PH 22 cme @

Chicago Mercantile Exchange

OFC. OF 15 SECRETARIAT

September 6, 2005

Ms. Jean A. Webb

Office of the Secretariat

Commodity Futures Trading Commission
Three Lafayette Centre

1155 21* Street, NW

Washington, DC 20581

RE: Amendments to Rules Governing Pre-Execution Discussion for Markets trading
pursuant to Rule 585. GLOBEX Call Market Trading Algorithm

Submitted per Sec. 5c(c)(1) of the CEA and Regulation Sec. 40.6(a).
CME Submission # 05-083.

Dear Ms. Webb:

Chicago Mercantile Exchange (“CME” or “Exchange”) hereby certifies with the
Commission the following amendments to the rules governing Pre-Execution Discussion for
Markets trading pursuant to Rule 585. GLOBEX Call Market Trading Algorithm for clarification
purpose. The Exchange certifies that these actions neither violate nor are inconsistent with any
portion of the Commodity Exchange Act or of the rules thereunder.

The following amendments do not alter the procedure by which trades in Eurodollar
Options Contracts consummated through Globex with the aid of pre-execution discussion can be
entered. They are adopted for the clarification of the procedure only. Based on existing Rule
585 governing GLOBEX Call Market Algorithm, prior to any private solicitation of bid(s) and/or
offer(s), a Request For Quotes (“RFQ”) shall be entered. The requirement is reiterated in the
amendment to Rule 539 for clarification purpose. Following an RFQ, a Request For Cross shall
be entered prior to entering opposing orders within the time frame specified in the rule.

The text of the rule amendment is as follows, with additions underlined and deletions
bracketed and overstruck.

20 South Wacker Drive, Chicago IL 60606-7499, Tel. 312-930-1000


Ms. Jean A. Webb
September 6, 2005
Page 2 of 3

539. PREARRANGED, PRE-NEGOTIATED AND NONCOMPETITIVE TRADES
PROHIBITED

[Sections A. and B. are unchanged.]

c. Pre-Execution Discussions Regarding GLOBEX Trades

[The introduction and Parts 1 — 4 are unchanged.]

5. Pursuant to Rule 585 (“GLOBEX® Call Market Trading Algorithm”), solicitation of
bid(s) and/or offer(s) through private discussion for the purpose of establishing a
market or improving the market for an eligible contract or an eligible combination of
contracts for options on Eurodollar futures shall be preceded by issuing a Request
For Quote (“RFQ”) through an eligible terminal. Subsequent to_such RFQ, a [A]
trade intended for execution pursuant to Rule 585 for which there has been a pre-
execution discussion shall be initiated with a Request for Cross Trade (“Cross
Request’) for the specific contract or combination of contracts, with explicit reference
to the anticipated order quantity. The order from the initiator of the Cross Request
for the contract or combination of contracts must be entered within three (3) minutes
of the entry of the Cross Request. The opposing order may not be entered until the
requisite period of time as stipulated in Section C.3. above has elapsed. Failure to
enter the initiating order [folowing] within three (3) minutes of the entry of the Cross
Request [withinthe-requisitetime] shall be considered an abandonment of [the] that
pre-execution discussion[;~and-a-new-Gress-Request_entry_is_required to-proceed
with—the—transaction]. Any subsequent pre-execution discussion concerning the
transaction must be preceded by the entry of a new RFQ and, thereafter, a new
Cross Request must be entered before proceeding with the order entries.

As discussed in the Exchange’s submission #05-77, the trading of Options on Eurodollar
Futures on the “Enhanced Options System” based on the GLOBEX Call Market Algorithm has
been formally incorporated in the GLOBEX electronic system. As such, the Exchange ceased
referring the GLOBEX Call Market system on Eurodollar Options as the “Enhanced Options
System.” The following rule amendment removes the reference to the term within Rule 585.
The text of the amendment is as follows, with additions underlined and deletions bracketed and
overstruck.

585. GLOBEX® CALL MARKET TRADING ALGORITHM

The following GLOBEX Call Market Trading Algorithm shall be applied to such contract
markets as determined by the Exchange, including, but not limited to, the options on

Eurodollar futures [en—the—Enhanced—Options—System]. This rule supersedes, if

applicable, other Exchange rules governing trading on GLOBEX, including, but not
limited to, Rule 580 and its interpretations.

[The remainder of Rule 585 remains unchanged.]


Ms. Jean A. Webb
September 6, 2005
Page 3 of 3

Please do not hesitate to contact Mr. Richard Co at 312-930-3227 or rco@cme.com if any
questions arise during the processing of this submission. Please reference our CME Submission
#05-083 on all future correspondence for this submission.

Sincerely,

John W. Labuszewski, Managing Director
Research & Product Development