Chapter 8A
Mutual Offset System
8A70.

SCOPE OF SECTION
This section governs the rights and responsibilities of clearing members participating in the MutualOffset System. The procedures for trading, clearing, etc., including the duties of a clearing member
to its customer and the rights of such customer that are not specifically covered herein shall begoverned by the rules of the Exchange that are consistent with this section.

8A71.

CONTRACT ELIGIBILITY 1
The Mutual Offset System may be utilized for the following futures contracts: Nikkei Stock Average,
Yen Denominated Nikkei Stock Average, E-mini FTSE China 50, and E-mini FTSE Emerging
Index.

8A72.

DEFINITIONS
8A72.A.
Mutual Offset System.
The process of substitution between Participating Exchanges whereby a trade executed on one
exchange liquidates or establishes a position on another such exchange.
8A72.B.
Inter-Exchange Transfer.
The transfer to one Participating Exchange of a position established as a result of a trade onanother Participating Exchange.
8A72.C.
Participating Exchange. 2
An exchange that is a party to the Mutual Offset System. (Chicago Mercantile Exchange Inc. andthe Singapore Exchange Derivatives Trading Limited are parties to the Mutual Offset System.)
8A72.D.
Originating Clearing Member.
A clearing member of a Participating Exchange that initiates an order for execution pursuant to theMutual Offset System.
8A72.E.
Executing Clearing Member.
A clearing member of a Participating Exchange that accepts and is responsible for executing anorder received from an Originating Clearing Member pursuant to the Mutual Offset System.

8A73.

CLEARING MEMBER ELIGIBILITY 3
A clearing member of the Exchange may not participate in the Mutual Offset System as anOriginating or Executing Clearing Member unless it has been approved by Exchange staff.
Exchange staff shall have the sole discretion in determining the qualifications of an applicant forparticipation in the Mutual Offset System. If Exchange staff has reason to believe that thecontinued participation of a clearing member in the Mutual Offset System may, or has the potential
to, adversely affect the Exchange or the Mutual Offset System, the Clearing House Risk Committee
may summarily revoke the approval. The clearing member shall be entitled to a hearing within 10
days of such revocation.
A violation of this Rule may be a major offense.

8A74.

CUSTOMER AUTHORIZATION 4A.

All orders for execution on another Participating Exchange shall be deemed to be for theMutual Offset System and the resulting position shall be automatically transferred to theExchange unless upon receipt of an order the clearing member receives instructions to thecontrary.

B.

Non-discretionary orders for execution on the Exchange shall not be transferred to a
Participating Exchange unless specifically authorized by the account holder in accordance with1

Revised June 1986; July 1994; February 1996; July 1998; March 1999; August 2004; June 2011; January 2017; July 2018; December 2019.
Revised November 2000.
3
Revised November 2000.
4 Revised July 1986; December 1986; March 1988; December 1993.
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CFTC Regulation 166.2.
C.

8A75.

A violation of this rule may be a major offense.

INTER-EXCHANGE MEMORANDUM
All trades originated or executed subject to the Mutual Offset System shall be promptly reported toand on a form of memorandum provided by the Clearing House.

8A76.

PREREQUISITES FOR INTER-EXCHANGE TRANSFER
So long as the Mutual Offset System is in effect, a trade will be transferred between Participating
Exchanges if all of the following conditions are satisfied:

8A77.

1.

The trade has cleared in the ordinary course on the Participating Exchange where executed.

2.

An Inter-Exchange Transfer memorandum has been duly delivered to the Clearing House.

3.

The Clearing House has received confirmation of the Inter- Exchange trade data from the otherParticipating Exchange.

INTER-EXCHANGE TRANSFER
8A77.A.
Clearing Members
The Executing Clearing Member with respect to a trade executed on CME pursuant to the Mutual
Offset System shall have the same responsibilities to the Clearing House for such trade as for any
other trade made on CME until the trade is transferred to a Participating Exchange.
After a trade executed on CME is transferred to another Participating Exchange, the Executing
Clearing Member shall have no further responsibility to the Clearing House for such trade and shallhave no further responsibility to or relationship with the Originating Clearing Member with respect tothe position created by such trade.
After a trade executed on a Participating Exchange, other than CME, is transferred to CME, theOriginating Clearing Member shall have no further responsibility to or relationship with theExecuting Clearing Member of the other Participating Exchange with respect to the position createdby the trade, and the Originating Clearing Member shall have a position on CME and the same
responsibilities to the Clearing House for such position as it would have had if the trade creating theposition had been executed on CME.
8A77.B.
Other Participating Exchanges
At such time as a trade executed on CME is transferred to another Participating Exchange, theother Participating Exchange shall be substituted for the Executing Clearing Member with respect
to the position created by such trade.
At such time as a trade executed on a Participating Exchange, other than CME, is transferred toCME, the other Participating Exchange will have a position equal and opposite to such position
subject to the Inter-Exchange Transfer.

8A78.

TRADE NOT TRANSFERRED BETWEEN PARTICIPATING EXCHANGES
If a trade executed on the CME is not transferred between Participating Exchanges prior to theopening of trading on the next business day, the Executing Clearing Member shall remain
responsible to the Clearing House to the full extent as with any trade.
(End Chapter 8-A)

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INTERPRETATIONS & SPECIAL NOTICESRELATING TO CHAPTER 8-A
REPEAL OF RULE 879(Special Executive Report S-1575, December 9, 1985)
The CFTC has approved the repeal of Rule 879 OMNIBUS ACCOUNT RESTRICTIONS. The
repeal is effective immediately.
Rule 879 had prohibited clearing members from accepting or carrying positions executed
pursuant to the Mutual Offset System in an omnibus account of a non-member FCM, unlessthe account was a proprietary account of the non-member FCM. The repeal of the rule meansthat clearing members may accept and carry positions executed through the mutual offset
system in an omnibus account of a non-member firm.

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