cheddar cheese
Cheddar cheese for manufacturing
Granular cheese
Granular cheese for manufacturing
StylesTrading in the several varieties shall be limited to the following "styles":Variety
Style
Cheddar cheese
40# blocks(Manufactured from pasteurized milk only.)
Cheddar cheese, cheddar cheese for manufacturing,
Barrels
granular cheese, granular cheese for manufacturing
GradesCheese in 40# block style shall meet the requirements of Wisconsin State Brand, USDA Grade A or
better.
Cheese in barrel style shall meet the requirements of Wisconsin State Brand, USDA Extra Grade or
better.
Age
Unless a bid or offer specifies otherwise, on date of sale cheese shall be not less than four days ormore than one month (30 calendar days) of age.
Moisture Content
Moisture content for cheese in 40# block style shall not be less than 36.5%.

© Copyright Chicago Mercantile Exchange, Inc. All rights reserved.

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ColorCheese in barrels shall be white. Cheese in 40# block style shall be colored and shall fall within thecolor range of 6-8 on the NCI color chart.
Marking
All cheese sold on CME Spot Market shall show upon each package the shipper's lot number, net
weight, vat number, and date and shall not contain upon the cheese and package any brand or printed
information except such information as is required by this Rule and by law.
Approved Factories
All cheese sold on CME Spot Market shall have been produced in factories which at the time of
production have been surveyed and approved by the Grading Service of the USDA and are on theeligible list of that Service.
1206.B.
Spot Call
Trading Schedule
Contracts shall be scheduled for trading and delivery during such hours and days as determined by
CME Spot Market.
Price Fluctuations
All bids and offers shall be at a stated price per pound. Fractions of a cent shall be stated in multiples
of a quarter of a cent. The minimum price fluctuation shall be $.0025 per pound.
The first posted bid (offer) of each trading session shall not be more than $.01 higher (lower) than thelast market price noted for the previous session. Subsequent bids (offers) that would establish orchange the market price for the current session, or any responses to posted offers (bids) higher (lower)
than the last market price, shall be made in price increments not to exceed $.01 per pound from the lastmarket price.
Posting Bids and Offerings
A spot load can only be sold on CME Spot Market when, at the time of offering, the seller has
documented possession/ownership of a deliverable load.
Quantities Bid and Offered
An offer to sell or bid to buy more than one carload may be accepted in part or in full.
Restriction on Bids and Offers
No principal shall enter a bid (offer) for cheese of the same variety, style, grade and age at the same
price that is currently being offered (bid) by that principal.
Contract Modifications
All deliveries must conform to government regulations in force at time of delivery. If any federal
governmental agency issues an order, ruling, directive or law that conflicts with the requirements ofthese Rules, such order, ruling, directive or law shall be construed to take precedence and become partof these Rules.
1206.C.
Settlement Procedures
Seller's Duties
1. The seller shall, by 3:00 p.m. (Chicago time) on the day of sale submit to the Clearing House theidentity of the seller.
2. The seller shall provide details about the cheese, to the Clearing House by 12:00 noon (Chicagotime) on the business day after the date of sale.
3. The seller shall, by 3:00 p.m. (Chicago time) on the business day after the day of sale, notify the
Clearing House if the cheese is to be graded.
4. Upon receipt of buyer's instructions, seller shall immediately make shipment in accordance
therewith. If the seller is unable to obtain shipping facilities, seller shall promptly notify buyer of its
inability to obtain shipping facilities and ship at the earliest opportunity. Cheese shall be loaded ontruck and shipped as directed by the buyer. All other transportation charges shall be borne by thebuyer.
5. Proof of delivery (i.e. bill of lading or warehouse form showing ownership transfer) shall accompany
the invoice and seller shall submit copies of the documents to the Clearing House no later than 5business days after the buyer receives the product.

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Buyer's Duties
1. The buyer shall, by 3:00 p.m. (Chicago time) on the day of sale, submit to the Clearing House theidentity of the buyer.
2. The buyer shall, by 3:00 p.m. (Chicago time) on the business day after the day of sale, notify the
Clearing House if the cheese is to be graded.
3. The buyer shall be responsible for arranging and providing transportation for the cheese. The
buyer shall deliver instructions for shipping and routing to final destination via the Clearing Houses
online deliveries system by 12:00 noon (Chicago time) on the third business day after the day ofsale. If the buyer fails to deliver such instructions within the required time or if the buyer fails topick up the cheese at the specified date and time, the seller shall either store the cheese andcharge the buyer the generally accepted commercial monthly rate or ship the cheese by truck orrail to the buyer at the buyer's main warehouse.
4. The buyer shall pay for the cheese within 3 business days after the date of the invoice covering thecheese.
Clearing House Responsibilities
The Clearing House shall make available an invoice that specifies the date and price of sale, adjusted
for moisture content when applicable. The freight differential, if any, shall be credited to the buyer on theinvoice.
1206.D.
Deviations And Allowances
Adjustment for Moisture Content
Adjustments in price for moisture content shall be made for carloads of cheese in barrel style inaccordance with this Rule. Cheese in the 40# block style shall not be subject to price adjustment formoisture content. No cheese exceeding 37.7% moisture content shall be invoiced on the moisturebasis.
Where applicable, the price adjustment for moisture content shall be invoiced according to the following
Rules:The price specified on the board, which shall be known as the stated price, shall be adjusted formoisture content in accordance with the moisture price adjustment tables as provided by CME Spot
Market.
In adjusting the stated price for moisture content the measured moisture shall be rounded to the nearest
one-half percent. For example, if the measured moisture is 36.2 percent, it shall be considered to be 36
percent moisture, while if the measured moisture is 36.3 percent, it shall be rounded to 36.5 percent
moisture.
The seller of cheese on the moisture basis shall furnish the buyer and to CME Spot Market, a manifest
showing for each vat the seller's lot number, date and vat number, number of boxes, weight, moisture
test, price per pound and extension in dollars and cents.
Weight
The delivered carload may vary between 40,000 and 44,000 pounds in gross weight. Payment shall bemade on the basis of the exact net weight delivered, with cheese delivered in steel barrels receiving a
3-cent per pound discount.
Delivery Points
Cheese may be delivered at any point within the continental United States. Cheese delivered frompoints more than 300 miles from Green Bay, Wisconsin, shall be subject to a freight differential. The
freight differential shall be deducted from the gross weight and shall be the amount by which the cost of
shipment from the shipping point to Green Bay, Wisconsin, exceeds the cost of shipment for 300 miles.
To comply with this Rule, distance from the shipping point to Green Bay shall be arrived at by reference
to the current issue of the Household Goods Carriers' Bureau Mileage Guide. The cost of shipment
shall be determined by reference to a table provided from time to time by CME Spot Market based onreasonable competitive rates per mile for minimum load of 44,000 pounds gross weight. In no event
shall the deduction for the freight differentials exceed the actual cost of shipment as noticed by thebuyer's shipping and routing instructions. The freight differential to be deducted is the lower of theGreen Bay delivery point or the actual mileage exclusive of the first 300 miles to the noticed delivery
point. See the notes at the end of this chapter for tables used in determining freight differentials and forexamples of calculations.
1206.E.
Packaging© Copyright Chicago Mercantile Exchange, Inc. All rights reserved.

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All containers used in the packaging of cheese sold on CME Spot Market shall meet the requirementsof all applicable Federal and State laws and the applicable requirements of the Consolidated FreightClassification, sometimes known as the Uniform Freight Classification, and of the National Motor FreightClassification.
Cheese shall be packed according to the following specifications:
1. 40# Block
Cheese in 40# block style shall be wrapped in a sealed film resulting in an airtight package and shall bepacked in corrugated or solid fiberboard containers with a reinforcing inner liner or sleeve.
2. Steel Barrels
The barrel shall be an airtight 16 gauge steel, straight side, universal style drum with full open
removable head and bolt locking ring closure. It shall be 55 gallon capacity with inside dimensions of
22 ½" diameter by 33 ½" depth.
The closing ring shall be 12 gauge steel, type 17-H, either dipped or sprayed with aluminum enamel,with forged lugs—one flanged and the other drilled and threaded to accommodate a 5/8" National
Coarse, zinc or cadmium plated bolt.
The barrel cover or head shall have 2" I.P.S. Reike zinc plated fitting with rubber plug gasket (No. GK43-W supplied by Reike Metal Products Co., Auburn, Indiana), or equivalent.
The barrel cover gasket shall be white, odorless, tasteless, non-toxic, fat resistant rubber. Gasket
dimensions shall be 3/8" outside diameter, 1/8" inside diameter, approximately 70" long, vulcanizedendless, 75 to 80 durometer on "A" scale. It shall be free of extrusion marks or ridges.
Barrels shall be lined with not less than .0015" thick polyethylene bag liner not less than 36" wide by 62"
long.
3. Barrels Other than SteelBarrel cheese in containers other than steel shall meet the specifications of USDA as set forth in“Announcement DAIRY-7, Purchase of Bulk Dairy Products”, as amended from time to time or as suchspecifications are modified as follows:
A. Fiber barrels(1) Sidewalls shall consist of Kraft liner board or equivalent which has been convolutely or spirally
wound using sodium silicate adhesive or equivalent, shall be constructed with a minimum of
six plies and have a thickness of not less than .07 inches. Bursting strength of the sidewall
shall be a minimum of 600 lbs. PSI.
(2) Inside dimensions of the sidewalls shall measure between 22½" and 23½" in diameter with aheight of between 33" and 35".
(3) Sidewalls may be manufactured with one open end to use one cover or two open ends which
require two covers.
(4) Top and bottom covers shall be manufactured of Kraft liner board with a minimum of six plies
glued together with the same adhesive as sidewalls. Bursting strength of the covers shall be aminimum of 800 lbs. PSI.
(5) Covers shall be coated, waxed or laminated for protection from the effects of free whey.
(6) Top and bottom covers shall be secured to the sidewall body with ½" to 3/4" wide flat steel
strapping with a minimum breaking strength of 300 lbs. Strapping shall be applied straight andsufficiently taut to embed into the edges of the barrel, but not to the extent of cutting, tearing or
damaging the barrel.
(7) Fiber barrels which are pallet loaded shall be strapped together, 4 barrels per pallet. The steel
banding shall have a minimum breaking strength of 1,400 lbs. and be applied straight aroundthe 4 barrels 8" to 10" from the top.
B. Corrugated Fiberboard Barrels
Body construction may be comprised of one or two parts. The shape may be round, hexagonal oroctagonal. The covers may be an integral folding part of the barrel body or may be a separate part ofthe barrel.
(1) Two Body Parts
Barrels which are comprised of two body parts (body and inner sleeve or tube) shall meet thefollowing minimum specifications:© Copyright Chicago Mercantile Exchange, Inc. All rights reserved.

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a.

The outer body may consist of a single wall corrugated fiberboard 180 lb. natural Kraft B
flute with a minimum bursting strength of 350 lbs. PSI. The body joint shall be overlappeda minimum of 3 inches and glued.
b. The inner corrugated fiberboard tube shall be made of double wall 106 lb. natural Kraft, AB or B-C flute with a minimum bursting strength of 350 PSI. This liner shall be the sameheight as the body of the barrel.
c. Top and bottom cover material shall meet the minimum standards for body construction.
The covers shall be coated, waxed or laminated to protect them from the effects of freewhey. Covers shall be designed with an interlocking feature of cover to barrel body. Bothcovers shall be secured to the barrel body with steel strapping.
d. When the sidewall body does not contain a minimum of three strands of sesame tape orequivalent reinforcing as an integral part of the body, then those barrels shall have two
straps of steel banding around the body. This strapping shall be sufficiently taut, applied
straight and equally spaced for added body strength.
e. Steel strapping shall be ½" or larger with a minimum breaking strength of 300 lbs.
f. Maximum overhang on a standard 40 X 48 pallet shall be four inches. Pallet loaded
barrels shall be banded together as required by subparagraph 3A of this Rule.
g. Barrel liners shall be USDA approved as outlined in "Announcement DAIRY-7, Purchaseof Bulk Dairy Products as amended from time to time."(2) Single Body
Barrels which are comprised of one body part shall meet the following minimum specifications:a. Double wall corrugated material which has B, AB or BC flutes. Minimum bursting strength
shall be 500 PSI.
b. Barrels with folding covers but without an interlocking feature shall be taped closed with awide waterproof tape of adequate strength to hold the closure securely.
c. Covers which are a separate part of the barrel shall comply with subparagraph 3B(1)c.
d. Barrels manufactured without sesame tape or equivalent body reinforcement shall bebody banded as in B(1) above.
e. Maximum overhang on a standard 40 X 48 pallet shall be 3 inches. Pallet loaded barrels
shall be banded together as required by subparagraph 3A of this Rule.
f. Barrel liners shall be USDA approved as outlined in "Announcement DAIRY-7, Purchaseof Bulk Dairy Products as amended from time to time.”
C. Performance Criteria for Fiber and Corrugated Fiberboard Barrels:(1) Barrels shall be clean and dry. They may contain stains from free whey providing the area has
dried out and has not damaged the barrel.
(2) Barrels may not be split, torn or contain any holes except for the sampling hole.
(3) Barrels shall maintain their original shape, however, hexagonal and octagonal barrels may
show slight rounding of the body.
(4) Barrels must withstand a minimum stacking height of 3 pallet loads without distorting or
damaging the bottom barrels.
(5) The maximum head space on all types of barrels shall be 1 ½ inches.
(6) Whenever in these Rules a bursting strength is specified, it shall refer to the Mullen test.
Any claim that cheese containers do not meet the above stated performance criteria must be madewithin thirty calendar days of delivery to buyer and any dispute shall be reported to CME Spot Market
and settled by arbitration by a Member Panel as set forth in Rule 1202.A. which may, in addition toother sanctions permitted by these Rules, require seller to replace barrels not meeting said performance
criteria and/or compensate buyer for any damages buyer has sustained by virtue of the barrels notmeeting performance criteria.
1206.F.
Inspection
Buyer or seller may demand inspection of cheese for grade and weight before it is shipped. Suchinspection shall be made prior to shipment at seller's facilities or at a warehouse near the seller’sfacilities and cost to be borne by the party requesting the grade. Such inspection shall be made by anindependent third party grader such as a Wisconsin State Grader or a U.S. Government Grader. The© Copyright Chicago Mercantile Exchange, Inc. All rights reserved.

Page 34 of 44

results of such inspection, grading or weighing shall be final and binding to both parties.
If an inspection is requested the following deadlines shall apply.
1. Buyer shall pay 90% of the amount invoiced within 3 business days after the day of invoice, and thebalance when grading is complete.
2. If the cheese delivered fails to meet specifications as stated in these Rules a claim shall be made inwriting to the seller with a copy delivered to the Clearing House within two business days of grading
issuance.
If the buyer inspects and accepts the cheese or if he waives inspection, he cannot thereafter dispute thegrade or weight of the cheese delivered to him.
Any cheese in dispute shall be properly stored by the Person having possession.
1206.G.
Delivery Procedures
The buyer must pick up the cheese no later than 6 business days after the date of sale, unless aninspection is call for by the buyer or seller. In which case, the buyer will receive additional calendar days
for pick up depending on the age of cheese on the day of sale.
1
Seven (7) additional calendar days for cheese between ten and thirty days old.
3.

Ten (10) additional calendar days for cheese between four and nine days old.

For loads that receive a failing grade, the following will take place:4.
A seller will have a replacement load available for pick up 3 business days after issuance.
5.

A buyer will pick up the replacement load 3 business days after the load is made available
from the seller.

6.

Cheese failing to meet grade will be replaced with cheese meeting the requirements asstated in these Rules or should be of like requirements of the original load.

7.

Documentation of replacement and pick up sent to the Clearing House within two
business days.

8.

Any claim regarding performance by the buyer or seller of the Rules of this Section shallbe reported to the Clearing House within Ten (10) calendar days of delivery.

The Market Regulation Department has the authority to perform audits of all market participants.
1206.H.
Associated Costs
Container and Pallet Charges
Seller shall invoice and buyer shall deposit with seller the sum of $34.00 per steel barrel plus theamount of any sales or other tax which would be imposed in the event of a forfeiture of said deposit. If
he notifies seller at or prior to delivery, the buyer may, within 60 calendar days of receipt thereof, returnto seller on a freight prepaid basis, identical barrels or barrels of like specification and in approximately
the same condition. All returned barrels must have been cleaned, and washed and waxed. Seller shall,
upon receipt of such barrels, refund to buyer the amount deposited with seller plus any excess freightcharge. The excess freight charge shall be the amount by which the actual return freight on empty
barrels exceeds the freight cost from buyer's shipping point to Green Bay, Wisconsin.
Failure of buyer to return containers within the time and in the condition called for in this Rule shall bereported to CME Spot Market and settled by arbitration by a Member Panel as set forth in Rule 1202.A.
which may assess damages in favor of seller for double the value of the containers.
Seller shall invoice and buyer shall pay to the seller the sum of $5 per barrel for cheese in containers
other than steel.
Cheese in block style must be loaded on pallets for shipping. Seller must note whether barrel stylecheese is floor or pallet loaded. Buyer must arrange for full exchange of pallets or make payment at $7
per pallet.
1206.I.
Settlement of Disputes
All disputes arising from the operation of this Section, except for disputes noted under Rule 1206.F.,
shall be arbitrated under the provisions of the Rules of CME Spot Market Inc.
1206.J.
CME Spot Market Fees
A fee of $25 per carlot shall be paid to CME Spot Market by both the buyer and the seller.
1206.K.
Failure to Perform© Copyright Chicago Mercantile Exchange, Inc. All rights reserved.

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If the seller fails to deliver at the required time, he shall be in default, except that the Chief Regulatory
Officer or his designee may extend the time to deliver for good cause shown, an additional three hours.
In the event a seller defaults, he shall be penalized $.10 per pound plus the advance, if any, from thepurchase price to the full market price on the day of tender. The Chief Regulatory Officer or his
designee, at its sole discretion, shall determine such market price by taking account of bona fide sales
and quotations on such date including any purchase by the buyer to replace the defaulted delivery.
If the buyer fails to accept delivery, he shall be penalized $.10 per pound plus the decline, if any, fromthe purchase price to the full market price on the day of tender, as determined by the Chief Regulatory
Officer or his designee] in the above stated manner. Payment shall be made as above.
With the exception of Force Majeure, any failure to meet the deadlines set forth within this Section will
subject one or both parties to a penalty of $500 per contract, per calendar day payable to CME Spot
Market at the close of each day. Repeated failure may result in suspension of trading privileges or
expulsion for one or both parties.
Sellers or Buyers who submit late, materially incomplete or erroneous delivery information or who causematerial adjustments to delivery information shall be fined $200 per contract per day, payable to thebuyer or seller depending on the party that is harmed.

INTERPRETATIONS AND SPECIAL NOTICESRELATING TO RULE 1206
INTERPRETATION TO RULE 1206.D. ADJUSTMENT FOR MOISTURE CONTENT
The method used in computing the moisture price adjustment tables noted in Rule 1206.D.. is asfollows:
1. Legal cheddar cheese may contain 39% moisture; therefore, 61% of solids. A cheese containing
37% moisture would have 63% solids, etc.
2. Price to be paid for 37% cheese on a "dry basis" where market level is 52.75 cents for 39%
moisture would be figured: multiply solids (100 less 37 equals 63) by market price (52.75) anddivide by 61 (100 less 39).
This gives the price per pound of 37% cheese as compared to 39% cheese at the 52.75 centmarket level (54.48 cents)
3. For 35% cheese on basis of 52.75 cents for 39% cheese: 65 times 52.75 divided by 61 equals
56.21 cents.

INTERPRETATION TO RULE 1206.D. DELIVERY POINTS
Table for use in determining freight differential to be deducted from the sale price pursuant to Rule1206.D.:
Miles from
Deduction perdelivery point
hundredweight on
to Green Bay, WI gross weight of invoice
300–319$.03
320–339.07
340–359.11
360–379.15
380–399.20
400–419.24
420–439.29
440–459.34
460–479.40
480–499.45
500–519.50
520–539.55
540–559.61
560–579.66
580–599.71
600–619.76
620–639.82
640–659.87
660–679.92© Copyright Chicago Mercantile Exchange, Inc. All rights reserved.

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680–699
700–729730–759760–789
790–819820–849
850–879
880–909
910–939
940–969
970–999
1000–1029
1030–1059
1060–1089
1090–1119
1120–1159
1160–1199
1200–1239
1240–1279
1280–1319
1320–1359
1360–1399
1400–1439
1440–1479
1480–1519
1520–1559
1560–1599
1600–1649
1650–1699
1700–1749
1750–1799
1800–1849
1850–1899
1900–1949
1950–1999
2000–2049
2050–2099
2100–2149
2150–2199
2200–2249
2250–2299
2300–2349
2350–2399
2400–2449

.97
1.03
1.10
1.17
1.25
1.34
1.42
1.50
1.57
1.64
1.73
1.80
1.88
1.94
2.02
2.10
2.18
2.26
2.36
2.45
2.54
2.62
2.72
2.82
2.90
3.00
3.09
3.18
3.28
3.39
3.50
3.62
3.72
3.83
3.93
4.05
4.16
4.27
4.38
4.49
4.60
4.71
4.82
4.93

© Copyright Chicago Mercantile Exchange, Inc. All rights reserved.

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Examples of calculations for freight differentials:

A.

Seller location

B.

Seller mileage toGreen Bay
Seller deduction
per cwt. gross wt.
vs. Green Bay
Buyer location

C.

D.

E.
F.

G.

Buyer mileage to
SellerSeller deduction
per cwt. gross wt.
vs. buyer
Net Seller
deduction per cwt.
(lesser of C. or F.)

Example 1:
Example 2:
Example 3:

Example 4:

Example 5:

1207.

Example 1

Example 2

Example 3

Example 4

Example 5

Eau Claire, WI

Dallas, TX

Fresno, CA

194

Twin Falls,
ID
1,586

1,095

2,218

Mankato,
MN
343

$0.00

$3.09

$2.02

$4.49

$0.11

Milwaukee,
WI

Ogden, UT

Springfield,
MO

Mankato,
MN

234

184

421

1,895

East
Atlantic
City, NJ
1,230

$0.00

$0.00

$0.29

$3.72

$2.26

$0.00

$0.00

$0.29

$3.72

$0.11

The seller to buyer mileage (E) is greater than the seller to Green Bay mileage (B). Bothare less than 300 miles. The seller pays $0 freight differential.
The seller to buyer mileage (E) is less than the seller to Green Bay mileage (B). The
seller to buyer mileage is also less than 300 miles. The seller pays $0 freight differential.
The seller to buyer mileage (E) is less than the seller to Green Bay mileage (B). Both are
greater than 300 miles. The seller to buyer mileage applies. The seller pays $0.29
freight differential.
The seller to buyer mileage (E) is less than the seller to Green Bay mileage (B). Both are
greater than 300 miles. The seller to buyer mileage applies. The seller pays $3.72
freight differential.
The seller to buyer mileage (E) is greater than the seller to Green Bay mileage (B). Bothare greater than 300 miles. The seller to Green Bay mileage applies. The seller pays$.11 freight differential.

SPOT CALL DRY WHEY
1207.A. Commodity Specifications
The dry whey is the product resulting from drying fresh whey which has been pasteurized and to whichnothing has been added as a preservative. It shall conform to the applicable provisions of 21 CFR
184.1979. On the day of sale, the dry whey shall be less than 120 days old. All dry whey shall becertified Kosher by a Rabbinical Service that provides Kosher classification. The methods of analysis
shall be those specified by the USDA.
All dry whey sold on the CME Spot Market shall have been produced in facilities that at the time of
production have been surveyed and approved by one or more of the following: The Grading Service of
the USDA and are on the eligible list of that Service or on the U.S. Department of Health and Human
Services, Public Health Service, Food and Drug Administration IMS List, Sanitation Compliance andEnforcement Ratings of Interstate Milk Shippers, or on the appropriate state agency inspection list.
Definitions
1. The "spot call" is the procedure for trading and delivering dry whey as more fully set forth in
this Rule.
2. The "day of sale" is the day on which trading on the spot call is conducted.

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3.
4.
5.
6.

7.

The “day of tender’ is the first business day after the day of sale.
The “day of invoice” is the second business day after the day of sale
The “day of delivery” is the sixth business day after the day of sale.
A "carlot" consists of between 41,000 and 45,000 pounds, net weight, of dry whey, which must
be manufactured on or before the day of sale. No carlot shall consist of more than 3 sublots
and each carlot shall be manufactured by a single plant.
“Certificate of Analysis” means a legible document, endorsed by a lab technician and/or quality
manager, certifying the following with respect to the U.S. Extra Grade Dry Whey being offered
for sale: (a) the warehouse or plant location; (b) the storage lot, and if applicable, release
number; (c) the number of bags in each sublot and total number of bags in the lot and themarked weight; (d) the date in storage and storage type; (e) that the U.S. Extra Grade shallhave a milkfat content of no more than 1.50%; (f) a moisture content of not more than 5.0%;(g) its bacterial estimate of not more 30,000 per gram standard plate count; (h) its coliform
count of less than 10 per gram; (i) its scorched particles content shall be not more than 15.0
gram; and its titratable acidity shall not be more than 15.0 mg.

1207.B. Spot Call
Trading Schedule
Contracts shall be scheduled for trading and delivery during such hours and days as may be
determined by CME Spot Market.
Price Fluctuations
The minimum price fluctuation shall be $0.0025 per pound. The first posted bid (offer) of each trading
session shall not be more than $0.01 higher (lower) than the last market price noted for the previous
session. Subsequent bids (offers) that would establish or change the market price for the current
session, or any responses to posted offers (bids) higher (lower) than the last market price, shall bemade in price increments not to exceed $0.01 per pound from the last market price.
Posting Bids and Offerings
A spot load can only be sold on CME Spot Market when, at the time of offering, the seller has
documented possession/ownership of a deliverable load.
Quantities Bid and Offered
An offer to sell or bid to buy more than one carlot may be accepted in part or in full.
Contract Modifications
All deliveries must conform to government regulations in force at time of delivery. If any federal
governmental agency issues an order, ruling, directive or law that conflicts with the requirements ofthese Rules, such order, ruling, directive or law shall be construed to take precedence and become partof these Rules.
1207.C. Settlement Procedures
Seller's Duties
1. The seller shall provide details about the dry whey i.e. Certificate of Analysis, to the Clearing House
and Buyer, by 3:00 p.m. (Chicago time) on the day of tender.
2. The seller shall, by 3:00 p.m. (Chicago Time) on the day of tender deliver to the Clearing House thefollowing:
Any other documentation required by CME Spot Market.
3. Upon receipt of buyer's instructions, seller shall immediately make shipment in accordance
therewith. If the seller is unable to obtain shipping facilities, seller shall promptly notify buyer of its
inability to obtain shipping facilities and ship at the earliest opportunity. Dry whey shall be loaded ontruck and shipped as directed by the buyer. All other transportation charges shall be borne by thebuyer.
Buyer's Duties
1. The buyer shall, by 5:00 p.m. (Chicago time) on the day of tender, notify the Clearing House if thedry whey is to be inspected.
2. The buyer shall be responsible for arranging and providing transportation for the dry whey. The
buyer shall deliver instructions for shipping and routing to final destination via the Clearing House’s
online deliveries system by 12:00 noon (Chicago time) on the second business day after the day ofsale. If the buyer fails to deliver such instructions within the required time or if the buyer fails to pick up© Copyright Chicago Mercantile Exchange, Inc. All rights reserved.

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the dry whey at the specified date and time, the seller shall either store the dry whey and charge thebuyer the generally accepted commercial monthly rate or ship the dry whey by truck or rail to the buyer
at the buyer's main warehouse.
3. The buyer’s clearing firm shall make payment by certified check or wire transfer of same day funds
to the seller’s clearing firm in the amount due as shown by the seller’s tender notice by 3:00 p.m.
(Chicago time) on the first business day after the day of invoice.
Clearing House Responsibilities
The Clearing House shall make available an invoice that specifies the date and price of sale. The freight
differential, if any, shall be credited to the buyer on the invoice.
1207.D. Deviations and Allowances
The delivered carlot may vary between 41,000 and 45,000 pounds in net weight. Payment shall bemade on the basis of the exact net weight delivered.
Delivery Points
Delivery may be made only from approved plants or approved warehouses within the 48 contiguous
states. Par delivery of dry whey shall be made from approved warehouses or approved plants in
Chicago. Deliveries made from approved warehouses or approved plants outside of Chicago shall be
subject to a freight allowance determined by CME Spot Market as follows: up to 400 miles outside
Chicago with a discount of $0.0125 per pound; between 400 and 800 miles outside Chicago with a
discount of $0.025 per pound; between 800 and 1200 miles outside of Chicago with a discount of$0.0325 per pound; between 1200 and 1600 miles outside Chicago with a discount of $0.040 per
pound; and beyond 1600 miles outside Chicago with a discount of $0.055 per pound. The allowanceshall be calculated on the net weight delivered.
1207.E. Packaging
The dry whey shall be packaged in multiwall paper bags of either 25-kilogram or 50-pound net capacity.
The bag shall be constructed of a minimum of 3 walls of flat or extensible kraft paper and a minimum
2.0 mil (guaranteed) low-density polyethylene food grade liner. The total basis weight of the walls of
paper shall be a minimum of 160 pounds when flat kraft or extensible paper is used. All bags shall show
the name and location of the manufacturing plant or a USDA plant number, the manufacturer's lot andsublot number, net weight, the date of manufacture, and the grade.
The closure for the bag shall meet one of the two following descriptions:
1. The bottom and top closures of the bag shall be closed by sewing through all walls of the outer bagwith 12/6 needle and 12/5 cotton looper thread, or a comparable strength or with a single thread chain
stitch with a 12/6 thread. The stitches shall be spaced 3.0 to 3.6 to the inch and not less than 3/8 inch
and not more than 3/4 inch from the top and bottom ends of the bag. The stitches along the bottom andtop of the bag shall be covered with not less than 70-pound basis weight flat extensible or low stretch
creped kraft tape.
2. The bottom and top of the bag shall be closed to provide a tight seal using hot-melt orthermoplastic adhesive applied along the top edge of the long side of the bag extending downward atleast 1-3/8 inches. The fold line of the closure shall be 1-5/8 inches plus or minus 3/8 inch below the topedge of the long side of the bag. The outer wall of the bag shall be stepped at the bottom and top
foldover flap beyond all inner walls in order to provide a positive seal over the ends of the inner walls.
1207.F. Inspection
Buyer or seller may demand inspection of dry whey for grade before it is shipped. Such inspection shallbe made prior to shipment at seller's facilities or at a warehouse near the seller’s facilities and cost to beborne by the party requesting the grade. Such inspection shall be made by an independent lab and theresults of such inspection shall be final and binding to both parties.
If an inspection is requested the following deadlines shall apply.
1. Buyer shall pay 90% of the amount invoiced one (1) business day after the day of invoice, and thebalance when inspection is complete.
2. Buyer or seller shall enter the grading results into the Clearing House’s online deliveries system
within one business day of grading issuance.
3. If the buyer inspects and accepts the dry whey or if he waives inspection, he cannot thereafter
dispute the grade of the dry whey delivered to him.
Any dry whey in dispute shall be properly stored by the person having possession.
1207.G. Delivery Procedures© Copyright Chicago Mercantile Exchange, Inc. All rights reserved.

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The buyer must pick up the dry whey no later than 6 business days after the date of sale, unless aninspection is called for by the buyer or seller, in which case, the buyer will receive an additional 16
calendar days for pick up.
For loads that receive a failing grade, the following will take place:
1. Dry whey failing to meet the requirements will be replaced with dry whey meeting the requirements
as stated in these Rules.
2. A seller will have a replacement load available for pick up 3 business days after issuance of theinspection certificate.
3. The buyer shall submit shipping and routing instruction by 12:00 p.m. (Chicago Time) within one (1)business day of receipt of a replacement load or a passing grading result.
4. A buyer will pick up the replacement load 3 business days after the load is made available from theseller.
5. Documentation of replacement and pick up will be sent to the Clearing House within two businessdays after pick up.
Any claim regarding performance by the buyer or seller of the Rules of this Section shall be reported to
the Clearing House within Ten (10) calendar days of delivery.
The Market Regulation Department has the authority to perform audits of all market participants.
Proper Handling by the Seller
If an inspection is requested at buyer's location, the seller shall be responsible for loading according toindustry practice. The bill of lading shall be prepared by the seller. The seller and the driver shall jointly
seal the truck promptly upon completion of loading. The buyer may, at his option, request check loadingby the USDA at origin.
Proper Handling by the Buyer
If an inspection is requested at buyer's location, the buyer shall be accountable for proper handlingduring transit and storage until the conclusion of the grading at the buyer's location and appeal grading,if any. Upon arrival at the buyer's location, the buyer and the driver shall jointly unseal the truck. The
seller may, at his option, request check loading by the USDA at the buyer's location.
Appeal Grading
Following an inspection at the buyer's location, the buyer shall enter the grading results into theClearing House’s online deliveries system within one (1) business day of grading issuance. A request
may then be made by the seller for an appeal inspection. Requests for such appeal must be presented
to the Clearing House no later than 11:00 a.m. (Chicago time), one business day after notification to theseller of the results of the inspection at the buyer's location. Appeal inspections shall be conducted byan independent lab. Applications for appeal inspections will be accepted or rejected in accordance withindustry regulations and the results of the appeal inspection shall be final.
Revocation of Plant Approval
If upon valid inspection at the buyer's location according to these Rules, portions of three or more
carlots which have been shipped directly from the same manufacturing plant fail to meet the contract
requirements within a single 12- month period, then the delivery approval of the plant may be revoked.
Any dry whey originating in such plant after the date of such revocation and put into storage shall also
be ineligible for delivery on the spot call.
1207.H. Associated Costs
Delivery from Warehouse
The seller shall assume storage charges until 5:00 p.m. on the fifth business day after the day of tender.
If an inspection is requested, and it indicates that the product is not equal to or better than therequirements specified by the terms of sale, the seller shall be responsible for storage charges until theseller or buyer provides the Clearing House with a certificate of analysis indicating that the product isequal to or better than the requirements specified by the terms of sale. At that point, the buyer shall be
responsible for storage charges for the remainder of the storage month. The buyer's share shall becomputed by dividing the prevailing monthly storage rate by 30, raising the quotient to the nearest five
cents and multiplying by the number of days remaining until the next expiration date (all months figured
as 30 days). Storage charges shall be paid in advance by the seller and the pro rata share due from thebuyer shall be added to and shown on the tender notice. All charges for handling prior to the day thatthe seller or buyer provides the Clearing House with a certificate of analysis indicating that the product© Copyright Chicago Mercantile Exchange, Inc. All rights reserved.

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is equal to or better than the requirements specified by the terms of sale shall be borne by the seller. All
charges incurred thereafter shall be borne by the buyer.
Delivery from Plant
If the buyer does not remove the dry whey from the plant of the seller on or before 3:00 p.m. local timeon the fifth business day after the day of tender, the buyer shall be obligated to pay $0.005 per pound
for each subsequent calendar day, up to and including the day the dry whey is removed. The seller
must, within two business days after removal of the dry whey, invoice such amounts to the buyer andsend a copy of such invoice to CME Spot Market. The buyer shall make payment to the seller.
Only the original manufacturing plant can deliver the carlot from its plant. If that carlot is to be resold on
CME Spot Market it must be moved to an approved warehouse before it can be sold.
Costs of Grading and Appeal Grading
The costs of all examinations, documentation and related services performed by independent labs forinspection at the buyer's or seller’s location and appeal grading, if any, and the costs of CME Spot
Market documentation and related services, such as repackaging after examination, shall be borne by
the buyer if the requirements for each sublot specified by the terms of sale is upheld, and by the seller if
it is not.
Container and Pallet Charges
Dry whey must be loaded on pallets for shipping. Buyer must make payments at $12.50 per pallet.
1207.I. Settlement of Disputes
All disputes arising from the operation of this Section shall be arbitrated under the provisions of theRules of CME Spot Market.
1207.J. CME Spot Market Fees
A fee of $25.00 per carlot shall be paid to CME Spot Market by both the buyer and the seller.
1207.K. Failure to Perform
If the seller fails to deliver at the required time, he shall be in default, except that the Chief Regulatory
Officer or his designee may extend the time to deliver for good cause shown, an additional three hours.
In the event a seller defaults, he shall be penalized $0.10 per pound plus the advance, if any, from thepurchase price to the full market price on the day of tender. The Chief Regulatory Officer or his
designee, at its sole discretion, shall determine such market price by taking account of bona fide sales
and quotations on such date including any purchase by the buyer to replace the defaulted delivery.
If the buyer fails to accept delivery, he shall be penalized $0.10 per pound plus the decline, if any, fromthe purchase price to the full market price on the day of tender, as determined by the Chief Regulatory
Officer or his designee in the above stated manner. Payment shall be made as above.
With the exception of Force Majeure, any failure to meet the deadlines set forth within this Section will
subject one or both parties to a penalty of $500 per contract, per calendar day payable to CME Spot
Market at the close of each day. Repeated failure may result in suspension of trading privileges or
expulsion for one or both parties.
Sellers or Buyers who submit late, materially incomplete or erroneous delivery information or who causematerial adjustments to delivery information shall be fined $200 per contract per day, payable to thebuyer or seller depending on the party that is harmed.

1208.

LIMITATION OF LIABILITYA.

EXCEPT AS PROVIDED BELOW, CHICAGO MERCANTILE EXCHANGE INC, INCLUDINGTHE CME SPOT MARKET (THE “EXCHANGE”), THE BOARD OF TRADE OF THE CITY OF
CHICAGO, INC. (“CBOT”), NEW YORK MERCANTILE EXCHANGE, INC. (“NYMEX”)(INCLUDING EACH OF THEIR RESPECTIVE SHAREHOLDERS) (INCLUDING EACH OF
THEIR RESPECTIVE SUBSIDIARIES AND AFFILIATES), THEIR RESPECTIVE OFFICERS,DIRECTORS, EMPLOYEES, AGENTS, CONSULTANTS, LICENSORS, MEMBERS, AND
CLEARING MEMBERS, SHALL NOT BE LIABLE TO ANY PERSON FOR ANY LOSSES,DAMAGES, COSTS OR EXPENSES (INCLUDING, BUT NOT LIMITED TO, LOSS OF
PROFITS, LOSS OF USE, AND DIRECT, INDIRECT, INCIDENTAL, CONSEQUENTIAL OR
PUNITIVE DAMAGES), ARISING FROM:
i. ANY FAILURE, MALFUNCTION, FAULT IN DELIVERY, DELAY, OMISSION,SUSPENSION, INACCURACY, INTERRUPTION, TERMINATION, OR ANY OTHER
CAUSE, IN CONNECTION WITH THE FURNISHING, PERFORMANCE, OPERATION,© Copyright Chicago Mercantile Exchange, Inc. All rights reserved.

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MAINTENANCE, USE OF OR INABILITY TO USE ALL OR ANY PART OF ANY OF THE
SYSTEMS AND SERVICES OF THE EXCHANGE OR SERVICES, EQUIPMENT OR
FACILITIES USED TO SUPPORT SUCH SYSTEMS AND SERVICES, INCLUDINGWITHOUT LIMITATION ELECTRONIC ORDER ENTRY/DELIVERY, TRADING
THROUGHANY ELECTRONIC MEANS, ELECTRONIC COMMUNICATION OF
MARKET DATA OR INFORMATION, WORKSTATIONS USED BY MEMBERS AND
AUTHORIZED EMPLOYEES OF MEMBERS, PRICE REPORTING SYSTEMS AND ANY
AND ALL TERMINALS, COMMUNICATIONS NETWORKS, CENTRAL COMPUTERS,SOFTWARE, HARDWARE, FIRMWARE AND PRINTERS RELATING THERETO; OR
ii. ANY FAILURE OR MALFUNCTION, FAULT IN DELIVERY, DELAY, OMISSION,SUSPENSION, INACCURACY, INTERRUPTION OR TERMINATION, OR ANY OTHER
CAUSE, OF ANY SYSTEM OR SERVICE OF THE EXCHANGE OR SERVICES,EQUIPMENT OR FACILITIES USED TO SUPPORT SUCH SYSTEMS OR SERVICES,CAUSED BY ANY THIRD PARTIES INCLUDING, BUT NOT LIMITED TO,
INDEPENDENT SOFTWARE VENDORS AND NETWORK PROVIDERS; OR
iii. ANY ERRORS OR INACCURACIES IN INFORMATION PROVIDED BY
EXCHANGE OR ANY EXCHANGE SYSTEMS, SERVICES OR FACILITIES; OR

THE

iv. ANY UNAUTHORIZED ACCESS TO OR UNAUTHORIZED USE OF ANY EXCHANGESYSTEMS, SERVICES OR FACILITIES BY ANY PERSON.
THE FOREGOING LIMITATION OF LIABILITY SHALL APPLY WHETHER A CLAIM ARISES IN
CONTRACT, TORT, NEGLIGENCE, STRICT LIABILITY, CONTRIBUTION OR OTHERWISE AND
WHETHER THE CLAIM IS BROUGHT DIRECTLY OR AS A THIRD PARTY CLAIM.
A PARTY WHO HAS BEEN FINALLY ADJUDICATED TO HAVE ENGAGED IN WILLFUL OR
WANTON MISCONDUCT MAY NOT AVAIL ITSELF OF THE PROTECTIONS IN THIS RULE.
B.

THERE ARE NO EXPRESS OR IMPLIED WARRANTIES OR REPRESENTATIONS(INCLUDING BUT NOT LIMITED TO WARRANTIES OF MERCHANTABILITY AND FITNESSFOR A PARTICULAR PURPOSE OR USE) PROVIDED BY THE EXCHANGE, CBOT, OR
NYMEX (INCLUDING THEIR RESPECTIVE SUBSIDIARIES AND AFFILIATES), THEIRRESPECTIVE OFFICERS, DIRECTORS, EMPLOYEES, AGENTS, CONSULTANTS, AND
LICENSORS RELATING TO ANY SYSTEMS OR SERVICES OF THE EXCHANGE ORSERVICES, EQUIPMENT OR FACILITIES USED TO SUPPORT SUCH SYSTEMS ORSERVICES INCLUDING THE CME DIRECT AUCTION PLATFORM.

C.

ANY DISPUTE ARISING OUT OF THE USE OF SYSTEMS OR SERVICES OF THE
EXCHANGE OR SERVICES, EQUIPMENT OR FACILITIES USED TO SUPPORT SUCHSYSTEMS OR SERVICES IN WHICH THE EXCHANGE (INCLUDING ITS SUBSIDIARIESAND AFFILIATES), OR ANY OF ITS OFFICERS, DIRECTORS, EMPLOYEES, AGENTS,
CONSULTANTS OR LICENSORS IS A PARTY SHALL BE ARBITRATED PURSUANT TOEXCHANGE RULES. ANY ARBITRATION SHALL BE BROUGHT WITHIN THE PERIODPRESCRIBED BY EXCHANGE RULES. ANY OTHER ACTIONS, SUITS OR PROCEEDINGSAGAINST ANY OF THE ABOVE MUST BE BROUGHT WITHIN TWO YEARS FROM THE
TIME THAT A CAUSE OF ACTION HAS ACCRUED. THIS PARAGRAPH C SHALL IN NO
WAY BE CONSTRUED TO LIMIT A PARTY’S OBLIGATION TO ARBITRATE ITS CLAIM OR
TO CREATE A CAUSE OF ACTION AND SHALL NOT AUTHORIZE AN ACTION THATWOULD OTHERWISE BE PROHIBITED BY EXCHANGE RULES. IF FOR ANY REASON, A
COURT OF COMPETENT JURISDICTION FINDS THAT SUCH DISPUTE IS NOTARBITRABLE, SUCH DISPUTE MAY ONLY BE LITIGATED IN THE COUNTY OF COOK IN
THE STATE OF ILLINOIS AND WILL BE GOVERNED BY THE LAWS OF THE STATE OFILLINOIS WITHOUT REGARD TO ANY PROVISIONS OF ILLINOIS LAW THAT WOULD
APPLY THE SUBSTANTIVE LAW OF A DIFFERENT JURISDICTION.

D.

THE EXCHANGE, CBOT AND NYMEX MAY, IN THEIR SOLE DISCRETION, ASSUME© Copyright Chicago Mercantile Exchange, Inc. All rights reserved.

Page 43 of 44

RESPONSIBILITY FOR DIRECT, OUT-OF-POCKET LOSSES DIRECTLY CAUSED BY THE
NEGLIGENCE OF GLOBAL COMMAND CENTER OR OTHER EXCHANGE STAFF AND/OR
ORDER STATUS ERRORS PROVIDED BY THE GLOBAL COMMAND CENTER. IF SUCH
LIABILITY IS ACCEPTED, THE TOTAL AGGREGATE OBLIGATIONS FOR THE
EXCHANGE, CBOT AND NYMEX SHALL NOT EXCEED $200,000 FOR ALL LOSSESSUFFERED FROM ALL CAUSES IN A SINGLE CALENDAR MONTH. ANY DISPUTED
CLAIM MADE UNDER THIS RULE MUST BE ARBITRATED PURSUANT TO EXCHANGE
RULES.
E.

IN NO EVENT SHALL THE COLLECTIVE TOTAL AGGREGATE LIABILITY FOR THE
EXCHANGE, CBOT AND NYMEX FOR ALL CLAIMS ARISING OUT OF ANY NEGLIGENCE,
FAILURES, MALFUNCTIONS, FAULTS IN DELIVERY, DELAYS, OMISSIONS,SUSPENSIONS,INACCURACIES,
INTERRUPTIONS,TERMINATIONS,ORDERSTATUSING ERRORS OR ANY OTHER CAUSES IN CONNECTION WITH THE
FURNISHING, PERFORMANCE, OPERATION, MAINTENANCE, USE OF OR INABILITY TO
USE ALL OR ANY PART OF ANY OF THE EXCHANGE’S SYSTEMS OR SERVICES, ORSERVICES, EQUIPMENT OR FACILITIES USED TO SUPPORT SUCH SYSTEMS ANDSERVICES, OR THE NEGLIGENCE OF EXCHANGE STAFF, EXCEED $200,000 IN ANYCALENDAR MONTH. IF THE NUMBER OF ALLOWED CLAIMS ARISING OUT OF ANY
FAILURES OR MALFUNCTIONS IN A SINGLE CALENDAR MONTH CANNOT BE FULLYSATISFIED BECAUSE OF THE MONTHLY LIABILITY LIMITATION, ALL SUCH CLAIMSSHALL BE LIMITED TO A PRO RATA SHARE OF THE MAXIMUM AMOUNT AVAILABLE
FOR THAT MONTH.

© Copyright Chicago Mercantile Exchange, Inc. All rights reserved.

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