MARKET REGULATION ADVISORY NOTICE______________________________________________________________________
Exchange

CME, CBOT, NYMEX & COMEX

Subject

Simultaneous Buy and Sell Orders for Different BeneficialOwners; Trading Against Customers’ Orders Prohibited

Rule References

Rule 533 and Rule 531

Advisory Date

August 30, 2021

Advisory Number

CME Group RA2113-5

Effective Date

October 1, 2021

Effective on trade date Friday, October 1, 2021, and pending all relevant CFTC regulatory review periods,
this Market Regulation Advisory Notice will supersede CME Group Market Regulation Advisory Notice
RA1617-5 from December 13, 2016. It is being issued to reflect amendments to CME, CBOT, andNYMEX/COMEX Rule 533 (“Simultaneous Buy and Sell Orders for Different Beneficial Owners”) andCME and CBOT Rule 531 (“Trading Against Customers’ Orders Prohibited”) that will become effective onOctober 1, 2021.
The amendments to CME, CBOT, and NYMEX/COMEX Rule 533 reduce the waiting period between
order entries into CME Globex from 15 to 5 seconds for simultaneous buy and sell options orders fordifferent beneficial owners. The other amendments to CME Rule 533 and the amendments to CME andCBOT Rule 531 are in connection with the September 30, 2021, closure of the trading floor for allproducts other than options on CME Eurodollar futures and options on CME SOFR futures.1
Overview
This Advisory Notice clarifies the proper procedures for the handling of simultaneous buy and sell orders
for different beneficial owners in open outcry and electronic markets pursuant to Rules 533 and 531. The
complete text of these rules begins on page 2 of this Advisory Notice.
Neither this Advisory Notice nor the rules referenced herein pertain to transactions on CME Globex thatinvolve pre-execution communications. Pre-execution communications are addressed in eachexchange’s Rule 539 (“Prearranged, Pre-Negotiated and Noncompetitive Trades Prohibited”) and in theMarket Regulation Advisory Notice concerning Rule 539, which can be found on the Rulebook
Harmonization page at the following link:
http://www.cmegroup.com/rulebook/rulebook-harmonization.html
CME Open Outcry Markets
CME Rule 533 allows for the direct crossing of buy and sell orders by a floor broker provided that theorders are for the accounts of different beneficial owners and the floor broker executing the orders first
openly bids and offers the price and quantity three times in a manner that is transparent to the pit. Ifneither the bid nor the offer is accepted, then the floor broker may match the orders, or any remaining
portion of the orders, in the presence of, and with the approval of, a Floor Operations staff member.
A floor broker may not cross an order with a trade for his own account, an account in which he has adirect or indirect financial interest, or an account over which he has discretionary trading authority unless

1Please see Special Executive Report S-8833 from August 27, 2021, for additional information on the rule amendments.

CME Group RA2113-5
August 30, 2021
Page 2 of 3
he complies with the requirements set forth in Section B. 5. of Rule 531. (“Trading Against Customers’Orders Prohibited”).
A floor broker who executes a cross trade must ensure that it is reported to Exchange price reporting stafffor entry into the Price Reporting System as a cross trade. Failure to identify the transaction to Exchange
price reporting staff as a cross trade shall constitute a violation of the rule.
Market participants are reminded that pre-execution communications or any other form ofprearrangement are prohibited with respect to all orders entered for execution in the open outcry venue.
CME, CBOT, NYMEX and COMEX Electronic Markets
In electronic markets, opposite orders for different beneficial owners that are simultaneously placed by aparty with discretion over both accounts may be entered on the electronic platform provided that oneorder is exposed for a minimum of 5 seconds. Similarly, an order allowing for price and/or time discretion,
if not entered immediately upon receipt, may be knowingly entered opposite another order entered by thesame firm only if the other order has been entered immediately upon receipt and has been exposed for aminimum of 5 seconds. Orders involving pre-execution communications are separately governed by each
Exchange’s Rule 539.
Questions regarding this Advisory Notice may be directed to one of the following individuals in MarketRegulation:
Erin Middleton, Director, Rules & Regulatory Outreach, 312.341.3286
Paige Gawrys, Senior Specialist, Rules & Regulatory Outreach, 312.872.5078
Aaron Smith, Executive Director, Investigations, 312.435.3754
Jennifer Dendrinos, Senior Director, Investigations, 312.341.7812
Natasha Selkov, Manager, Investigations, 312.341.7623
For media inquiries concerning this Advisory Notice, please contact CME Group Corporate Communications at 312.930.3434 or
news@cmegroup.com.

CME
533.

SIMULTANEOUS BUY AND SELL ORDERS FOR DIFFERENT BENEFICIAL OWNERS
A member who is in possession of both buy and sell orders for different beneficial owners for the same productand expiration month, and, for a put or call option, the same strike price, may execute such orders for anddirectly between such beneficial owners provided that in pit trading, a member executing such orders shallfirst bid and offer by open outcry three times at the same price, stating the number of contracts, and, thereafter,
if neither the bid nor the offer is accepted, the orders may be matched in the presence, and with the approval,of a designated Exchange official.
The member making such transactions shall, by appropriate descriptive words or symbols, clearly identify all
such transactions on his trading card or other similar record made at the time of the execution. The member
executing such trade must ensure that it is reported to Exchange price reporting staff for entry into theExchange Price Reporting System. Failure to identify the transaction to Exchange price reporting staff as across trade shall constitute a violation of this rule.
On the Globex platform, opposite orders for different beneficial owners that are simultaneously placed by aparty with discretion over both accounts may be entered into the Globex platform provided that one order isexposed 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 Globex platform fora minimum of 5 seconds.

CME Group RA2113-5
August 30, 2021
Page 3 of 3531.

TRADING AGAINST CUSTOMERS' ORDERS PROHIBITED
531.A. General Prohibition
No person in possession of a customer order shall knowingly take, directly or indirectly, the opposite side ofsuch order for his own account, an account in which he has a direct or indirect financial interest, or an accountover which he has discretionary trading authority.
531.B. Exceptions
The foregoing restriction shall not apply to the following:
1. Transactions executed in accordance with Rule 527 to resolve bona fide outtrades or errors;
2. Transactions executed pursuant to Rule 538;
3. Block trades executed pursuant to Rule 526;
4. On the Globex platform, a person may knowingly trade against his customer order for his own account,an account in which he has a direct or indirect financial interest, an account over which he has
discretionary trading authority, or a proprietary account of his employer, only if the customer order has
been entered immediately upon receipt and has first been exposed on the Globex platform for a minimumof 5 seconds in the case of futures orders or for a minimum of 15 seconds in the case of options orders;and
5. If the transaction was pit traded, a person may knowingly trade against his customer order for his own
account, an account in which he has a direct or indirect financial interest, an account over which he has
discretionary trading authority, or a proprietary account of his employer, only if: (i) the customer has
consented in writing to waive the application of Rule 531.A no more than 12 months prior to thetransaction; (ii) the member complies with the requirements set forth in Rule 533; (iii) the member clearly
identifies, by appropriate descriptive words, all such transactions, and (iv) the member ensures that it isreported to Exchange price reporting staff for entry into the Exchange Price Reporting System as a crosstrade.
CBOT and NYMEX/COMEX

533.

SIMULTANEOUS BUY AND SELL ORDERS FOR DIFFERENT BENEFICIAL OWNERS
On the Globex platform, opposite orders for different beneficial owners that are simultaneously placed by aparty with discretion over both accounts may be entered into the Globex platform provided that one orderis 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 Globex platform
for a minimum of 5 seconds.

531.

TRADING AGAINST CUSTOMERS' ORDERS PROHIBITED
531.A. General Prohibition
No person in possession of a customer order shall knowingly take, directly or indirectly, the opposite sideof such order for his own account, an account in which he has a direct or indirect financial interest, or anaccount over which he has discretionary trading authority.
531.B. Exceptions
The foregoing restriction shall not apply to the following:
1. Transactions executed in accordance with Rule 527 to resolve bona fide errors;
2. Transactions executed pursuant to Rule 538;
3. Block trades executed pursuant to Rule 526; and4. On the Globex platform, a person may knowingly trade against his customer order for his own account,an account in which he has a direct or indirect financial interest, an account over which he has
discretionary trading authority, or a proprietary account of his employer, only if the customer order has
been entered immediately upon receipt and has first been exposed on the Globex platform for aminimum of 5 seconds in the case of futures or swaps [the reference to swaps appears solely in CBOT
Rule 531] orders or for a minimum of 15 seconds in the case of options orders.