Chapter 1
Membership
100.

GENERAL101.

QUALIFICATIONS AND RESPONSIBILITIES102.

NON-MEMBER INVESTORSPROCEDURES FOR PURCHASE, SALE AND TRANSFER
103.

PURCHASE OF MEMBERSHIP AND MECHANICS OF PURCHASE
103.A. Purchase of Membership
103.B. Mechanics of Purchase

104.

SALE OF MEMBERSHIP105.

APPLICATION FOR MEMBERSHIP
105.A. [RESERVED]
105.B. Application Process for Members

106.

TRANSFERS, SECURITY TRANSACTIONS, AND AUTHORIZATIONS TO
TRANSFER OR SELL
106.A. Authorization to Sell
106.B. Security Transactions
106.C. Family Transfers
106.D. Futures Industry Transfers
106.E. Unconditional Bequests and Bona Fide Gifts of Membership
106.F. Clearing Member
106.G. Transfer to Wholly-Owned Entities
106.H.-I.[RESERVED]
106.J. Member Firm
106.K. Transfer to a Trust
106.L. [RESERVED]
106.M. Transfer to Joint Tenants With Right of Survivorship
106.N.-O.[RESERVED]
106.P. Transfer to a Family Limited Partnership
106.Q.-S.[Reserved]

107.

APPROVAL OF APPLICANT

108.

[RESERVED]

109.

REJECTION OF APPLICANT110.

CLAIMS AGAINST MEMBERSHIP, APPLICATION OF PROCEEDS

111.-119.

[RESERVED]

PRIVILEGES AND RESPONSIBILITIES120.

MEMBERSHIP CATEGORIES

121.

MEMBERSHIP PRIVILEGES122.

MEMBERSHIP DUES AND ASSESSMENTS PAYABLE

123.

COMPLIANCE WITH THE COMMODITY EXCHANGE ACT124.

VIOLATIONS OF COMMODITY EXCHANGE ACT

125.-126.

[RESERVED]

127.

BROKING AND SOLICITATION PRIVILEGES

128-129.

[RESERVED]

130.

REQUIRED NOTICES BY MEMBER FIRMS AND SUSPENSION OF MEMBERFIRM PRIVILEGESINVOLUNTARY SALE
131.

EXPULSION FOR FRAUD OR DISHONESTY PRIOR TO ELECTION TO
MEMBERSHIP

132.

SALE OF MEMBERSHIP AT DIRECTION OF REGULATORY AUTHORITY

133.

SALE OF MEMBERSHIP WHEN MEMBER DEFAULTS

134.-194.

[RESERVED]

195.

MARKET MAKER AND INCENTIVE PROGRAMS

Chapter 1
Membership
100.

GENERAL
Membership with full privileges in the NYMEX Division shall be limited to 816; membership with fullprivileges in the COMEX Division shall be limited to 772; and COMEX Option Membership shall belimited to 238. Membership in the Exchange is a privilege subject to transfer only as authorized
and on the conditions prescribed herein.

101.

QUALIFICATIONS AND RESPONSIBILITIESAny adult of good moral character, reputation and business integrity, with adequate financial
resources and credit to assume the responsibilities and privileges of membership, is eligible formembership in the Exchange. A determination as to whether an applicant for membership or an
applicant for an incentive program satisfies the Exchange requirements shall be made by theMembership Committee or by staff in the applicable department. A person approved formembership and an individual or entity approved for an incentive program shall be subject to all
Exchange Rules. Notwithstanding a transfer of membership, a person shall continue to be
responsible for violations of Exchange Rules committed by him while he was a member and also
agrees to have any disputes, which arose while he was a member and which relate to or arise outof any transaction upon the Exchange or membership in the Exchange, resolved in accordancewith Exchange Rules.

102.

NON-MEMBER INVESTORSA person may purchase a membership interest and be approved as a “Non-Member Investor” in
the Exchange. The person shall file an Application to become a Non-Member Investor with theMemberships Department (the “Department”). A Non-Member Investor is presumed to know all therules and regulations of the Exchange and agrees to abide by and be subject to them. In the eventthat multiple individuals own a membership, such individuals shall appoint a designated individual
who shall have the authority to sell, lease, pledge or otherwise dispose of or encumber themembership. Further, in the event that a legal entity owns a membership, such entity must provide
the Department with appropriate corporate, partnership or other legal documentation indicating who
has authority to sell, lease, pledge or otherwise dispose of or encumber the membership and anyother documentation requested by the Department.

PROCEDURES FOR PURCHASE, SALE AND TRANSFER
103.

PURCHASE OF MEMBERSHIP AND MECHANICS OF PURCHASE
103.A.

Purchase of Membership

The prospective purchaser of a membership shall sign and file with the Department a Bid toPurchase which shall be guaranteed by: a) a clearing member of the Exchange; or b) the deposit ofa certified or cashier's check; or c) a wire transfer. The Bid to Purchase shall contain an agreementby the purchaser to take no recourse against the Exchange in the event his Application for
Membership is rejected (except as provided in Section 8c of the Commodity Exchange Act).
103.B.

Mechanics of Purchase

The Department shall post the lowest offer to sell and the highest bid to purchase each type ofmembership. The Department shall match bids and offers and, in the event of an agreement, shallpromptly notify the purchaser and the seller. Within two business days of such notification, thepurchaser shall deposit with the Department the following:

104.

a.

A check, payable to the Exchange, for a transfer fee in an amount set by Exchange staff; andb.

A wire transfer, or a certified or cashier's check, if not previously deposited, or a check or awire transfer from a clearing firm, payable to the Exchange, in the amount of the purchaseprice.

SALE OF MEMBERSHIP
A membership in the Exchange may only be sold as provided for in the Rules. When the owner orthe legal representative of an owner desires to sell a membership, he shall sign and file with the
Department an Offer to Sell, which shall set forth the price at which he is offering his membership,
and contain an agreement to the conditions of sale set forth in these rules.
Upon the sale of a membership, any and all membership privileges granted by these rules shallterminate.

105.

APPLICATION FOR MEMBERSHIP
105.A.

[Reserved]

105.B.

Application Process for Members

The applicant shall file an Application for Membership and the appropriate fee with the Department.
The applicant shall agree to take no recourse against the Exchange in the event his application isrejected (except as provided in Section 8c of the Commodity Exchange Act), set forth all financial
arrangements made in connection with the proposed purchase or transfer of the membership andagree to abide by the applicable rules and regulations of the Exchange and all amendments
thereto.
The applicant may receive temporary membership privileges upon the filing of a complete
Application unless the Department has reason to believe that the applicant is not qualified formembership. An applicant that receives temporary membership privileges shall be subject to all of
the rules of the Exchange including the rules related to the approval and rejection of an applicant.
Such temporary membership privileges will expire upon the earlier of: 1) sixty days after the
temporary membership privileges are granted; 2) a rejection of the applicant’s membership
application by the Membership Committee; or 3) notification that the application for membershiphas been approved. An applicant who receives temporary membership privileges who issubsequently rejected for membership shall reimburse the Exchange for the difference between
trading and clearing fees paid by reason of the temporary membership status and the fees thatwould have been paid on the same transactions at the rates that would have otherwise prevailed.
The Department shall notify the membership by posting for a period of 20 days of the name of theapplicant, the seller or transferor and the purchase price. The notice shall request the submission
to the Department of claims against the seller or transferor arising out of Exchange transactions or
any other relationship regulated by the Exchange. During the posting period, the Department shallprepare a report on the qualifications of the applicant.
The Application of a member who obtains a membership may be approved by the Department
before the expiration of the posting period, provided the member obtains an indemnificationagreement in favor of the Exchange from a clearing member to cover Rule 110 claims up to thevalue of the membership at the time of purchase or transfer.
An applicant who has acquired a membership prior to approval for membership shall become amember upon such approval. An applicant approved for membership prior to acquiring amembership shall become a member if, within thirty calendar days after approval for membership,
he procures a membership; otherwise his membership shall be deemed vacated and the Exchange
shall retain the membership application processing fee. Extensions of the 30-day period in which
the applicant must acquire a membership may be granted by the Department.

106.

TRANSFERS, SECURITY TRANSACTIONS, AND AUTHORIZATIONS TO TRANSFEROR SELL
Transfers of memberships may be made only in accordance with the following provisions. All of theapplicable procedures and requirements for the sale and purchase of a membership as set forth in
Chapter 1, including the provisions of Rule 110, shall apply to transfers made under this rule. A
transfer, reinstatement or revocation of a transfer shall not be completed until all valid Rule 110
claims against a member are satisfied unless the clearing member firm qualifying such member asof the close of business on November 30, 2018, files a properly completed Indemnification Form.

106.A.

Authorization to Sell

An Authorization to Sell (“Authorization Agreement”) is a grant of authority by a member orapplicant for membership that may be used only for the purposes specified in Rule 106.B.
Authorization Agreements shall be effective only if executed on the form supplied by the Exchange
and filed with the Department. Authorization Agreements shall be irrevocable without the writtenconsent of the grantee.
A member or applicant for membership who executes an Authorization Agreement relinquishes his
power to direct the sale of his membership. A grantee shall have all powers of sale that otherwise
would have been available to the grantor. The Exchange shall act at the grantee's direction as if
the grantee was the member-owner.
Private agreements between the grantor and the grantee shall not be recognized by the Exchange
and shall not affect the rights of the Exchange or its members. The grantee shall be entitled, in
addition to any other rights he may have under Rule 110, to the residual proceeds after all Rule 110
claims have been satisfied up to the amount of the outstanding debt owed.
106.B.

Security Transactions

A member, applicant for membership or a Non-Member Investor, may execute an Authorization
Agreement, in favor of a clearing member, a financial institution or bank, or in favor of the memberthat financed the purchase of the membership in order to secure any outstanding debt connectedwith that financing.
A member, applicant for membership or a Non-Member Investor may execute an Authorization
Agreement in favor of a member or clearing member to whom the member is indebted or may
become indebted by reason of transactions upon the Exchange in order to secure such current or
future debts.
106.C.

Family Transfers

A member or Non-Member Investor may temporarily transfer his membership to a member of his
immediate family who shall be subject to all Exchange rules and regulations. For purposes of thisrule, immediate family members shall be limited to parents, siblings, children, grandchildren,
grandparents, fathers-in-law, mothers-in-law, sons-in law, daughters-in-law and spouses.
Rule 106.C transfers shall be subject to the following terms and conditions:1.

The transferor may revoke the transfer upon written notice filed with the Department.

2.

[Reserved]

3.

The transfer shall be revoked and the membership shall revert to the transferor's estate orconservator upon official notice of the death or formally declared incompetence of thetransferor. However, the legal representative of a deceased member’s estate may transfer his
membership pursuant to this Rule 106.C. during the pendency of probate.

4.

[Reserved]

5.

Upon approval for membership, the transferee shall be treated as a member for all purposes,
except that the transferee shall have no authority to sell, transfer or assign the membership.
The transferor shall be considered the member and an assignment of the membership formembership purposes pursuant to Rules 106.J. or 902 shall not be terminated by thetransferee.

6.

The transferor may sell the membership at any time in accordance with the provisions of Rule104 or transfer the membership pursuant to Rule 106. The proceeds of the sale of themembership will be distributed to the transferor following the settlement of all claims pursuant
to Rule 110.

7.

The transferred membership may be sold in accordance with Rule 133, and the proceeds may
be applied as provided in Rule 110, to satisfy financial obligations of the transferee to the
Exchange, to another member or to a clearing member arising out of the transferee’s use of
the membership in the event that such financial obligations have not been otherwise satisfied.

106.D.

Futures Industry Transfers

A member or Non-Member Investor may temporarily transfer his membership to another member
who shall be subject to all Exchange rules and regulations.
Transfers under this section shall be subject to the following terms and conditions:1.

The transferor may revoke the transfer upon written notice filed with the Department.

2.

[Reserved]

3.

The transfer shall be revoked and the membership shall revert to the transferor's estate orconservator upon official notice of the death or formally declared incompetence of thetransferor. However, the legal representative of a deceased member’s estate may transfer his
membership pursuant to this Rule 106.D. during the pendency of probate.

4.

[Reserved]

5.

The transferor may sell the membership at any time in accordance with the provisions of Rule104 or transfer the membership pursuant to Rule 106. The proceeds of the sale of themembership will be distributed to the transferor following the settlement of all claims pursuant
to Rule 110.

6.

The transferee’s guarantor(s) shall have no right of indemnification against the transferor for
any and all claims against the transferee which have been satisfied in accordance with theterms of the guarantee. The transferor shall neither be liable for nor shall the transferredmembership be used to satisfy any and all claims against the transferee which have not beensatisfied by the transferee and/or the transferee’s guarantor(s). Transferees shall havecontinuing personal liability for any claims which accrued during the term of the transfer whichwere not satisfied by the transferee’s guarantor(s); for the payment of disciplinary fines
assessed against the transferee which were not otherwise satisfied; and for any other financial
obligations to the Exchange and/or its members that were not otherwise satisfied.

7.

The transferor may not assign the membership for membership purposes pursuant to Rules
106.J. or 902.

8.

[Reserved]

9.

Upon a transferor’s expulsion from the Exchange, the transfer shall be revoked and themembership shall revert to the transferor who must sell the membership within 30 days.

10.-11. [Reserved]
12. A lessor shall notify the Exchange, in a manner designated by the Exchange, of the terms of a
new lease agreement or any renewal of a lease agreement within two (2) business days of thenegotiation of the lease agreement, or renewal thereof. A lessor's failure to comply with thisRule 106.D.12 may result in the issuance of a warning letter to the lessor. A lessor may thenbe subject to an automatic fine of $500 and $1000 respectively for a second and third violationof this rule within a rolling 12-month period from the issuance of the warning letter. Repeatedviolations of this rule may be referred to a disciplinary committee.
13. Unless otherwise previously agreed to by the transferor and the transferee, notice must be
provided by the parties of their intention to continue a leasing arrangement at least ten (10)days prior to the expiration of the current lease term. If either party fails to provide such notice,
it is assumed that the lease will not be renewed upon its expiration. Terms of the renewal, if
any, will be subject to negotiation between the parties.
14. No Option Membership may be transferred pursuant to this Rule 106.D.
106.E.

Unconditional Bequests and Bona Fide Gifts of MembershipA member or Non-Member Investor may make a bona fide gift or bequest of membership. The
bona fide gift may be made only to immediate family members as defined in Rule 106.C. Unlessotherwise required by law, a letter affirming the gift or Letters of Office from the Probate Court anda letter from the decedent’s personal representative allowing the transfer will be required as aprecondition of transfer.
106.F.

Clearing Member

A membership may be owned by a clearing member, or a person or an entity having an acceptable
proprietary interest in the clearing member. The membership may be transferred provided that: (1)the transfer is approved by Exchange staff; and (2) the transferee is approved pursuant to the rulesof the Exchange.
106.G.

Transfer to Wholly-Owned Entities

A membership may be transferred to an entity which is wholly-owned by the member or his
immediate family members as that term is used in Rule 106.C. Transfers pursuant to thisauthorization shall be limited to transfers pursuant to Rules 106.C., D. or E.
A 106.G. transferee may assign the membership for membership purposes in accordance with
Rules 106.J. and 902 except in circumstances where the transfer has been made pursuant to Rule
106.D.
106.H.-I.

[Reserved]

106.J.

Member Firm

A firm may qualify as a:•

NYMEX Rule 106.J. member firm if two NYMEX Division memberships and 20,000
CME Group Class A Shares or if the equity member firm is a fund, pool or othercollective investment vehicle, 30,000 shares, are assigned for the firm’s membershipprivileges. A member firm may pay an Equity Member Subscription Rate as
published in the NYMEX fee schedule in lieu of holding CME Group Class A Shares.
The Equity Member Subscription Rate will be applied per member, per month, per
Exchange. Member firms choosing to pay the Equity Member Subscription Rate mustfile an application with the Department. The Exchange will have discretion regarding
applying the appropriate rate.

•

COMEX Rule 106.J. member firm if two COMEX Division memberships are assigned
for the firm’s membership privileges.

•

COMEX Rule 106.J. member firm (Options only) if two COMEX Option Division
memberships are assigned for the firm’s membership privileges.

A NYMEX Rule 106.J. member firm (excluding a fund, pool or other collective investment vehicle)
shall at all times have assigned to it at least 30,000 CME Group Class A Shares if it is also either:(a) a CME clearing member with shares or CME Rule 106.J. equity member firm or (b) a CBOT
clearing member with shares or a CBOT member firm that has a 20,000 share requirement. If the
CBOT member firm has an 8,750 share requirement, the combined share requirement will be
28,750.
A NYMEX Rule 106.J. member firm that is a fund, pool or other collective investment vehicle shallat all times have assigned to it at least 45,000 CME Group Class A Shares if it is also either: (a) a
CME clearing member with shares or CME Rule 106.J. equity member firm or (b) a CBOT clearing
member with shares or CBOT Rule 106.J. equity member firm.
A NYMEX Rule 106.J. member firm shall at all times have assigned to it at least 40,000 CME
Group Class A Shares if it is also both: (a) a CME clearing member with shares or CME Rule106.J. equity member firm and (b) a CBOT clearing member with shares or a CBOT member firmthat has a 20,000 share requirement. If the CBOT member firm has a 8,750 share requirement, thecombined share requirement will be 38,750.
A NYMEX Rule 106.J. member firm that is a fund, pool or other collective investment vehicle poolshall at all times have assigned to it at least 60,000 CME Group Class A Shares if it is also both: (a)a CME clearing member with shares or CME Rule 106.J. equity member firm and (b) a CBOT
clearing member with shares or CBOT Rule 106.J. equity member firm.
For NYMEX Rule 106.J. member firms, at least one membership and 50% of the CME Group ClassA Shares required for membership pursuant to this Rule must be owned by the member firm,
principals or employees of the member firm or persons, including a parent company, with anacceptable proprietary interest in the member firm, or if the member firm is a fund, pool or othercollective investment vehicle, the investment manager of the fund, pool or other collective
investment vehicle. One membership and 50% of the CME Group Class A Shares required formembership may be independently assigned.

A member firm may pay an Equity Member Subscription Rate as published in the NYMEX feeschedule in lieu of holding CME Group Class A Shares referenced above.
For COMEX Rule 106.J. member firms and COMEX Rule 106.J. member firms (Options only), atleast one membership in each Division required for membership pursuant to this Rule must be
owned by the member firm, principals or employees of the member firm or persons, including aparent company, with an acceptable proprietary interest in the member firm, or if the member firm
is a fund, pool or other collective investment vehicle, the investment manager of the fund, pool orother collective investment vehicle. One membership in each Division required for membershipmay be independently assigned.
COMEX Option Memberships may be assigned solely for the purpose of trading those contracts
which a COMEX Option Member is permitted to trade.
The memberships may be held in the name of the member firm, principals or employees of themember, or persons with an acceptable proprietary interest in the member firm. The owner of themembership may transfer the membership among such persons provided that: (1) the transfer isapproved by Exchange staff; (2) the transferee is approved pursuant to the rules of the Exchange;and (3) the transfer is for the legitimate business purposes of the firm. The firm shall have the right,
at any time, to withdraw the authority of the transferee to trade on the membership, but mustwithdraw such authority upon termination of his employment or other association with the firm.
Notice of the withdrawal of the authority of the transferee to trade on the membership must be
given to the Department. The member firm shall designate on a form provided by the Exchange a
representative who shall be authorized to deal with the Exchange with respect to the membershiptransferred under this Section.
The proceeds of the sale of a membership which has been assigned in order to qualify a Rule106.J. member firm shall be subject to Rule 110 claims against both the owner of the membershipand the Rule 106.J. member firm.
A Rule 106.J. member firm membership may not be transferred pursuant to any other provision ofRule 106. The membership may not be assigned for membership purposes under Rule 902.
Rule 106.J. member firm benefits apply only to the firm’s member firm trading and not to the tradingof any affiliates, subsidiaries or customers. All positions of the member firm must be carried by aclearing member(s) in accounts separate from positions of affiliates, subsidiaries, customers andother entities.
A Rule 106.J. member firm may not hold itself out to the public as a clearing member.
Exchange staff may grant exemptions from the requirements of this Rule.
106.K.

Transfer to a Trust

A member may transfer his membership to an Estate Planning Vehicle for which the member is the
grantor. An Estate Planning Vehicle is a trust established primarily for the benefit of the grantor’sfamily and friends and charitable beneficiaries. A membership properly held in an Estate Planning
Vehicle may be transferred to one successor Estate Planning Vehicle for which the member is the
grantor within one year of the member’s death. The grantor (or the grantor's personal
representative) and the trustee (and any successor) shall complete the trust transfer agreement
and certification provided by Exchange staff. The grantor shall comply with any request to produce
the Estate Planning Vehicle or information regarding the Estate Planning Vehicle made by
Exchange staff.
If such a transfer is made by a bona fide gift or bequest, it shall also be subject to the requirementsof Rule 106.E.
The grantor's liability to the Exchange under Rule 439 shall continue with respect to any claim
arising out of an act or omission occurring prior to such transfer, and the membership will continue
to be treated as the asset of the grantor for the purposes of Rule 439 and for otherwise meetingany obligations to the Exchange arising out of the grantor's use of the membership prior to thetransfer to the trust, including fines imposed with respect to conduct occurring prior to the transfer.
A membership held pursuant to a transfer under this section may be assigned for membershipprivileges under Rules 106.J. or 902 or reinstated to the transferor pursuant to this section. The
transfer shall be revoked and the membership shall revert to the transferor upon official notice tothe Exchange that the trust has been revoked. The membership must be transferred out of thetrust within 90 days of the closing of the member’s estate.
106.L.

[Reserved]

106.M.

Transfer to Joint Tenants With Right of SurvivorshipA member may transfer his membership to himself and a member of his immediate family, as
defined in Rule 106.C., as joint tenants with right of survivorship.
The joint tenants shall designate on a form provided by the Exchange which one of them shall beauthorized to deal with the Exchange with respect to the membership transferred under thisSection. The designee must qualify for membership by satisfying the requirements of Chapter 1 ofthese rules, and shall be treated as a member for all purposes. In the designation form, the joint
tenants shall acknowledge that the designee shall have the exclusive right to transfer themembership or to execute an Authorization to Sell pursuant to Rule 106.A. and that the Exchange
shall have no liability to the non-designee in the event of such transfer or execution or themishandling of the membership by the designee. The joint tenants may at any time change suchdesignation in writing signed by both of them, and each such change shall be deemed a transfer forthe purposes of these rules. Upon such change in designation, the new designee must qualify formembership by satisfying the requirements of Chapter 1 of these rules.
Whether or not the transferor is the designee, the transferor's liability to the Exchange under Rule439 shall continue with respect to any claim arising out of an act or omission occurring prior to atransfer under this rule, and the membership will continue to be treated as an asset of thetransferor for the purposes of Rule 439 and for otherwise meeting any obligations to the Exchange
arising out of the transferor's use of the membership prior to such transfer, including fines imposedwith respect to conduct occurring prior to the transfer. Upon receipt of satisfactory proof of thedeath of a joint tenant, the Exchange will transfer the membership to the survivor.
Upon receipt by the Exchange of written notice signed by both joint tenants terminating joint
ownership of the membership transferred under this section and instructing the Exchange totransfer the membership to one of the joint tenants as sole owner, the Exchange shall transfer suchmembership pursuant to such instructions.
A membership held pursuant to a transfer under this section may not be assigned for membershipprivileges under Rules 106.J. or 902.
106.N.-106.O. [Reserved]
106.P.

Transfer to a Family Limited PartnershipA member may transfer his membership to a Family Limited Partnership ("FLP") with respect towhich all partners are members of the member’s family who would be eligible for a family transferfrom the member pursuant to Rule 106.C. The limited partnership agreement or other document(s)governing the FLP shall at all times prohibit transfers of an interest in the FLP to any person who is
not eligible pursuant to Rule 106.C and shall state that (1) the FLP's interest in the membershipshall at all times be subject to all of the rules of the Exchange, as may be amended, including, but
not limited to, Rule 110 and, if the membership is assigned to a member firm for membership
purposes, Rules 106.J. and 902; (2) management of the FLP shall be vested exclusively in a
managing general partner, who must qualify for membership by satisfying the requirements ofChapter 1 of these rules; and (3) the Exchange shall have no liability to the partners for any loss,
damage, or expense resulting from any acts or omissions by the managing general partner or any
person acting by or through the authority of a general partner. The transferor and the managing
general partner (and any successor) shall each provide in the form provided by the Exchange acertification that the FLP acquires the membership subject to all of the rules of the Exchange andthat the FLP is in compliance with the requirements of this Rule. The FLP also may transfer themembership back to the transferor.
If the transfer of a membership to the FLP is made by a bona fide gift or bequest, it shall also be
subject to the requirements of Rule 106.E.
Transfer of a membership pursuant to this rule shall not relieve the transferor of any liability to the
Exchange under Rule 439 with respect to any claim arising out of an act or omission occurring prior
to such transfer, and the membership will continue to be treated as the asset of the transferor forthe purposes of Rule 439 and for otherwise meeting any obligations to the Exchange arising out of
the transferor’s use of the membership prior to the transfer to the FLP, including fines imposed withrespect to conduct occurring prior to the transfer. A membership held pursuant to a transfer underthis section may be assigned for membership purposes under Rules 106.J. and 902.
106.Q.-106.S. [Reserved]

107.

APPROVAL OF APPLICANT
Department staff shall review and approve applicants for membership on the Exchange. Suchapproval shall be based upon admission criteria established by the Membership Committee. The
Membership Committee shall review applicants for membership not meeting the staff-administeredadmission criteria.
Department staff shall inquire into and be satisfied with respect to the reputation and financial
responsibility of the applicant and the details of the financial arrangements made in connection withthe purchase or transfer of the membership. After review of all of the information, a decision shallbe made as to whether the applicant is qualified for membership.
An applicant not approved for membership by Department staff shall be referred to a panel of theMembership Committee. A panel of the Membership Committee shall consist of two members anda chairman, who shall have a vote. A unanimous vote of the panel is required for approval of theapplicant.
An applicant approved for membership either by Department staff or the Membership Committee,
as applicable, shall assume the responsibilities and privileges of membership once a membershipis obtained.

108.

[RESERVED]

109.

REJECTION OF APPLICANT
If an applicant is rejected by the Membership Committee panel, the applicant may appeal thedecision to the full Membership Committee. The Membership Committee shall decide, by majority
vote, whether the applicant is qualified for membership. The decision of the Membership
Committee shall be final. An applicant rejected by the Membership Committee may bereconsidered for membership if new or additional information is subsequently brought to theattention of the Membership Committee. If an applicant is rejected for membership or if for any
reason his application is withdrawn, the Exchange shall retain the processing fee and the applicant
shall assume all risk of gain or loss from the resale of any membership purchased by him prior
thereto.
If the applicant executed and filed an Authorization to Sell pursuant to Rule 106.A. with the
Department in connection with the financing of the purchase of a membership, then the proceeds ofany sale of such membership shall be paid to the grantee, up to the amount of the debt, includinginterest.

110.

CLAIMS AGAINST MEMBERSHIP, APPLICATION OF PROCEEDSFor the purposes of this rule "sale" shall include a sale made pursuant to Rule 104 or a transfer
made in accordance with the provisions of Rule 106; "seller" shall include owners of a membershipand firms that have membership privileges pursuant to Rules 106. F., G. or J.; and “claim” shall belimited to claims involving incidents that occurred prior to the sale of the membership and whicharose in connection with Transactions on the Exchange or membership in the Exchange. For
purposes of this Rule, “Transactions on the Exchange” shall include, but are not limited to,transactions receiving preferential clearing fees as a result of the membership, regardless of theparty entitled to receipt of such preferential fees. Claims resulting from conduct subsequent to thesale of a membership may not be asserted against that membership or its proceeds. All claims
against the membership or proceeds resulting from the sale of the membership shall be submitted
in writing to the Department within 20 days of the posting of notice of the sale of said membership.
At the conclusion of the 20-day claim filing period, authorized Exchange staff shall conduct aninvestigation of all claims properly filed against the membership sale or its proceeds. This
investigation shall be completed within 20 days unless the investigation cannot be resolved withinthat period.
The total proceeds of the sale, or in the case of a transfer, the value at the mid-point of the bid-offer
spread as of the date of the transfer, of the membership shall be applied to the following purposes
and in the following order of priority:
a. Payment of all 1) debts owed to the Clearing House, if the membership transferred was
assigned to the Clearing House pursuant to Rule 902; and 2) dues, fines, contributions,charges and other indebtedness owed to the Exchange;
Payment of any indebtedness to the clearing member who last qualified the selling member
prior to the sale arising out of: (i) a pledge of such membership as collateral security on suchindebtedness, or (ii) a deficit which authorized Exchange staff determines to have arisen
directly out of Transactions on the Exchange;c. Payment of amounts due to other clearing members on claims filed which authorized
Exchange staff determines to have arisen directly out of Transactions on the Exchange;
d. Payment of amounts due to members and member firms on claims filed which authorized
Exchange staff determines to have arisen directly out of Transactions on the Exchange; ande. Payment of amounts due to public customers of the seller or public customers of any party
receiving preferential clearing fees as a result of the membership based on claims filed bysuch customers or based on reports of the Market Regulation Department, which claims are
determined by authorized Exchange staff to be based upon misappropriation of customer
funds, improperly executed transactions, unpaid credit balances, or other similar matters,
directly related to Transactions on the Exchange.
No other claims against the proceeds of the sale of a membership shall be recognized andadministered by the Exchange except where the seller gives the Exchange permission to use theproceeds to pay an outstanding tax lien, but the creditors of the seller of a membership not falling in
the foregoing categories may pursue other legal means of securing payment of their obligations.
Authorized Exchange staff shall make a final determination of all claims filed in time or reported by
the Market Regulation Department and the Department against the proceeds of the sale of amembership.
Except as provided in Rule 913 or where Exchange staff is aware of an outstanding tax lien,
Exchange staff shall make a distribution of such proceeds within 40 days after receiving notificationand confirmation of the sale of the membership, unless claims to the proceeds are not resolved
within that period. If, however, at such time an Exchange disciplinary proceeding is pending against
the seller or any party receiving preferential clearing fees as a result of the membership, or, based
upon a pending investigation, is highly probable, or if a legal proceeding, in respect to which theindemnification provisions of Rule 439 would operate, is pending, has been announced or is highly
probable, then the Exchange staff shall retain so much of the proceeds as determined by staff inorder to satisfy such obligations until such time as the pending matter is concluded. Distribution ofproceeds shall be made by the payment of claims in the categories listed in this rule to the extent
the proceeds from the sale are sufficient to meet those obligations. If the proceeds of the sale of amembership are insufficient to pay all amounts determined to be due under the categories listed inthis rule, the proceeds shall be applied to pay the full amounts determined to be due undersubparagraphs a, b, c, d and e in the priority named. If the proceeds are insufficient to pay theamounts determined to be due under any priority, the claims due under that priority shall be paid
pro rata, and the remaining priorities shall be left unpaid. In determining the amount of any claim,
the Exchange staff shall first deduct the fair cash value of any collateral held by that claimant.
Creditors of the seller of a membership whose obligations are not fully satisfied pursuant to thisparagraph may pursue other legal means of securing payment of their obligations.
The surplus, if any, shall be paid to the person whose membership was sold or his legal
representative or a 106.A.-B. grantee, as applicable, upon the execution of a satisfactory release.
The Exchange staff’s determination and allowance of claims hereunder shall be final. The death,
incompetence, expulsion, suspension, insolvency or bankruptcy of a member shall not affect therights of claimants under this rule.
b.

111.— 119. [RESERVED]
PRIVILEGES AND RESPONSIBILITIES120.

MEMBERSHIP CATEGORIES
There are three categories of membership: NYMEX Division, COMEX Division and COMEX Option
Membership. NYMEX Division membership privileges extend to all NYMEX products and to any
COMEX products for which cross-divisional trading privileges have been granted by the Board;
COMEX Division membership privileges extend to all COMEX products and to any NYMEX
products for which cross-divisional trading privileges have been granted by the Board; and COMEX
Option Membership privileges are limited to products assigned to COMEX Option Members by the
Board. A member who trades products on Globex in which he does not have membershipprivileges is not entitled to member’s rates for such trades.

121.

MEMBERSHIP PRIVILEGESMembership in the Exchange entitles the member to certain privileges including the right to receive
member or lessee fee rates in accordance with Exchange requirements.

122.

MEMBERSHIP DUES AND ASSESSMENTS PAYABLE
Dues and other amounts owed to the Exchange are payable upon receipt of the invoice. Members
in arrears 60 days after the invoice date may forfeit all membership privileges, including reduced
clearing and trading fees, including Globex fees. Exchange staff shall use reasonable efforts to
notify the member before any privileges are forfeited.

123.

COMPLIANCE WITH THE COMMODITY EXCHANGE ACT
All members of the Exchange shall comply with the provisions of the Commodity Exchange Act andthe rules and regulations duly issued pursuant thereto by the CFTC, including the filing of reports,
maintenance of books and records, and permitting inspection and visitation by duly authorized
representatives of the CFTC.

124.

VIOLATIONS OF COMMODITY EXCHANGE ACTWithin a reasonable time following the receipt of final notice under Section 6(c) of the Commodity
Exchange Act from the CFTC that any person has been found guilty of violating the provisions of
the Commodity Exchange Act, Exchange staff shall take the necessary action to effectuate theorder of the CFTC, as applicable, and shall report such action to the Board.

125.-126.

[RESERVED]

127.

BROKING AND SOLICITATION PRIVILEGESIn order to broker or solicit customer business, a member must have proper CFTC registration.
All broking and solicitations must take place from the premises of an entity registered to conductcustomer business and be on behalf of the entity or one of its properly registered affiliates andsuch entity or affiliate must be an NFA member if required by NFA rules.

128-129.

[RESERVED]

130.

REQUIRED NOTICES BY MEMBER FIRMS AND SUSPENSION OF MEMBER FIRM
PRIVILEGESRule 106.J. member firms shall notify the Financial and Regulatory Surveillance Department prior
to any proposed merger, acquisition, consolidation, combination, sale, or any other change ofownership involving the Rule 106.J. firm.
Rule 106.J. member firms shall notify the Financial and Regulatory Surveillance Department in atimely manner of any material change in key personnel who are responsible to act on behalf of themember firm.
If any Rule 106.J. firm:•

has notified the Exchange or the Exchange otherwise becomes aware of a significant
event as defined in Rule 442; or•that is an FCM fails to meet CFTC minimum financial requirements in the opinion of the
Financial and Regulatory Surveillance Department; or•neglects to promptly furnish a statement upon request
the membership privileges of the Rule 106.J. firm may be suspended, subject to the procedures set
forth in Rule 974.B.

INVOLUNTARY SALE
131.

EXPULSION FOR FRAUD OR DISHONESTY PRIOR TO ELECTION TO
MEMBERSHIP
A member or a firm with membership privileges who is found guilty of fraud or dishonest conduct byany 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, theNational Futures Association, the Financial Industry Regulatory Authority, or any self-regulatory or
regulatory organization prior to becoming a member and of failing to make full disclosure thereof in
his or its application for membership, or who is found guilty of having made a false statement of amaterial fact in or in connection with his or its application, may be expelled from membership in the
Exchange by a Panel of the Business Conduct Committee.

132.

SALE OF MEMBERSHIP AT DIRECTION OF REGULATORY AUTHORITY
If the Exchange is apprised by a regulatory authority with jurisdiction over the owner of amembership that said membership was obtained unlawfully based on the laws of the jurisdiction inwhich the owner of a membership is located or where the regulatory authority directs that the ownerof the membership relinquish ownership, the Chief Executive Officer may order the membership tobe sold and the proceeds applied as provided in Rule 110. If, within 30 days of such order of sale,the owner voluntarily sells the membership, the ordered sale of the membership shall be cancelled.
If the membership is not sold by the owner within 30 days of the order, then the membership
involved shall be sold by the Exchange to the highest bid on file with the Department for suchmembership upon the opening of the seat sale market on the sixth business day after expiration of
the 30-day period.

133.

SALE OF MEMBERSHIP WHEN MEMBER DEFAULTS
If Exchange staff determines that a member or a firm that has membership privileges is in default
upon any financial obligation due to the Exchange or any financial obligation to another member or
to a clearing member in connection with transactions on the Exchange, the Chief Executive Officer
may order the membership of the defaulting member or firm sold and the proceeds applied asprovided in Rule 110. If, within 30 days of such order of sale, the defaulting member or firm
satisfies the indebtedness and provides proof of such satisfaction to staff, the ordered sale of themembership shall be cancelled. If full payment is not made within the 30-day period, then themembership involved shall be sold by the Exchange to the highest bid on file with the Department
for such membership upon the opening of the seat sale market on the sixth business day after
expiration of the 30-day period. If the proceeds from the sale are less than the indebtedness of thedefaulting member or firm, such debtor shall remain liable to the Exchange or its members or
clearing members for the deficit.

134.-194.

[RESERVED]
MARKET MAKING AND INCENTIVE PROGRAMS

195.

MARKET MAKER AND INCENTIVE PROGRAMSThe Exchange may approve the implementation of market maker or incentive programs (eachindividually a “Program” or collectively, “Programs”) from time to time or modifications to existing
Programs. The terms and conditions of each individual Program will be set forth in separate
regulatory filings submitted to the Commodity Futures Trading Commission (“CFTC” or“Commission”). This Rule 195 contains terms and conditions that are generally applicable to the
Exchange’s administration of the Programs.
Any person, entity, or firm that is accepted as a participant in any of the Exchange’s Programs shallbe subject to Exchange Rules as one of the Program terms and conditions (each such person,
entity, or firm a “Participant”).
195.A.
Restriction on Non-Public Knowledge
With the exception of allowable privately negotiated transactions and orders executed inaccordance with Rule 539.C., an individual responsible for performing the duties of a market makerin which the Participant would be required to maintain two-sided markets in products designated by
the Exchange, may not accept, hold or in any manner have possession or non-public knowledge oforders for any other person, including knowledge of customer orders, in the same or a related
market. All contract months in the product and any related futures or options contracts, in addition
to any corresponding mini-sized futures or options contracts shall be considered to be the same ora related market for purposes of this Rule.
195.B.
Program Terms and Conditions
1. Authority.

The Exchange shall have the sole authority to determine the qualifications, eligibility, productscope, start and end date, requirements, restrictions, obligations, and incentives of each Program(“Program Terms”) and whether an applicant or current Participant meets or has met the Program
Terms. The Exchange reserves the right in its sole discretion to apply and interpret Program Terms
and modify Program Terms. The Exchange has sole discretion to determine whether a Participant
is admitted into or continues participation in any Program.
2. Registration, Documentation, Accounts and Information.
The Exchange may require the Participant to provide and/or execute documentation, including but
not limited to applications, bid sheets and/or agreements (collectively, “Documents”) containing theProgram Terms or other participant information prior to admission or continued participation in a
Program. Where Documents are required, they must be submitted in accordance with any specified
requirements set forth by the Exchange. The implementation or modification of a Program issubject to all applicable regulatory processes and certification with the CFTC, and the completion ofsuch processes and certification are conditions precedent to the effectiveness of any Document.
All information supplied by the Participant concerning the Participant, its principals, and all otherinformation set forth in its Documents must be true, correct and complete. Submission ofincomplete, incorrect, or false information may subject the Participant to Exchange disciplinary
action. The Participant agrees to notify the Exchange in writing of any material changes withrespect to the information that take place after the Participant has submitted its Documents and, if
accepted into the Program, for the duration of the Participant’s participation in the Program.
The Participant must provide the Exchange with any required information including, without
restriction, any account information, and register such accounts with the Exchange in order to beeligible to participate in the Program. Participant accounts must be registered with the Exchange foreach Program into which a Participant is admitted. Any Participant that has not provided accountinformation on a timely basis may not be eligible to receive incentives in the Exchange’s sole
discretion.
The Participant shall promptly notify the Exchange in writing if the Participant: (i) merges with or
acquires, in whole or in part, any separate trading entity, or (ii) is acquired, in whole or in part, by
any separate entity.
3. Monitoring of Participant Activity.
The Exchange shall have the right to monitor the Participant’s activity to ensure compliance with
the Program Terms.
4. Incentives.
The Exchange has the sole and final determination as to any rankings, calculations, accrual, anddisbursement of incentives. Apart from the specific fee incentives listed in the Program, in any, allfees associated with transacting on the Exchange will continue to apply at the applicable standard
rates.
5. Exchange Right to Terminate Participation.
The Exchange may terminate a Participant’s status in a Program in its sole discretion, including but
not limited to the following circumstances: (a) the Participant no longer meets the qualifications or
eligibility requirements of the Program or has failed to meet any applicable Program obligations; (b)the Participant violates any of the Rules; (c) the Participant takes any action or engages in any
omission that, in the Exchange’s sole discretion, has an adverse effect on, or damages the
reputation of, the Exchange, the Program’s products, or any of the Exchange’s trading and/or
clearing venues; (d) such termination is necessary, in the sole discretion of the Exchange, tocomply with any applicable law or regulation, or any other agreement, legal proceeding,investigation or settlement to which the Exchange, or any of its affiliates, is a party or which may
affect the Exchange or any of its affiliates; (e) the Exchange is asked or required to terminate or
modify the applicable Program by the Commission or its staff, or any other regulatory body or its
staff with jurisdiction over such matters; (f) the Participant ceases doing business as a going
concern; (g) the Participant files any petition under the Federal Bankruptcy Act or any state
insolvency law, becomes insolvent, has an involuntary petition in bankruptcy filed against it or has areceiver appointed for it or its property; (h) the Participant fails to maintain an appropriate clearing
arrangement with an Exchange clearing member firm; or (i) the Exchange delists the products
under the applicable Program, upon the effective date of such delisting.
6. Delisting of Program Products.

To the extent that additional products included in the applicable Program have not been delisted,
the applicable Program shall remain in effect with respect to the remaining listed products unlessotherwise terminated by the Exchange.
7. Limitation of Liability.
The Exchange shall not have any liability to Participant or any third party with respect to its
administration of a Program, and the exclusive remedy of Participant for any claim under a
Program will be termination of the applicable Document for enrolment in a Program andParticipant’s participation in a Program. The Exchange and its partners, directors, officers,
employees, shareholders and agents shall not be liable to Participant, or to any third party, for any
damages, whether actual, direct, indirect, incidental, special or consequential, of any typewhatsoever, arising out of or relating in any manner to the administration of a Program, theProgram Terms, and the applicable Document for enrolment in a Program. For the avoidance of
doubt, the liability of the Exchange for any event not related to the administration of the Program
shall be limited by Rule 578 and any related dispute shall be subject to the arbitration requirementsof Rule 578.
195.C.
Priority
Nothing in this Rule shall alter or waive a Participant’s responsibility to comply with the provisionsof the Commodity Exchange Act (“CEA” or “Act”) and the rules and regulations duly issued
pursuant thereto by the CFTC, including the filing of reports, maintenance of books and records,
and permitting inspection and visitation by duly authorized representatives of the CFTC.
195. D.
Participant Compliance
If a Participant is accepted into a Program, the Participant must comply with all applicable Program
Terms, Exchange Rules, Exchange Fee Policy Bulletins, and Exchange policies located on CMEGroup Inc.’s website at www.cmegroup.com, including all amendments thereto.
(End Chapter 1)