8D25.

8D26.

8D27.

8D28.

8D29.

ORDER IN EXCESS OF CREDIT LIMIT

Any dispute respecting execution of an order entered by an Auction Participant in excess of its
Credit Limit must be resolved through arbitration proceedings conducted in accordance with
Chapter 6 of CME’s Rulebook. The Designated Clearing Member, Auction Broker and Auction
Participant may govern the consequence of such behavior by private agreement. In the absence of
an agreement, such disputes shall be resolved in accordance with ordinary commercial practices at
CME.

MARGIN

The CME Clearing House will establish and publish the margin requirements for each contract
executed as a result of an Auction, mark-to-market open positions daily where applicable, and
collect the applicable margin amounts from the Designated Clearing Member that guarantees
performance of that contract. The Designated Clearing Member shall make commercially
reasonable arrangements to collect such amounts from its customers.

AUCTION PROCEDURES
EFFECT OF AUCTION PROCEDUERS

Participants in Auctions, and all orders submitted and transactions entered into by Auction
Participants in connection with Auctions, will be governed by these Auction Procedures and such
other CME Rules as may be applicable, all as amended from time to time. CME AM will use
reasonable efforts to publish any amendments to the Auction Procedures at least one week before
the effectiveness of any such amendments. Any amendments to the Auction Procedures or the
CME Rules will become binding on Auction Participants upon their effectiveness.

AUCTION DETAILS

Prior to the opening of each Auction, CME AM will Publish the relevant “Auction Details” which will
include the following and such other information as may be appropriate:

i. the Statistic and the Statistic Release Date and Time;

li. the date of the Auction;

iii. the scheduled time for the opening and closing of the Auction;
iv. the available Strike Levels (applicable to Options);

v. _ the relationship between each Index Point and the unit of measure of the Statistic on which the
instrument will be based (e.g., for Auctions on non-farm payrolls one Index Point per thousand
jobs);

vi. the currency in which the instrument executed through the Auction are denominated, if not
U.S. dollars;

vii. the minimum order size, if any;

viii. the conditions that must be satisfied in order for the Statistic to be deemed to have been
released on the Statistic Release Date, which may include the manner and timing of
publication of the Statistic and other criteria;

(x) the applicable fee and the manner in which it will be calculated; and

(xi) the public Uniform Resource Location, or “URL” (the World Wide Web address of a
site on the Internet), at which the Trading Levels and Pro Rata Fills, if any, will be
published.

STRIKE LEVELS

CME AM will Publish opening prices for an Auction before the Auction Open. The Strike Levels for
an Auction will include, without limitation, any Strike Levels with respect to which there are
outstanding instruments sold in any previously held Auction for instruments on the same Statistic


8D47.

8D48.

8D49.

AUCTION FEES

AUCTION FEES

CME AM will Publish the auction fees (“Auction Fees”) applicable to a given Auction as part of the
Auction Details. Each Designated Clearing Member will pay to CME AM the applicable Auction
Fees for itself and its Auction Participants. The fee for Forward transactions shall be included as
an adjustment to the Trading Level as provided in Rule 8D51.

OPTION PREMIUM

The Designated Clearing Member shall pay to CME AM the Option premium due in connection with
an Option executed as a result of an Auction for itself or its Auction Participant to buy an Option.

FORWARD FEES

The Designated Clearing Member shall pay to CME AM a fee for each Forward (the “Forward Fee”)
executed for itself or its Auction Participant as a result of an Auction. CME AM will calculate the
Forward Fee after the Auction Close by increasing or decreasing, as appropriate, the single
Forward Trading Level (at which each Forward was executed) by the Forward Fee to arrive at the
adjusted Forward Trading Level. Because the Forward Fee is reflected in this adjustment, no
separate payment of the Forward Fee is required.

RISK FACTORS

Although the principal risks presented by the trading in Auctions of Auction Instruments are
described below, this document does not describe all of the risks that may be presented by
such trading and does not include a full description of those risks that are identified below.
Auction Participants should consult with their own advisors, including tax and financial
advisors, and carefully consider these risks, the mechanics of the Auctions, the terms of the
Auction Instrument, the applicable CME Rules and CME AM Rules and the Auction
Participants’ own objectives and circumstances, before trading in Auctions.

STATUS OF CME AM

CME AM is not regulated by the CFTC. CME AM has filed a notice with the CFTC that it
intends to operate as an exempt board of trade pursuant to Section 5d of the CEA. An
exempt board of trade, such as CME AM, is not registered with, or designated, recognized,
licensed, or approved by the CFTC.

DERIVATIVES BASED ON PUBLISHED STATISTICS

The Auction Instruments that are the subject of the Auction are subject to the same basic risks as
other derivatives plus certain additional risks related to the underlying Statistics upon which they
are based. The trading of Auction Instruments based on published Statistics is subject to the risk
that the underlying Statistic will no tonger be calculated or published, or that the Statistic will be
substantially modified or that other changes to the Statistic will be made. The possibility exists that
the agency or entity responsible for publication of the Statistic might cease publication of, or
materially modify, the Statistic subsequent to the Auction but prior to the relevant Statistic Release
Date. If CME is able to identify a Replacement Statistic for the purposes of settling Auction
Instruments in that Statistic, the Auction Instrument will be settled based on the Replacement
Statistic. Auction Participants with executed Auction Instruments will therefore be parties to
transactions based on a Statistic that may differ from the Statistic on which the Auction was based.
In addition, if CME AM is unable to identify a Replacement Statistic, the Auction Instrument will
either be cancelled (if there have been no prior Auctions on the same Statistic and Statistic
Release Date) or will be settled based on the Trading Levels of the most recent Auction on the
same Statistic and Statistic Release Date, in accordance with the Auction Procedures.
Cancellation of Auction Instruments will not, and settlement of Auction Instruments based on the
Trading Levels of the most recent Auction may not, result in Auction Participants obtaining the
benefits that might have been realized if the Statistic had remained available and such settlement
could result in losses to certain Auction Participants.

In addition, it is possible that the agency or entity responsible for publication of the Statistic might,

subsequent to the completion of the relevant Auction but prior to the release of the Statistic, alter
the content of the Statistic or modify the underlying indicators or indicia on which the Statistic is


8D34,

8D35.

8D36.

8D37.

8D38.

8D39.

8D40.

Pending Orders) and the original order will be deemed cancelled if and when the new Pending
Order becomes an Accepted Order. Prior to that time, the original order remains in effect. An
order may be cancelled or modified using the Electronic Platform through which the original order
was entered, subject to any applicable requirements of the applicable Auction Broker, including
(without limitation) the Rules hereof, and the foregoing procedures will apply, as appropriate, to any
such cancellation or modification.

MARKET MAKER FUNCTION

CME AM may authorize one or more of the Auction Brokers to perform a market-making function
for specific Auctions. CME may provide such designated market makers with the ability to enter
orders for Options, including types of Options and at Strike Levels that may not be available to
other Auction Participants. These orders will not confer any order execution or informational
advantage to the market-making Auction Brokers or their customers but are merely intended to
increase the likelihood that orders submitted by Auction Participants will be executed.

INDICATIONS

CME AM will publish the current Indications for each instrument offered during the period that an
Auction is open. The Indications published at the Auction Close may not reflect the Trading Levels
for each instrument as finally determined by CME AM after the Auction Close because CME AM
may revise Accepted Orders which contain errors. Each Auction will be conducted on the basis of a
single Trading Level for each type of Auction Instrument offered through the Auction, and not on
the basis of spreads.

FILLS OF ACCEPTED ORDERS

CME AM will publish Trading Levels and, if applicable, Pro Rata Fills promptly after each Auction
Close. Accepted Orders will be executed and filled based on Trading Levels and the Pro Rata Fill.
The Trading Levels published by CME AM will be definitive (absent manifest error) and will
supersede any verbal notifications provided by CME, CME AM, Auction Brokers, Designated
Clearing Members or any other Auction Participants.

PRO-RATA FILLS

If an Accepted Order in an Auction to buy/sell an Auction Instrument has a limit price below/above
the Trading Level for the relevant Auction Instrument, then no portion of that Accepted Order will be
filled. If an Accepted Order in an Auction to buy/sell an Auction Instrument has a limit price
above/below the Trading Level, the Accepted Order will be filled in its entirety. If an Accepted
Order in an Auction to buy/sell an Auction Instrument has a limit price at the applicable Trading
Level for the relevant Auction Instrument, and not all Accepted Orders can be executed at that
Trading Level, then each Accepted Order entered at the Trading Level will be filled on the basis of
a pro rata percentage (“Pro Rata Fill”), based on the order size of the Accepted Order and the sum
of all order sizes for all Accepted Orders at that Trading Level. For example, if 65% of the
Accepted Orders to buy an Auction Instrument at a given Trading Level are filled, then each buy
order entered at that Trading Level will be filled with respect to 65% of the order (e.g., an order size
of 100 will result in a filled order size of 65), and in such case all Accepted Orders to sell, if any, at
that same Trading Level will be fully filled. The Pro Rata Fill percentage, if applicable, will be
published along with the Trading Level for each Auction Instrument.

FINALITY .

Each executed Accepted Order will become final and binding on the relevant Designated Clearing
Member when Trading Levels and Pro Rata Fills, if applicable, are Published. The guarantee of
CME’s Clearing House will apply to executed Accepted Orders when Trading Levels and Pro Rata
Fills, if applicable, are Published. No obligation of the CME Clearing House arises in respect of any
Accepted Order until Trading Levels and Pro Rata Fills, if applicable, are Published.

TRADE NOTICE

After Trading Levels have been Published, the Designated Clearing Member or Auction Broker may
provide its customers with an electronic or oral notice of the Auction Participant's Trading Level and
filled amount of the Accepted Orders that resulted from the Auction (a “Trade Notice”). However,
Trade Notices are provided as a courtesy for Auction Participants, are not definitive or binding and
do not invoke the guarantee of CME’s Clearing House.

TRADE CONFIRMATION


8D30.

8D31.

8D32.

8D33.

for the same Statistic Release Date. The Strike Levels and other Auction Details provided to
Auction Participants by CME AM, including through an Electronic Platform, will be definitive,
notwithstanding any contrary information contained elsewhere.

SUBMISSION OF ORDERS

By submitting an order in connection with an Auction, and by entering into an Auction Instrument
executed through an Auction, an Auction Participant will be deemed to have represented and
warranted that (i) it is an Eligible Contract Participant, (ji) it is submitting such order, and entering
into such Auction Instrument in good faith and for a bona fide business purpose; (iii) it intends to
complete a transaction on the terms set forth in such order; and (iv) its actions are in compliance
with all applicable laws and regulations and subject to the terms of the Auction Procedures and the
Rules of CME AM and CME, as in effect from time to time.

ORDER SUBMISSION DETAILS

Orders may be submitted in an Auction by Auction Participants, either through their Auction Broker,
Designated Clearing Member or directly into the Auction System through an Electronic Platform
made available to Auction Participant by their Auction Broker. Any order submitted through an
Electronic Platform must be submitted in accordance with the rules or procedures applicable to
CME AM. All orders must in any event be submitted prior to the Auction Close. Regardless of the
manner in which orders are entered, orders must specify at least the following:

(i) The Statistic and Auction;
(ii), Whether the order is a purchase or a sale and, in the case of an Option, a put or a call;

(iii) The type of Auction Instrument (e.g., Option or Forward and, if an Option, vanilla or digital put
or call, vanilla spread, straddle, strangle or risk reversal, or digital range, strangle or risk
reversal);

(vi) The Strike Level or Levels (with respect to Options);
(v) The limit price (expressed in terms of a Trading Level);

(vi) The order size (expressed in terms of currency amount per Index Point) for vanilla Options and
Forwards or size of payout for Digital Options; and,

(vii) An Auction Participant unique account identifier.

REFUSAL, CANCELLATION AND EXPIRATION OF ORDERS

CME AM, Designated Clearing Members and Auction Brokers are under no obligation to accept an
order from an Auction Participant and may, in their sole and absolute discretion, reject or refuse to
accept any such order. CME AM, Designated Clearing Members and Auction Brokers may, in their
sole and absolute discretion, cancel any Pending Order received at any time before the Auction
Close for any reason. Accepted Orders may also be cancelled prior to the Auction Close, but only
if CME AM or the relevant Designated Clearing Member or Auction Broker concludes that the
Auction Participant has engaged in activity that may be in violation of applicable law, regulation or
the Rules hereof, or that the Auction Participant's conduct may be detrimental to the Auction. Any _
Pending Order that has not been classified as an Accepted Order before the Publication of Trading
Levels will expire.

Any Accepted Order that has not been executed in accordance with the Auction Procedures will
automatically expire upon Publication of the Trading Levels. Neither CME AM, a Designated
Clearing Member, nor an Auction Broker, is under any obligation to notify Auction Participants that
their orders were not executed.

CANCELLATION AND MODIFICATION OF ORDERS BY AUCTION PARTICIPANT

An Auction Participant may cancel or modify an order at any time before, but not after, the Auction
Close, directly on the Auction System or by submitting a request for cancellation or modification to
the designated representative of the relevant Auction Broker or Designated Clearing Member.
When an Auction Broker or Designated Clearing Member receives a request for modification before
the Auction Close, the Auction Broker or Designated Clearing Member will treat the modified order
as a new Pending Order (which will be subject to the Auction Procedures applicable to new


8D43.

8D44,

8D45.

8D46.

accept orders, or permit Auction Brokers or Designated Clearing Members to continue to enter
orders, in the event of a suspension and, if it elects to do so, enter such orders, or permit Auction
Brokers and Designated Clearing Members to enter such orders, into the Auction System.

AFTER THE PUBLICATION OF TRADING LEVELS - MODIFICATIONS OR
CANCELLATIONS

The Trading Levels of Auction Instruments executed in Auctions will be determined and published
following the Auction Close and, except as set forth in these Auction Procedures, an Auction may
not be cancelled after Trading Levels have been Published. Notwithstanding the foregoing, CME
AM may cancel an Auction, after Trading Levels have been Published, if it determines in its sole
and absolute discretion that the results of the Auction were adversely affected by an Auction
Participant's possession of advance information regarding the Statistic Level.

DELAY OF CALCULATION AND SETTLEMENT

Provided that Trading Levels have been Published and the Auction has not been cancelled
pursuant to Rule 8D44, the amounts due under executed contracts are determined on the basis of
the Statistic Level, as released on the relevant Statistic Release Date. CME AM may, however,
delay the determination of the amounts due under executed contracts if it determines in its
reasonable judgment that the Statistic Level reflects manifest error. In addition, if publication of the
relevant Statistic is delayed, then the determination of amounts due under outstanding contracts
and the settlement of such contracts may be similarly delayed.

STATISTIC EVENT

If a Statistic Event occurs with respect to the Statistic that underlies an Auction Instrument that is
the subject of an Auction, and Trading Levels for that Auction have been published, CME AM may,
but will not be obligated to, use reasonable efforts to identify a Replacement Statistic. If CME AM
identifies a Replacement Statistic, CME AM will promptly Publish notice of the Replacement
Statistic (and use reasonable efforts to otherwise notify Auction Participants). Such Auction
Instrument will be settled on the basis of the Replacement Statistic on the announcement date for
that Replacement Statistic.

\f CME AM is unable to identify a Replacement Statistic, or determines that it is not feasible or
advisable to do so, CME AM will promptly publish notice thereof (and use reasonable efforts to
otherwise notify Auction Participants with open Auction Instruments on the affected Statistic). In
such instances, if only one Auction has been conducted on the affected Statistic (for the same
Statistic Release Date), CME AM will cancel any open positions on that Statistic and return any
related amounts paid by Designated Clearing Members. In addition, each Designated Clearing
Member will be required to return to CME AM any related amounts received from CME AM by such
Designated Clearing Member. If, however, more than one Auction has been conducted on the
affected Statistic (for the same Statistic Release Date), CME will settle open positions on the
affected Statistic based on the Trading Levels determined in the most recent Auction for the
relevant Statistic (for the same Statistic Release Date) (the “Previous Trading Levels”). Specifically,
open Auction Instruments on the affected Statistic will be settled by the sellers of Options paying to
CME, and CME paying to the buyers of Options, in each case through the Auction Participants’
respective Designated Clearing Members, an amount equal to: (i) in the case of a vanilla Option,
the Previous Trading Levels multiplied by the filled order size; and (ii) in the case of a digital or
digital range Option, the Previous Trading Levels multiplied by filled order size. Open Forwards will
be settled by treating the Previous Trading Level for Forwards as the Statistic Level. Buyers or
sellers of Forwards, as the case may be, will therefore pay to the sellers or buyers, respectively, an
amount equal to the difference between the Previous Trading Level and the Trading Level for the
current Auction, multiplied in each case by the filled order size.

SETTLEMENT

The settlement of outstanding instruments based on the Statistic as released on the Statistic
Release Date (or, if applicable, Replacement Statistic on the announcement date for that
Replacement Statistic or failure to obtain a Replacement Statistic) as determined by CME for
settlement purposes will be binding on all Auction Participants. Subsequent to the publication of
the Statistic, CME AM will determine the settlement amounts due to and from CME Clearing House
in connection with each Auction Instrument and will publish such amounts and notify the applicable
Designated Clearing Members (and it is expected that the Designated Clearing Member will collect
such amount from, or pay such amount to, its customers that are Auction Participants under
arrangements between such parties) in accordance with the CME AM Rules.



cme @

a \O: 48 Chicago Mercantile Exchange

wep (2 Tine SECRE 20 South Wacker Drive
UFE.Or bic Seeks Chicago, Il. 60606-7499
wwnw-eme.com

December 15 2005

Ms. Jean A. Webb

Office of the Secretariat

Commodity Futures Trading Commission
Three Lafayette Centre

1155 21* Street, NW

Washington, DC 20581

RE: CME Rulebook Chapter 8-D Part Il (Auction Markets)
Submission No. 05-85A (Addendum to Submission No. 05-85)

Dear Ms. Webb:

Chicago Mercantile Exchange Inc. (“CME” or “Exchange") hereby notifies the
Commission that the Exchange is filing an addendum to Submission No. 05-85 that was
submitted on September 2, 2005. Chapter 8-D Part II (Auction Markets) was inadvertently
omitted from the originat submission. CME previously approved Chapter 8-D to govern the
Alternative Marketplace Inc. ("CME AM").

The Exchange certifies that Part Il of Chapter 8-D neither violates nor is inconsistent with
any provision of the Commodity Exchange Act or of the rules and regulations thereunder.
If you have any questions regarding this matter, please call me at (312) 648-5422.

Sincerely,

/S/ Stephen M. Szarmack
Director and Associate General Counsel

‘SMS/elm/5576 SUB 05-85A.doc


order size, as the case may be. However, the total payout due on vanilla Options and Forwards are
each subject to a cap or floor. If the Statistic Level exceeds the maximum Strike Level or is below
the minimum Strike Level, the total payout due on a vanilla Option or a Forward will be limited to an
amount equal to: (i) in the case of a call Option, the differential between the maximum Strike Level
and the call’s Strike Level, multiplied by the buyer's filled order size, (ii) in the case of a put Option,
the differential between the minimum Strike Level and the put’s Strike Level, multiplied by the
buyer’s filled order size, or (iii) in the case of a Forward, the differential between the maximum
Strike Level or minimum Strike Level, as the case may be, and the Adjusted Forward Trading
Level, multiplied by the filled order size of the buyer or the seller, respectively.

CLEARING

Each Designated Clearing Member to an Auction Instrument will be subject to the benefits and
costs of cleared instruments. Each Auction Instrument that becomes final and binding will have the
benefit of the CME Clearing House guarantee. In order to facilitate the clearing of Auction
Instruments, the CME Clearing House will decompile elements of the Auction Instruments into
“Book Instruments” consisting of two or more Option legs. The Book Instrument decompilation of
the Auction Instruments permits straight-through processing into the facilities of book keeping
systems, while maintaining the economic characteristics of the Auction Instrument subject to minor
discrepancies due to rounding.

As a result, any Auction Participant purchasing or selling any such Auction instrument will be
subject to the credit restrictions on participation, and the margin and other credit requirements,
imposed by the Clearing House and that party's Designated Clearing Member, and will be further
subject to the risk that this credit restriction may be inadvertently misapplied or misutilized when the
Auction Participant's order is entered. The performance guarantee provided by the CME Clearing
House applies pursuant to the CME rules and procedures for such products.

The clearing of Auction Instruments exposes each Auction Participant to the credit risk of the CME
Clearing House and the Auction Participant’s Designated Clearing Member. By entering into an
Auction transaction, an Auction Participant in an Auction will not be subject to the direct credit risk
of an over-the-counter counterparty, as is typically the case with respect to other over-the-counter
transactions. However, an Auction Participant with a position will be subject to the risk of the
bankruptcy of its Designated Clearing Member or the CME Clearing House. In that event, the
Auction Participant might experience substantial delays in recovering any amounts due to it from
the Designated Clearing Member or the CME Clearing House, and might never recover the full
amount due.

Funds deposited with a Designated Clearing Member or the CME Clearing House in connection
with an Auction will not be segregated. The Commodity Exchange Act requires futures
commission merchants and clearing houses to hold customer funds deposited in connection with
futures and commodity option trading in segregated accounts. Such accounts are maintained
separately from al! other non-segregated customer accounts and all proprietary assets of the
futures commission merchant or clearing house. These rules are designed to protect customers in
the event of an insolvency or financial instability of their futures commission merchant or clearing
house. However, if another customer of the same futures commission merchant defaults, the
clearing house may apply funds held in segregated customer accounts, which could expose non-
defaulting customers of the futures commission merchant to risk of loss. Auction Participants will
be subject to these same risks. In addition, however, because Auction Instruments entered into
through Auctions will be cleared as over-the-counter contracts, funds deposited as margin or for
other purposes in connection with such transactions will not be held in segregation. As a result, in
contrast to participants in the regulated futures and commodity option markets, Auction Participants
will not have the same protection against a bankruptcy of a CME Clearing Member or the CME
Clearing House, with respect to funds on deposit with a Designated Clearing Member or the CME
Clearing House.

CONFLICTS OF INTEREST

The roles of the Auction Brokers in connection with Auctions and resulting Auction Instrument
transactions present certain conflicts of interest and other risks. It is intended that CME AM will
generally operate the Auctions and will be responsible for all aspects of the Auctions, including the
establishment of the terms of the Auction Instruments to be traded (such as the opening prices,
strike prices, schedule, etc.), the acceptance and entry of orders, publication of Trading Levels,
determination of executed orders, order submission processes, and other Auction-related matters.
The roles of the Auction Brokers in connection with the Auctions and the execution and clearing of


based in a manner that does not constitute a Statistic Event. Such alterations or modifications
could nevertheless affect the value of open Auction Instruments or the amount paid under such
Auction Instruments. Moreover, the agency or entity responsible for publication of the Statistic may,
after release of the Statistic, determine that an adjustment to or recalculation of the Statistic is
warranted. Notwithstanding any such alterations, modifications, adjustments or recalculations, open
Auction Instruments will be settled on the basis of the Statistic as most recently published by the
relevant agency or entity as of three hours after publication of the original Statistic, or such longer
or shorter time as CME AM announces in the Auction Details or otherwise, if CME AM deems such
action necessary under the circumstances in order to allow for the possibility of revisions to the
Statistic.

It is possible that some market participants will obtain information regarding a Statistic. CME AM
and CME have no responsibility for or involvement in the determination or publication of the
relevant Statistics and has no control over the Statistic Levels or the release of information
regarding the Statistics. It is possible that information regarding Statistic Levels will become known
to certain Auction Participants prior to the release of such Statistics to the public and that such
Auction Participants will be able to use such information to their advantage, and to the detriment of
other Auction Participants, in entering orders in an Auction.

Reports on which certain Statistics are based may be inaccurate. Certain of the Statistics on which
Auction Instruments are based are compiled on the basis of reports submitted by industry
participants. This presents a risk that one or more of the reporting companies will submit inaccurate
reports, either intentionally or inadvertently, which could impact the level of the Statistics.

Initially, there may be no market for the Auction Instrument other than the Auctions. Initially,
Auction Instruments may be traded only through Auctions conducted by CME AM that are
subsequently cleared through the CME Clearing House. CME AM has no obligation to conduct
subsequent Auctions on the same Statistic and Statistic Release Date, or to maintain any other
secondary market for an Auction Instrument. As a result, there will likely be no fiquid market for
Auction Instruments and there can be no assurance that it will be possible to liquidate Auction
Instruments previously entered into.

ELECTRONIC TRADING SYSTEMS

The Auction System that wil! be used for Auctions may not always operate and function as
designed. The Rules under which the Auctions are conducted preclude or severely limit the liability
of CME, CME AM, the CME Clearing House and all other persons providing any component of the
Auction System in connection with system failures or malfunctions.

An Auction and its results are subject to the risk of systems and communications failures or other
events that may cause the suspension, extension, reopening or cancellation of the Auction. Upon
the occurrence of a Force Majeure Event, CME AM may be unable to conduct or continue an
Auction or to accept orders. Before an Auction begins, a Force Majeure Event could result in the
postponement or cancellation of the Auction. if the Auction has already begun, one or more of
these types of events could occur and result in the suspension, extension or reopening of the
Auction and, in some cases, the cancellation of the Auction. If CME AM suspends or cancels an
Auction before the publication of Trading Levels, CME AM may cancel all outstanding Orders, in
which case no Auction Instrument will be executed and Auction Participants will not be entitled to
any compensation. Participants in Auctions will therefore be subject to the risk that orders that
would otherwise be executable cannot be executed.

Upon the occurrence of a Force Majeure Event, CME AM might also be delayed or prevented by
such event from determining and publishing Indications, or from determining those orders that can
be filled or the Trading Levels of Auction Instruments executed in an Auction. The occurrence of a
Force Majeure Event could also adversely affect the accuracy or completeness of Indications or
Trading Levels. If the Force Majeure Event occurs after the relevant Auction Close, Auction
Participants may not modify or cancel their orders and, as a result, might not be able to determine
whether their orders have been executed until the Force Majeure Event has been rectified.

CAPS AND PAYMENT LIMITS

The payouts on “vanilla” Options and Forwards are subject to caps and floors. CME AM generally
determines the total payout due on a vanilla Option by multiplying the differential between the
Statistic Level and the Strike Level by the Auction buyer's filled order size. In the case of a
Forward, CME AM generally determines the total payout due by multiplying the differential between
the Statistic Level and the Adjusted Forward Trading Level by the Auction buyer's or seller's filled


8D41.

8D42.

Each Designated Clearing Member will deliver a Trade Confirmation to each of its customers that is
an Auction Participant with an executed order in the Auction, in accordance with, and at the time
specified by, the Designated Clearing Member's ordinary commercial practice or the agreement in
place between the Auction Participant and the Designated Clearing Member. The terms set forth in
a Trade Confirmation will constitute the definitive terms of each transaction entered into by an
Auction Participant and in the event of any conflict between a Trade Notice, or any other
transaction notice, provided to an Auction Participant and a Trade Confirmation, the Trade
Confirmation will contro! (in the absence of manifest error). The Auction Participant will be bound
by the terms of each Trade Confirmation as it relates to a transaction entered into by the Auction
Participant and cleared by its Designated Clearing Member. The prices set forth in a Trade
Confirmation provided to an Auction Participant, and the resulting payment obligations, may differ
Slightly from the published final Trading Levels as a result of system rounding conventions.

CANCELLATION AND MODIFICATION OF AUCTIONS

CANCELLATION OF AN AUCTION AND MODIFICATION OF AUCTION DETAILS
BEFORE THE AUCTION OPEN

An Auction may be cancelled or Auction Details may be modified at the discretion of CME AM, at
any time prior to the Auction Open.

If an Auction has been cancelled, CME AM will cancel all Accepted and Pending Orders for that
Auction. If CME AM modifies the Statistic, strike prices or currency published as part of the Auction
Details for an Auction, CME AM will cancel all Accepted and Pending Orders for that Auction and
any Auction Participants wishing to resubmit their Pending Orders will be permitted to do so in
accordance with the Auction Procedures. Other changes to the Auction Details will not result in the
cancellation of Accepted or Pending Orders.

CME AM will Publish notice of the cancellation of an Auction or any modification to the Auction
Details before the scheduled Auction Open (and will use reasonable efforts to otherwise provide
notice to Auction Participants, Auction Brokers, and Designated Clearing Members that have
Pending Orders).

SUSPENSION, EXTENSION, CANCELLATION OR REOPENING OF AN AUCTION
AFTER THE AUCTION OPEN AND BEFORE THE PUBLICATION OF TRADING
LEVELS

After an Auction Open, CME AM may, upon the occurrence of a Force Majeure Event: (i) suspend
or extend the Auction only if such suspension or extension occurs before the Auction Close, or (ii)
cancel or reopen the Auction, but only if such cancellation or reopening occurs before the
Publication of Trading Levels.

CME AM will cancel an Auction if Trading Levels cannot be Published by the earlier to occur of: (i)
five minutes prior to the scheduled Statistic Release Date and Time, as set forth in the Auction
Details, (ii) the official publication of the Statistic, or (iii) three hours after the Auction Close,
provided that CME AM may establish a shorter or longer time period with respect to certain
Auctions, if warranted or appropriate under the circumstances. CME AM will also have the right,
but not the obligation, during the period after the Auction Close and prior to the Publication of
Trading Levels, to revise any data entry issues that have been identified.

lf an Auction has been cancelled, CME AM will cancel all orders for that Auction. CME AM will
promptly Publish notice of any suspension, extension, cancellation or reopening of an Auction (and
use reasonable efforts to otherwise notify Auction Participants, Auction Brokers, and Designated
Clearing Members that have orders for that Auction).

Notwithstanding the foregoing, CME AM will make all reasonable efforts to suspend, extend or
reopen, rather than cancel, an Auction upon the occurrence of a Force Majeure Event, provided
that CME AM will cancel the Auction if the Force Majeure Event continues for more than three
hours (or such shorter or longer time period as CME AM may establish with respect to certain
Auctions, if warranted or appropriate under the circumstances). Any such suspension, extension or
reopening shall be for such period as CME A\M, in its sole and reasonable discretion, determines to
be necessary to address the circumstances giving rise to the need for action. If an Auction is
suspended, extended or reopened upon the occurrence of a Force Majeure Event, CME AM will
determine the action(s) to be taken with respect to such suspension, extension, or reopening
including, without limitation: (i) in the case of a suspension, ceasing to receive new Pending
Orders, or (ii) in the case of an extension or reopening, modification of the scheduled Auction
Close. Notwithstanding the foregoing, CME AM may, in its sole and absolute discretion, continue to


8D22.

8D23.

8D24.

for the parties to any Auction Instrument (after suitable adjustment, if necessary) substantially
. the economic equivalent of the terms of the Auction Instrument on the original Statistic and
which therefore serves as an acceptable substitute for the original Statistic.

“Statistic” means the event, statistic, measure, value or other data point underlying the Auction
Instrument as specified in the Auction Detail attached hereto.

“Statistic Event” means any of the following: (i) a cessation by the government agency or other
entity responsible for publication of the Statistic of its calculation or dissemination of the
Statistic, or a public announcement by such agency or entity that it intends to cease such
calculation or dissemination prior to the Statistic Release Date; (ii) a material change is
announced or made with respect to the calculation or methodology of the Statistic that, in the
reasonable judgment of CME AM, renders the Statistic a fundamentally different Statistic than
that on which the relevant Auction was based; or (iii) a material change is made in the
schedule with respect to calculation or publication of the Statistic that, in the reasonable
judgment of CME AM, represents a fundamental change in the nature of the relevant Auction.

“Statistic Level” means the number or level at which a Statistic is released and published by the
entity charged with calculating or compiling the Statistic upon which an Auction is based.

“Statistic Release Date” means the specific date upon which a Statistic is scheduled to be released.

“Trade Confirmation” means the binding confirmation of a transaction to an Auction Participant as
described in Rule 8D40 hereof.

“Trade Notice” means the non-binding confirmation of a transaction to an Auction Participant as
described in Rule 8D39 hereof.

“Trading Levels” means the event, statistic, measure, value or other data point at which each
Auction Instrument is executed.

CONDITIONS FOR PARTICIPATION IN AUCTIONS
DOCUMENTATION

Prior to an Auction, each Designated Clearing Member must execute a CME Auction Markets
Agreement.

ACCOUNT REGISTRATION

It is the responsibility of each Designated Clearing Member to register each Auction Participant with
CME AM. The following information must be provided for each Auction Participant:

i) A representation from the Designated Clearing Member that the Auction Participant is an
Eligible Contract Participant, as defined in the CEA;

ii) An acknowledgement from the Designated Clearing Member or a signed statement from the
Auction Participant that it has read and understood the Rules governing the Auction, the Risk
Disclosure pertinent to Auctions set forth below, and all other relevant Rules of CME and CME
AM, and agrees to be bound thereby and by any amendments thereto;

ili) Credit limits; and

iv) A description of the means by which orders will be entered including the use of an Auction
Broker.

CREDIT LIMITS

Each Designated Clearing Member will establish credit limits for each Auction Participant for which
it acts as the Designated Clearing Member in connection with a particular Auction. An Auction
Participant is not eligible to submit orders until CME AM determines that the credit limit is
acceptable and the Designated Clearing Member is notified that the Credit Limit for that Auction
Participant has been activated. Regardless of any Credit Limits established, Designated Clearing
Members are obligated to accept for clearing any executed orders for its guaranteed Auction
Participants.


6. Provides transaction information to the CME Clearing House.

“CME AM” means “CME Alternative Marketplace Inc.” CME AM is a subsidiary of Chicago
Mercantile Exchange Inc. CME AM is not regulated by the Commodity Futures Trading
Commission. CME AM has filed a notice with the CFTC that it intends to operate as an
exempt board of trade pursuant to Section 5d of the Commodity Exchange Act. An exempt
board of trade is not registered with, or designated, recognized, licensed, or approved by the
Commodity Futures Trading Commission. CME AM will not be registered with, or designated,
recognized, licensed or approved by the Commodity Futures Trading Commission. Certain
instruments traded on CME AM may be subject to Sections 4b, 4c(b), 40, 6(c) and 9(a)(2) of
the Commodity Exchange Act and the Commission may have the authority to enforce those
provisions in connection with such instruments.

“Designated Clearing Member” means a CME Clearing Member approved for the purpose of
entering orders to an Auction on behalf of Auction Participants together with the duties, rights
and privileges attendant to membership in the Clearing House.

“Electronic Platform” means a website, web-based or other electronic platform commonly used for
disseminating information.

“Force Majeure Event” means any of the following that renders it impossible or reasonably
impracticable for CME AM to continue, maintain or complete an Auction or settle the resulting
Auction Instrument: (i) earthquake, fire, flood, extraordinary weather conditions or other Act of
God; (ii) labor dispute, riot, insurrection, war, accident, act of terrorism or act of government;
(iii) failure of systems, communications lines, software, hardware or other equipment of the
Auction System, CME AM or any third-party service provider, including WebET and any other
Electronic Platform; (iv) market disruptions affecting the Statistic or instruments traded on such
Statistic in other markets; (v) information regarding the level of the underlying Statistic
becoming known to certain market participants prior to the release of such Statistic to the
public; or (vi) any other events beyond the reasonable contro! of CME AM or CME, including
without limitation, events that prevent the determination of filled order sizes and Trading
Levels.

“Forward” means an instrument that does not have a specified Strike Level or Premium. A Forward
exposes the buyer to the risk that the value will decrease and exposes the seller to the risk that
the value will increase after the price has been established. Each Forward offered in an
Auction will be executed at its own "Trading Level," determined on the basis of orders for all
Auction Instruments collectively entered by Auction Participants.

“Indications” means indicative Trading Levels that approximate the Trading Levels at which each
Auction Instrument would be executed if the Auction was closed at that time.

"Options" means vanilla-style options (which include vanilla options, vanilla option spreads and
vanilla option strategies) and digital-style options (which include digital options, digital option
ranges and digital option strategies), as well as other Option structures. Each type of Option
offered in an Auction, at each Strike Level offered, will be executed at its own Trading Level,
determined on the basis of orders for all Auction Instruments collectively entered by Auction
Participants in the Auction.

“Pending Order” means an order entered by or on behalf of an Auction Participant prior to the point
in time when it has been integrated into the process by which CME AM adjusts the current
Indications for each instrument offered through an Auction.

“Pro Rata Fills” means a partial fill of an Accepted Order as described in Rule 8D37 hereof.

“Publish” or “Published” means a communication by CME AM or Auction Brokers to Auction
Participants through one or more of the means used by CME AM or CME to transmit
information generally regarding Auctions, Auction Instruments or related matters, which may
include, without limitation, posting such information on an Electronic Platform, e-mail, fax or
telephone communications.

“Replacement Statistic” means a Statistic selected by CME AM in the event that the original
Statistic is unavailable which Replacement Statistic would, in CME’s sole discretion, preserve


8D21.

CHAPTER 8-D
PART Il.
AUCTION MARKETS

The rules contained in this Chapter 8-D govern the Auctions that occur on CME AM. To the extent
that any provisions of this Chapter conflict with other Rules, this Chapter supersedes such Rules
and governs the manner in which Auction Instruments on CME AM are matched through the
Auction System. Otherwise, CME AM Auctions are fully subject to the Rules of CME, as
applicable, unless specifically and expressly excluded therefrom.

DEFINITIONS

“Accepted Order” means an order in an Auction Instrument that has been processed into the
Auction System to the point that Indications offered through an Auction have been updated.

“Auction” means a market through which CME AM makes Auction Instruments available to Auction
Participants through the Auction System.

“Auction Broker” means a person authorized by CME AM to enter orders to an Auction on behalf of
Auction Participants.

“Auction Close” means the time specified by CME AM in the Auction Details at which orders will no
longer be accepted for processing in a particular Auction.

“Auction Details” shall mean the information published by CME AM in advance of an Auction as
described in Rule 8D28 hereof.

“Auction Instrument(s)” means any agreement, contract, or transaction that is a forward, swap, or
option on one or more occurrences of any event, rate, currency, commodity, economic, or
other indices or measure of economic or other risk or value.

“Auction Open” means the time at which orders will be accepted for processing in a particular
Auction.

“Auction Participant” means a person or entity approved by CME AM to participate in an Auction
including, but not limited to —

1. Auction Brokers;
2. Designated Clearing Members; and

3. Customers of an Auction Broker or Designated Clearing Member that satisfy the following
criteria:

i. Qualify as an eligible contract participant ("ECP"), as defined in the Commodity Exchange
Act, and

ii. Maintain a customer relationship and account with a Designated Clearing Member prior to
participating in an Auction.

"Auction System” means the electronic auction system operated by CME AM or by its vendors
including without limitation all of its human, physical, electronic and communication
components attendant thereto, whether provided by CME or its vendors, by means of which
CME AM:

4 Accepts orders from Auction Participants;

2. Processes orders;

3. Publishes Indications during the Auction process;
4. Completes the Auction;

5. Publishes the results of the Auction; and


transactions could present certain conflicts of interest. For example, the Auction Brokers, in
addition to entering orders submitted by Auction Participants, may participate in the Auctions as
principals. Because of the mutualized process used by CME AM to conduct the Auctions, the
Auction Brokers will not have the ability to influence the determination of Trading Levels, except as
a result of bona fide orders entered by such Auction Brokers as principals. However, they will have
an interest in the outcome of an Auction, which could conflict with their duties as brokers to Auction
Participants. The Auction Brokers, as participants in Auctions, may also be competing with other
Auction Participants for the execution of orders.

CME AM and the Auction Brokers may also engage in other business activities, outside of their
roles in connection with the Auctions, with respect to the Statistics underlying Auction Instruments
traded or related instruments. For example, CME AM or the Auction Brokers may offer other types
of derivative products, such as futures, indexed securities or swaps, on these Statistics, and may
have incentives to promote such products instead of Auction Instruments. It is also possible that
trading in these other types of products could affect the volume of activity and consequently the
pricing of Auction Instruments traded through Auctions, or the market expectations or views of
Auction Participants.

NO FIDUCIARY RESPONSIBILITIES

Neither CME AM nor an Auction Broker that enters an order on behalf of an Auction Participant
acts as an advisor or fiduciary to any Auction Participants with respect to the Auctions. Each
Auction Participant is responsible for making its own evaluations and decisions with respect to all
orders and Auction Instruments. Without limitation of the foregoing, neither CME AM nor any
Auction Broker makes any representation whatsoever with respect to: (i) the suitability of any
Economic Derivative transaction for an Auction Participant or the advisability of participating in an
Auction or entering into an Economic Derivative; (ii) whether an Economic Derivative will-satisfy
the trading or hedging objectives of an Auction Participant; (iii) the legality or permissibility of
transactions in Auction Instruments for an Auction Participant; (iv) the appropriate tax or accounting
treatment or consequences of Auction Instruments; or (v) the future value or profitability of Auction
Instruments. Auction Participants should consult their own tax, financial or other advisors with
respect to participation in Auctions or entering into Auction Instruments.

LIMITATION OF LIABILITY

Auction Instruments, Auctions and the Auction System offered through CME AM are subject to all
the disclaimers and limitations contained in the CME Rules.