(3) Aggregation:

(i) When determining margin rates, margin calls, and the release of
margin deposits, a Member or Member Organization may
aggregate identically-owned accounts within the same regulatory
account classification of Customer segregated, Customer

secured, and non-segregated.

(ii) To satisfy a margin deficiency, a Member or Member
Organization may not apply available free funds from an
identically-owned account that has a different regulatory account
classification. Instead, the Member or Member Organization
must transfer the free funds from one identically-owned account
in one regulatory account classification to another identically-
owned account with a different regulatory account classification

that is undermargined.

(iii) Except for omnibus accounts, a Member or Member
Organization may calculate margin requirements on a net basis
for concurrent long and short positions in identically-owned

accounts within the same regulatory account classification.

(4) Extension of Credit: No Member or Member Organization shall extend
or maintain credit to or for a Customer to evade or circumvent any
requirements of this Rule. A Member or Member Organization may
extend or maintain (or arrange for the extension or maintenance of)
credit to or for a Customer to meet the margin requirements of this Rule

only if the credit or loan is secured as defined by Commission regulation

17


positions or controls trading shall be aggregated and (2) positions held by two or more Persons acting
pursuant to an expressed or implied agreement or understanding shall be aggregated as if the positions

were held by a single Person.

(c) The position limits in this Rule do not apply to bona fide hedging positions
meeting the requirements of Commission regulation 1.3(z)(1). However, the Exchange may limit bona
fide hedging positions or any other positions that have been exempted pursuant to Commission regulation
150.5(e) if the Exchange determines that the positions are not in accordance with sound commercial
practices or exceed an amount which may be established and liquidated in an orderly manner.

(d) To request an exemption from Rules E28(a) through and including E28(c), a
Person must apply to the Exchange pursuant to this Rule E29(d) by providing the information requested
and following the procedures established by the Exchange. When considering whether to grant an
exemption, the Exchange will take into account the factors contained in Commission regulation

150.5(d)(1).
Rule E29 Reportable Positions.

Each Member or Member Organization required to file any report, statement, form, or
other information with the Commission pursuant to Commission regulations Part 15, 17, or 18 concerning
any Contract must simultaneously file a copy thereof with the Exchange. Each Member of Member
Organization must submit the report, statement, form, or other information to the Exchange in the form

and manner designated by the Exchange.
Rule £30 Transfers of Positions.
(a) A Clearing Member may transfer a position on its books to:

(1) correct errors in an existing Contract, provided that the original trade

documentation confirms the error,

38


Customer with a monetary adjustment equivalent to the price at which the Customer Order should have

been executed.

(4) If provisions of this Rule E24 conflicts with any instructions of the Customer

related to the Customer Order, then the instructions of the Customer prevail.
Rule E25 Customer Order Error Correction Procedures.

(a) Upon the request of a Member or Member Organization that failed to execute or
made an error in executing or reporting a Customer Order (“Erring Member”), the Exchange may, in its
sole discretion, permit the correction of the error to protect the interest of the Customer, as provided for in

this Rule.

(b) To use the provisions of this Rule to correct an error in a Customer Order, the
Erring Member must provide the Exchange with (1) a completed and signed error correction request form,
(2) evidence that the Order reported to the Customer could have been reasonably executed on PBOT XL,
(3) the relevant completed Order ticket or similar record, and (4) any other evidence that the Exchange

reasonably requests.

(c) If an Erring Member discovers an error in a transaction for a Customer in a
Contract when the market is open, then the Erring Member may request the use of the provisions of this

Rule if:

(1) the price reported to the Customer was worse than the actual transaction
execution price, but the Customer declined the price improvement in

whole or part,

(2) the price reported to the Customer was better than the actual transaction

execution price, or

34


(c) Subject to Rule E36(a) and except as otherwise expressly provided in the Rules,

the Exchange may provide any other notice to a Member, Member Organization, or Authorized Trader

Contact by:

ay

(2)

@)

(4)

handing a copy to the Member, Member Organization, or Authorized
Trader Contact, or

mailing a copy to the Member, Member Organization, or Authorized
Trader Contact to the address supplied to the Exchange by the Member,
Member Organization, or Authorized Trader Contact for notice, or
transmitting electronically a copy to the Member, Member Organization,
or Authorized Trader Contact (including, through a facsimile or
electronic-mail transmission) to the address supplied to the Exchange by
the Member, Member Organization, or Authorized Trader Contact for
notice, or

posting the notice on the Exchange’s website.

Rule E37 Limitation of Liability For PBOT XL.

(a) Except for any party found to have engaged in willful or wanton misconduct,

neither the Exchange (which for purposes of this Rule E37 includes its parents, subsidiaries and

affiliates), its Members or Clearing Members, nor any of its or their respective officers, directors,

employees, or agents shall be liable to any Person (including, but not limited to, a Customer) for any

losses, damages, costs or expenses (including, but not limited to, loss of profits, loss of use, direct,

indirect, incidental or consequential damages) arising from (1) any failure or malfunction of PBOT XL or

the Clearing Corporation or any Exchange services or facilities used to support PBOT XL including but

not limited to any user interface or any inability to enter or cancel Orders (the “PBOT XL Complex”), or

(2) any fault in delivery, delay, omission, suspension, inaccuracy or termination, or any other cause, in

connection with the furnishing, performance, maintenance, use of or inability to use all or any part of the

43


() The Member Organization must identify the Person submitting each Order or
Quote by also attaching to the Order or Quote a Trader ID, a unique identifier, in the manner, format, and

following the procedures established by the Exchange and as described in a Notice to Members.

() In the manner, format, and following the procedures established by the Exchange
in a Notice to Members, each Member and Member Organization must provide to, and keep current with,
the Exchange the contact information for its Authorized Traders Contact so that the Exchange can
immediately reach the Authorized Trader Contact when Orders or Quotes are resting in, being submitted

to, or being executed by PBOT XL through the Authorized Trader’s Member Organization’s Member ID.

Rule E8 RESERVED

Rule E9 Clearing Arrangements.

(a) No Member or Member Organization shall submit an Order or a Quote to PBOT
XL or accept the transfer of a Contract unless the Member or Member Organization is either a Clearing
Member or a Non-Clearing Member guaranteed by a Clearing Member pursuant to this Rule for that

Contract.

(b) A designated Clearing Member is authorized by the Exchange to clear, carry, and
guarantee specified Contracts for itself, its Customers, and Non-Clearing Members. To become a
Clearing Member, a Member or Member Organization must (1) apply to a Clearing Corporation and the
Exchange, (2) satisfy the criteria established by the Clearing Corporation and the Exchange for Clearing
Members, and (3) submit to the Exchange confirmation from the Clearing Corporation that the Member

or Member Organization is a member of the Clearing Corporation.

11


(ff) Release of Margin: A Member or Member Organization may only release free
funds in connection with a Customer Account if after release the Customer

Account has at least free funds at the initial margin requirement level.
Rule E12 Submission of Orders.

(a) Members, Member Organizations, and other Persons through Members and
Member Organizations may submit Orders and Market Makers may submit Quotes to PBOT XL during
the pre-open period and until the end of the Trading Day, but PBOT XL only matches Orders and Quotes

during the Trading Day.

(b) A Member or Member Organization must ensure that each Order (including an
Order submitted through an electronic or automated order routing system pursuant to Rule E19) is

recorded and time-stamped immediately upon receipt, execution, and any modification or cancellation.
(©) Each Order entered into PBOT XL shall include the following information:
(1) Member ID;
(2) Trader ID for the person submitting the Order;
(3) Contract and Contract Month;
(4) buy or sell;
G) price;
(6) Order instruction from Rule E14 (if applicable);
(7) quantity;

(8) open or close position indicator as appropriate;

21


(2) transfer an existing Contract from one account to another within the
same Member or Member Organization where no change in ownership is

involved;

(3) transfer an existing Contract from one Clearing Member to another

Clearing Member where no change in ownership occurs; or

(4) transfer an existing Contract through operation of Jaw from death or

bankruptcy.

(b) Upon written request, the Exchange may, in its sole discretion, allow the transfer
of a position as a result of a merger, asset purchase, consolidation, or similar non-recurring transaction for

an association, limited liability company, partnership, trust, corporation, or other entity.

(c) Clearing Members must transfer positions pursuant to this Rule at the same
prices that appear on the books of the transferring Clearing Member, and the transfer must indicate the
date when the original trade was made. Each Clearing Member that is a party to a transfer of positions
must make and retain records stating the nature of the transaction, the name of the counter-party Clearing

Member, and any other information required by the Clearing Corporation.

Rule E31 Daily Trading Information.

Each Member or Member Organization must file with the Exchange a report or reports
concerning the Proprietary Account, Customer Accounts, or portions thereof of the Member or Member
Organization as the Exchange may require to facilitate the Exchange’s compliance with Commission

regulation Part 16 or which the Exchange may otherwise deem necessary or appropriate.

39


Clearing Member. The term “Clearing Member” means a Member or Member
Organization designated by the Exchange under Rule E9 to clear Contracts on behalf of itself, its

Customers, and Non-Clearing Members.

Contract. The term “Contract” means any Commodity Interest that trades or is reported

through PBOT XL or subject to the Rules of the Exchange.

Contract Month. The term “Contract Month” means the calendar month in which the
Last Trading Day for a Contract occurs , provided that with respect to Daily ExpiryTM US Dollar 3-
Month BBA LIBORTM Futures the term "Contract Month" means the maturity date for a

contract.

Cross Transaction. The term “Cross Transaction” means a transaction in which a
Member or Member Organization knowingly represents both the buyer and seller by simultaneously

selling and buying pursuant to Rules E22.

Customer. The term “Customer” has the meaning attributed to it by Commission

Regulation 1.3(k).

Customer Account. The term “Customer Account” means an account carried by a
Member or Member Organization on behalf of a Customer, which may be another Member or Member

Organization.

Customer Order. The term “Customer Order” means an Order submitted on behalf of a

Customer Account.

Daily Settlement Price. The term “Daily Settlement Price” means the price at which a

Contract settles at the conclusion of any Trading Day as described in Rule E27.


of trading on a Trading Day (i) the Member or Member Organization on
the selling side of the Block Trade must obtain from the Exchange a
trade authorization identification number and provide that trade
authorization identification number to the Member or Member
Organization on the buying side of the Block Trade and (ii) each
Member or Member Organization must submit to the Exchange a

completed Block Trade request form.

(g) Upon receipt of the applicable Block Trading request forms, the Exchange will
teview the information received for the proposed Block Trade. If the market for the relevant Contract is
open when the Exchange receives the Block Trade request forms and the Block Trade appears to satisfy
the requirements of Rule E23, then the Exchange will immediately disseminate information concerning
the Block Trade through the PBOT XL. If the market for the relevant Contract is closed when the
Exchange receives the Block Trade request forms and the Block Trade appears to satisfy the requirements
of Rule E23, then the Exchange will disseminate information concerning the Block Trade through the
PBOT XL prior to the market open on the next Trading Day for the relevant Contract. The Exchange will
disseminate the following information concerning Block Trades through PBOT XL: the Contract with a
designation denoting that the transaction was a Block Trade, the Contract Month, price, and quantity.

The Exchange will not consider Block Trades in calculating either the relevant Daily Settlement Prices or
the range of daily prices and the Exchange will report Block Trades separately for purposes of calculating

trading volume.

(h) For purposes of Rules E23(c) and Rule E23(d) an adviser means any of the

following:

(63) a commodity trading adviser registered under the Act (or exempt from

registration),

32


1.17(c)(3) and the proceeds are treated by the Member or Member

Organization in accordance with Commission regulation 1.30.

(d) Type, Form, and Value of Margin Deposits:

q)

2)

A Member or Member Organization must only accept the following

assets, securities, or instruments as margin deposits, which must be and

remain unencumbered by third party claims:

@)

(ii)

(iii)

(iv)

(vy)

(vi)

USS. dollars and foreign currencies,

U.S. government treasury and agency securities,

municipal securities,

readily marketable securities (which means securities traded on a
“ready market” as defined by Securities and Exchange

Commission rule 15c3-1(c)(11)),

money market mutual funds that meet the requirements of
Commission regulation 1.25 (other than securities issued by the

Customer or an affiliate of the Customer), and/or

irrevocable letters of credit in a form, and issued by banks or
trust companies, approved by the Clearing Corporation (other
than letters of credit issued by the Customer or an affiliate of the

Customer).

If a Member or Member Organization accepts securities identified in this

Rule as margin deposits, then the Member or Member Organization must

18


instructs otherwise, if the Member or Member Organization cannot enter Orders received immediately
into PBOT XL, then the Member or Member Organization must (a) make a written record in non-erasable
form of the Orders received and (b) submit the Orders received into the PBOT XL in the sequence

received once able to do so.

Rule E16 Order Status, Change, or Cancellation.

(a) All Orders submitted to PBOT XL are firm and remain open until executed,
changed, or cancelled. Except for Good ‘Til Cancelled Orders, all open Orders in PROT XL

automatically cancel at the close of each Trading Day.

() A Member or Member Organization may edit an Order’s price, change its
quantity, or change its Order instruction in accordance with Rule E14, once the Order Book holds the
Order. If the volume is reduced for an Order held in the Order Book, then the Order’s position in the
time-priority queue remains unchanged. Any other change to an Order is treated as a new Order for
purposes of the time-priority queue. To increase the quantity of an Order, the Member or Member
Organization may either submit to PBOT XL a new Order for the incremental quantity increase or may

enter a Cancel Replace Order for the greater amount.
Rule E17 Quote Status, Change, or Cancellation and Submission.

(a) Only Market Makers can submit Quotes and all Quotes submitted to PBOT XL

are firm and remain open until executed, changed, or cancelled. At the close of each Trading Day all

Quotes automatically cancel.

(b) A Market Maker may change or cancel a Quote at any time prior to a match with

another Quote or Order through the PBOT XL.

(c) Each Quote entered into PBOT XL shall include the following information:

24


(G)

@

(5)

Customer to establish a new position if the Member or Member
Organization reasonably believes that the Customer will meet the
outstanding margin call within a reasonable time. If a margin call toa
Customer is outstanding for an unreasonable time, a Member or Member

Organization may only accept Orders from the Customer that will reduce

the Customer’s margin requirements.

After a margin call is made by a Member or Member Organization, if the
Customer fails to deposit the required additional margin deposit within a
reasonable time, the Member or Member Organization may, but is not
required to, liquidate all or a portion of the Customer’s positions to
restore the Customer’s account to a properly margined level. However,
the inability of a Member or Member Organization to liquidate all or a
portion of the Customer’s positions before the account equity results in a
debit or deficit balance does not affect any liability of the Customer to

the Member or Member Organization.

A Member or Member Organization must make and retain a written
record of the date, time, amount, and other relevant information for all
margin calls made (whether made by telephone, in writing, or by other

means) as well as margin calls reduced, satisfied, or relieved.

A Member or Member Organization that liquidates all or a portion of the
Customer’s positions pursuant to this Rule is not deemed to have

extended credit or made a loan to the Customer in violation of this Rule.

20


(2) an investment adviser registered as such with the Securities and
Exchange Commission (or exempt from registration under the
Investment Advisers Act of 1940) that is exempt from regulation under

the Act and Commission regulations thereunder, or

(3) any Person authorized to perform functions similar or equivalent to those
of a commodity trading adviser in any jurisdiction outside the United

States that has total assets under management exceeding $25 million.

Rule E24 Price Improvement.

(a) A Member or Member Organization that obtains a better price executing a

Customer Order must offer the entire price improvement to the Customer, subject to Rule E24(b).

(b) A Member or Member Organization that executes a Customer Order for the
wrong Contract Month or price, but otherwise executes the trade consistent with the Customer’s
instructions (1) may offset any loss suffered from the erroneous trade against any improvement achieved
for the Customer on a properly executed Order and (2) must offer any net improvement received to the

Customer.

(c) If a Member or Member Organization fails to timely submit a Customer Order,
then upon discovery of the error the Member or Member Organization (1) may promptly seek to execute
the Customer Order at the best obtainable price without obtaining new instructions from the Customer,
but (2) must report any resulting trade to the Customer at the price actually executed and provide any
price benefit to the Customer. If a Member or Member Organization fails to timely submit a Customer
Order and does not upon discovery promptly seek to and execute the Customer Order, then the Member

or Member Organization must (1) notify the Exchange and Customer of the error and (2) provide the

33


2)

established by the Exchange. The Exchange will publish the minimum
initial and maintenance margin rates and other requirements for each
Contract through Notices to Members or other appropriate means. Any
changes imposed by the Exchange to initial or maintenance margin rates
or requirements apply to both new and existing positions and the
Exchange may, within its discretion, establish different margin rates or

requirements for different types of accounts.

Unless otherwise required by this Rule, a Member must use a risk-based
portfolio margining system acceptable to the Exchange to calculate the

margin rates imposed on a Customer by this Rule.

(©) Account Administration, Classification, and Aggregation:

q)

Q)

Omnibus Accounts: A Member or Member Organization must
calculate margin requirements for an omnibus account (whether domestic
or foreign) on a gross basis. However, a Member or Member
Organization may impose maintenance margin rates for positions in the
omnibus account and need not impose the initial margin rates. To use
spread or hedge margin rates, a Member must obtain a written
representation from the omnibus account identifying the positions within

the account that are spreads or bona fide hedges.

Bona Fide Hedge Accounts: For bona fide hedging transactions and
positions as defined by Commission regulation 1.3(z)(1), a Member or
Member Organization may impose maintenance margin rates for the
transactions and positions and need not impose the initial margin rates if

the Member or Member Organization has a reasonable basis to believe,

15


(d) No Member or Member Organization shall knowingly submit to PBOT XL a
Quote or Order for any Contract for the account of that Member or Member Organization or any account
in which that Member or Member Organization has an interest while holding an Order of another Person
for the same Contract on the same side of the market that is executable at the then current market price or
at the price at which the Quote or Order is executable for the account of the Member or Member

Organization or an account in which that Member or Member Organization has an interest.

(e) No Member or Member Organization shall exercise discretion and submit an
Order to or through PBOT XL for an account of another Person without the prior specific consent of that
Person; provided, however, that prior specific consent required by this Rule does not apply to an Order .

for a Proprietary Account of the Member or Member Organization.

(f) No Member or Member Organization shall accept or submit any Order to or
through the PBOT XL for an employee, agent, or other Person acting on behalf of another Member,
Member Organization, or its associated Authorized Traders without the prior written consent of that other
Member or Member Organization, which is filed with the Exchange. If an Order for another Member or
Member Organization results in a transaction, then the Member or Member Organization through which
the Order is submitted to the PROT XL must promptly send a duplicate confirmation of the transaction to

the Person providing the prior written consent of the other Member or Member Organization.
(g) Members, Member Organizations, and Authorized Traders Contacts shall not:

()) Engage in practices that may cause degradation of the Exchange’s
services or facilities, or that may cause a disorderly market, including but
not limited to, unwarranted use of cancelling and resubmitting Orders or
Quotes;

(2) Engage in pre-arranged transactions other than transactions executed in

compliance with Rule E22 and Rule E23; or


Member Organization must (1) submit one Order (in compliance with Rule E22(c), if applicable), (2) wait
four seconds, and (3) submit the second Order for the relevant Contract Month. Because both Orders
submitted pursuant to this Rule are exposed to the market, PROT XL may not necessarily match the two

Orders.

(f) A Person must not enter a bid and/or an offer into PBOT XL in an attempt to

circumvent the requirements of Rule E22.

Rule E23 Block Trades,

(a) A Member or Member Organization may only negotiate and execute Block
Trades in Contracts on the Exchange but outside the PBOT XL if all the requirements are met related to
(1) hours of trading (Rule E23(b)), (2) minimum quantity (Rule E23(c)), (3) eligible parties (Rule

E23(d)), (4) fair pricing (Rule E23(e)), and (5) timely recording and submission of information (Rule

E23(f).

(b) Subject to Rule E32 and Rule E33, a Block Trade may be negotiated and
reported to the Exchange at any time during the trading hours on a Trading Day for the applicable

Contract except for the last 15 minutes before the close of trading.

(c) A Block Trade may only be executed in a Contract designated as eligible for
block trading in the relevant Contract specifications and must meet or exceed the minimum quantity
threshold set forth in the Contract specifications. For purposes of meeting the minimum quantity
thresholds, a Member or Member Organization must not aggregate separate Customer Orders, except that
an adviser (as defined in Rule E23(h)) with discretion over multiple Customer Accounts may aggregate

multiple Customer Orders to meet the minimum quantity threshold for a Block Trade.

(d) Each party to a Block Trade must qualify as an “Eligible Contract Participant”

(as defined in Section 1a(12) of the Act). An adviser (as defined in Rule E23(h)) with discretion over

30


Customer Orders and reporting of executions, and to timely handle

Customer complaints about Order delivery and reporting;

(3) adopt and enforce written procedures reasonably designed to prevent the
order-routing system from being used to create undue financial risks for

the Member or the Member Organization or its other Customers;

(4) reasonably ensure that the order-routing system has adequate operational
capacity and that the operational capacity is consistent with the
tepresentations made by the Member or Member Organization to
Customers, other Members or Member Organizations, and other Persons;

and

(5) ensure that the order-routing system complies with all applicable Rules
of the Exchange, provisions of the Act, Commission regulations and

Tegistration requirements, and rules of the National Futures Association.

(b) A Member or Member Organization is fully responsible for all Orders submitted
directly to PBOT XL through its electronic or automated order-routing system as if the Member or

Member Organization had placed each Order itself.
Rule E20 Average Price Transactions.

A Member or Member Organization that is a registered futures commission merchant
may confirm for a Customer Account an average price when multiple execution prices are received on an

Order or series of Orders if all the following requirements are met:

(a) The Customer has requested average price reporting and has received appropriate

disclosure of the method used to calculate the average price.

27


Notice to Members. The term “Notice to Members” means a written communication
titled “Notice to Members” that the Exchange sends to all Members and Member Organizations as

described in Rule E36, which has the force and effect of Rules.
Order. The term “Order” means an instruction to buy or sell a Contract.

Order Book. The term “Order Book” means all Orders received by PBOT XL for a
particular Contract that are not immediately filled or cancelled upon entry pursuant to an Immediate or

Cancel Order instruction under Rule E14.

PBOT Best Bid and Offer. The term “PBOT Best Bid and Offer” means for each
Contract then listed and trading through PBOT XL the current highest bid and lowest offer in the Order
Book or available by Quote; except as provided by Rule E18(c) and excluding those Orders or Quotes that
at the time of receipt are matchable and are due execution pursuant to the procedures described in Rule

E18.

PBOT XL. The term “PBOT XL” means the electronic trading system maintained by
the Exchange for the receipt, entry, cancellation, storage, display, matching, and reporting of Orders and
Quotes.

Proprietary Account. The term “Proprietary Account” shall have the meaning ascribed
to it by Commission regulation 1.3(y).

Quote. The term “Quote” means a bid or offer submitted by a Market Maker to transact
through PBOT XL in a certain quantity of a Contract at a specified price or better.

Rule. The term “Rule” means rules adopted, and Notices to Members published, by the

Exchange.

Trading Day. The term “Trading Day” means a day that the Exchange is open for

trading in a particular Contract.


Discretionary Order. The term “Discretionary Order” means an Order for a Customer
Account for which the Member or Member Organization has discretion as to the Contract, the price, or

the amount purchased or sold.

Final Settlement Price. The term “Final Settlement Price” means the price at which a

Contract settles at the conclusion of the Last Trading Day for that Contract as described in Rule E27.

Last Trading Day. The term “Last Trading Day” means the day specified by the

Exchange for the conclusion of trading for the Contract.

Limit Order. The term “Limit Order” means an Order to buy or sell a stated number of

Contracts at a stated price or better.

Market Data. The term “Market Data” means any and all price, quantity, and time data
from any and all bids and offers submitted to, and trades executed by or through, the PBOT XL, any data
derived from the foregoing, the format and presentation of any such data or information, and the
transmissions of such data or information to Members, Member Organizations, any party that has entered

into an agreement with the Exchange to distribute the above-described data or information or other

Person.

Market Maker. The term “Market Maker” means a Member or Member Organization
appointed by the Exchange to undertake rights and obligations to facilitate an orderly and liquid market

for one or more Contracts pursuant to Rule E10.

Member ID. The term “Member ID” means a unique identification code assigned by the

Exchange to each Member or Member Organization.

Non-Clearing Member. The term “Non-Clearing Member” means a Member or

Member Organization that is not a Clearing Member.


and the Customer represents in writing that, the transactions or positions

are for bona fide hedging.

16


Rule E4 Trading Days and Hours.

Except as provided in Rule E32 and Rule E33, the Exchange shall determine and publish
through a Notice to Members the days on which the Exchange is open for business, the opening and

closing hours of the market, and the opening and closing trading times for each Contract.

Rule ES Market Opening.

(a) The Exchange shall, by a Notice to Members or other appropriate means,

designate a period prior to the market opening during which PBOT XL will accept Orders and Quotes for

execution upon market open or for execution during the Trading Day.

(b) If the Exchange halts or suspends trading in a Contract prior to the scheduled
closing, then before resuming trading in that Contract the Exchange will have a pre-opening period during

which PBOT XL will accept Orders and Quotes into PBOT XL, as described in Rule E5(a) above.
Rule E6 General Trading Standards and Prohibited Practices.

(a) No Member or Member Organization may accept a Customer Order for
submission to PBOT XL unless the Member or Member Organization has provided the Customer with the
Uniform Electronic Trading and Order Routing Systems Disclosure Statement or any successor disclosure

published by the National Futures Association.

(b) No Member or Member Organization shall disclose the existence or terms of an
Order not yet disseminated by the Exchange, except to representatives of the Exchange or Commission or

otherwise for the sole, necessary, and appropriate purpose of executing the Order.

(c) No Member or Member Organization shall aggregate two or more Customer
Orders, allocate trades, or provide for average price transactions among Customer Accounts except as

provided for in Rules E13, E20, and E23.


(9) Customer Type Indicator (or “CTT” code) as prescribed by Commission

Tegulation;

(10) | Customer Account number, unless a Bunched Order submitted in

compliance with Rule E13;
(11) — Clearing Account Number; and

(12) _ clearing origin code (i.e., customer account, firm account, or market

maker account as those terms are defined by the Clearing Corporation).

(d) A Member or Member Organization shall retain all memoranda reflecting Orders
for a Customer Account in accordance with Rule 201and shall retain those memoranda for the period
required in Rule 201. A Member or Member Organization receiving a Customer Order other than in the
form of an electronic or written record must comply with the requirements of Commission regulation

1.35(a-1)(1).
Rule E13 Bunched Orders.

(a) For post-execution allocation of a Bunched Order, a Member or Member
Organization acting as an Eligible Account Manager (as defined by Commission regulation 1.35(a-
1)(5)(G)(A-D), need not provide, at the time of either Order entry or report of Order execution, specific
Customer Account identifiers for accounts included in a Bunched Order, if the Member or Member

Organization complies with the requirements of Commission regulation 1.35(a-1)(5)(i)-(iv), as applicable.

(b) A Member or Member Organization that executes Bunched Orders or carries
accounts eligible for post-execution allocation of Bunched Orders must maintain records that, as

applicable, identify each Bunched Order subject to post-execution allocation and the accounts to which

22


Philadelphia Board of Trade
A subsiciary ofthe PBOT,

Philadelphia Stock Exchange

1900 Market Street
Philadelphia, PA 19103-3584
Telephone: 215-496-5000
Fax: 215-496-5399

Rule Self-Certification
October 3, 2006 rd
=
4 8 oe]
“4 om
Office of the Secretary 1 AQ
, woos a
Commodity Futures Trading Commission m=
Three Lafayette Center = OF
1155 21" St, N.W. o 2
Washington, D.C. 20581 a
=

Reference File SR-PBOT-2006-03: Rule Certification ~*

Ladies and Gentlemen:

Pursuant to Commission Rule 40.6, the Philadelphia Board of Trade (“PBOT”) proposes to adopt new
tules E1 through E37 dealing with trading on the PBOT XL electronic trading system, as set forth below.

The PBOT intends to implement these rules on October 6, 2006.
There were no opposing views among the PBOT’s Executive Committee concerning these rules.

The PBOT certifies that these rules comply with the Commodity Exchange Act and the rules thereunder.

Sincerely,

C kbd fad

C. Robert Paul
Executive Vice President
and General Counsel

ec: Mr. Allen J. Cooper
Ms. Jane Croessmann


(vii) _ withdrawing, withholding, disclosing, or taking advantage of a
Customer Order in whole or in part for the benefit of any other
Person;

(viii) engaging in compensation trades, where one or more parties
executes non-competitive trades to transfer money between
accounts; and

(ix) engaging in conduct or practices detrimental to the best interests

of the Exchange.

Rule E7 Responsibility for Orders and Quotes.

(a) Each Member and Member Organization is responsible for all Orders and Quotes
submitted through its Member ID by any Persons associated with that Member or Member Organization.
Each Member and Member Organization must reasonably ensure that all Orders and Quotes submitted
through its Member ID are submitted in good faith to execute bona fide trades and that the Orders and
Quotes comply with all applicable provisions of the Act, Commission regulations and related
Tequirements, all Rules (including Notices to Members), and all Exchange regulatory and operational

orders and procedures.

(b) Each Member and Member Organization must have one Authorized Trader
Contact. Each Member and Member Organization must provide to the Exchange the name, title,
telephone number and other contact information for its Authorized Trader Contact in the manner, format,

and following the procedures established by the Exchange and as described in a Notice to Members.

(c) An Authorized Trader Contact is responsible for all business conducted by or
through the Member or Member Organization’s Member ID. Each Authorized Trader Contact must sign
a written statement provided by the Exchange whereby the Authorized Trader consents to the jurisdiction

of the Exchange and the Commission and agrees to observe and be bound by the By-laws and Rules of


Engage in acts, practices, or conduct contrary to the purposes of the
Exchange or likely to bring the Exchange into disrepute. These
prohibited practices include, but are not limited to:

(i) effecting a transaction in, or inducing the purchase or sale of,
any Contract through any manipulative, deceptive, or fraudulent
device or contrivance;

(ii) engaging in price manipulation or cornering of the market;

(iii) engaging in wash transactions (or other activities that may or
may not involve the making of a Contract) that creates a
misleading appearance of activity occurring on PBOT XL and/or
causes the reporting of a misleading price level;

(iv) engaging in accommodation transactions, by which one party
enters into a Contract with another party knowing or having
Teason to know that such transaction was an attempt to conceal a
trading abuse;

(vy) engaging in “front-running” or “trading-ahead,” where a party
knowingly places an Order or a Quote or executes a trade for a
Contract while in possession of material non-public information
concerning an imminent Block Trade or Customer Order;

(vi) _ engaging in “cherry picking,” where a party assigns a trade for a
Customer to the account of another Customer or party (for any
reason, even if only temporarily, where the situation is not
remedied) and the trade assigned to the other Customer or party
is at a superior price than the trade price received by the

Customer;


(d) No trading restriction or suspension imposed under this Rule shall continue for
more than two business days (or as soon thereafter as a quorum of the Board can be assembled) unless the

Board approves of the continuation of the restriction or suspension.

(©) Any trading restrictions or suspensions imposed under this Rule will be
communicated by a Notice to Members or other means that the Exchange determines appropriate. The
Exchange will document its decision-making process and the reasons for using its authority under this

Rule, and consult with Commission staff as necessary and appropriate.
Rule E33 Regulatory Trading Halts.

The Exchange shall halt trading of broad-based index futures Contracts at any time that
circuit breaker procedures are in place to halt or suspend trading in all equity securities trading on a
national securities exchange or national securities association. After the triggering of circuit breaker
procedures, the Exchange will resume trading of broad-based index futures Contracts only after trading

has resumed in equity securities traded on a national securities exchange or national securities association.
Rule E34 Restrictions on Message Traffic.

At any time, the Exchange may, in its sole discretion, restrict the electronic transmissions
or submissions to the PBOT XL by Members or Member Organizations of Quotes, Orders, modifications
or cancellations of Quotes or Orders, trade reports, and other messages or vice versa (‘Message Traffic”)
to safeguard the operations or integrity of PBOT XL or to preserve market integrity, fair and orderly

trading, or the public interest or for the protection of investors.
Rule E35 Proprietary Nature of Market Data.

All Members, Member Organizations, Authorized Traders Contacts, and all employees,

agents, vendors, and other Persons affiliated with the foregoing:

41


Rule E21 Trade Confirmations and Objections.

The Exchange will promptly confirm each trade resulting from the electronic matching of
bids and offers through PBOT XL. If appropriate, upon receipt of a trade confirmation, the relevant
Member or Member Organization must promptly object in writing to the Exchange; and under no
circumstances will the Member or Member Organization object to any trade later than one hour after the

close of trading for the relevant Contract on the applicable Trading Day.
Rule E22 Pre-Negotiated Business and Cross Transactions.

(a) Except as otherwise provided for in Rule E23, a Member or Member
Organization may only execute Cross Transactions or seek to match an Order through pre-negotiation

with itself or with its other Customers in accordance with this Rule.

(b) When pre-negotiating and executing a Cross Transaction for a Customer, a
Member or Member Organization must (1) obtain a prior written consent from the Customer which is
either a generic or transaction specific consent and (2) act with due skill, care, and diligence, and ensure
that the Customer’s interests are not prejudiced.

(c) When submitting a Cross Transaction to the PBOT XL through this Rule, if only
one side of the transaction is a Customer Order, then the Member or Member Organization must submit

the Customer Order first to PBOT XL.

(d) A Member or Member Organization may enter Orders matched through pre-
negotiation immediately into the PBOT XL if, at the time of entry, a bid and an offer exists for the
relevant Contract Month in the PBOT XL. Because both Orders submitted pursuant to this Rule are

exposed to the market, PBOT XL may not necessarily match the two Orders.

() If a bid and an offer for a Contract Month does not exist in the PBOT XL, then

before submitting Orders in the relevant Contract Month that have been pre-negotiated, a Member or

29


(b) Each Order is, or series of Orders are, for the same Customer Account or group

of Customer Accounts.

(c) Each Order is, or series of Orders are, for the same Contract, Contract Month,

market direction (i-e., purchase or sale), and Order instructions pursuant to Rule E14.

(d) Each individual trade is submitted to, and cleared by, the Clearing Corporation at

the price executed.

(e) The Member or Member Organization calculates and confirms the weighted
average mathematical price by (1) multiplying the number of contracts purchased or sold at each
execution price by that price; (2) adding the results together; and (3) dividing the sum by the total number
of contracts. For a series of Orders, the Member or Member Organization may compute the average price
based on each Order in the series. The Member or Member Organization may confirm to the Customer
either the actual average price or an average price rounded up for a buy Order, or rounded down for a sell

Order, to the nearest price increment.

() The applicable confirmation and monthly account statement provided to each

relevant Customer indicates that the price represents an average price.

(g) The Member or Member Organization does not average its proprietary trades

with Customer trades that are subject to average price calculations.

(h) The Member or Member Organization creates and maintains records (in
accordance to Commission regulation 1.31) to support its average price calculations pursuant to this Rule
and the allocations into Customer Accounts and makes those records available for inspection by the

relevant Customers upon request.

28


(b) For all purposes of the Rules, unless otherwise expressly provided:

(1) any time period which expires on a day which is not a Trading Day as

defined in Rule E4 will expire on the next succeeding Trading Day;

(2) all references to the Act or the Commission’s regulations or Rules of the
Exchange or Rules of the Clearing Corporation include such provisions as
amended, modified, supplemented, restated, or replaced from time to
time;

(3) all references to the Commission includes any successor to the

Commission;

(4) as permitted by the context any gender specific reference also include the

other gender; and

(5) as permitted by the context any reference in the singular includes the

plural and vice versa.

Trader ID. The term “Trader ID” means a unique personal identification code assigned
to a person submitting an order or a quote by or through a Member or Member Organization that is in a

form and provided in a manner acceptable to the Exchange.

Rule E3 Listed Contracts.

The Exchange shall determine and publish through Notices to Members the Contracts

listed for trading through PBOT XL.


(3)

value the securities at no greater than the current market value of the
securities less any deductions specified by Securities and Exchange

Commission rule 15¢3-1.

A Member or Member Organization must not consider any guarantee of
a Customer Account when determining whether required margin in that

account is satisfied.

(e) Margin Calls and Liquidation:

q)

(2)

Once additional margin deposits are required pursuant to this Rule, a
Member or Member Organization must call for the additional margin as
promptly as possible and in any event not more than one business day
after the event giving rise to the call. Once the Member or Member
Organization calls for the additional margin, the Member or Member
Organization must collect the full amount of the required additional
margin from a Customer as promptly as possible and in any event within
areasonable time. In a margin call, a Member or Member Organization
must require that a Customer deposit additional margin so that the
Customer’s account at least meets the minimum initial margin
requirement (i) when the margin equity in the account initially falls
below the minimum maintenance margin requirements and (ii)
subsequently when the margin equity plus existing margin calls on the

account are less than the minimum maintenance margin requirements.

After a margin call is made by a Member or Member Organization but
before the Customer makes the required additional margin deposit, the

Member or Member Organization may only accept an Order from the

19


(1) the opening price levels of the Contract on the PBOT XL;
(2) the price movements in other Contract Months of the same Contract;

(3) the current market conditions, including levels of activity and volatility;
(4) the last trade price for the Contract;

(5) the speed of execution;

(6) the information regarding price movements in related markets, the
telease of economic data, or other relevant news immediately before or

during the trading session;
(7) an obvious error;
(8) the proximity of the trade to the close of the market; and
(9) the impact of the error transactions on other transactions.

(c) When nullifying a transaction pursuant to Rule E26(a), the Exchange will act as
soon as practicable and will promptly notify the Authorized Traders Contacts for the Member
Organizations submitting each side of the transaction of any nullification pursuant to this Rule by
telephone or any other means that the Exchange deems appropriate.

(d) A Member or Member Organization that executes a transaction in a Contract in
error, at an unrepresentative price which is outside the “No-Bust Range” specified in the relevant Contract
specifications, may, within 10 minutes of the Order execution, contact the Exchange to seek to modify or
nullify the transaction pursuant to Rule E26(a).

(e) The Exchange may, within its sole discretion, nullify or modify a transaction in a
Contract if an error occurs as a result of a disruption or malfunction of PBOT XL or its related

communication or other systems.

36


(f) The Exchange will notify all Authorized Traders Contacts_as soon as practicable
(through means deemed appropriate by the Exchange) of (1) trades that the Exchange is investigating
pursuant to this Rule and (2) trades that the Exchange has modified or nullified pursuant to this Rule.
(g) The Exchange’s nullification or modification of transactions in Contracts

pursuant to this Rule is final.
Rule £27 Establishment of Settlement Prices.

The Exchange shall establish Daily and Final Settlement Prices at the times and using the
methodology established by the Exchange as described in the Contract specifications. Such Daily
Settlement Prices are subject to subsequent review and revision by the Clearing Corporation. The time
set for determining the Daily Settlement Price or the Final Settlement Price need not coincide with the

end of a Trading Day.
Rale E28 Position Limits.

(a) Unless otherwise provided by this Rule E28, no Person shall own or control,
separately or in combination, a net long position or a net short position in a Contract in excess of any
position limit established by Commission regulations or the Exchange and set forth in the Contract
specifications for that Contract. No Member or Member Organization shall effect a transaction in a
Contract that the Member or Member Organization knows or has reason to believe would result in the
Member, the Member Organization, a Customer, or any other Person holding or controlling, separately or
in combination, a net long position or net short position in excess of a position limit established by

Commission regulations or the Exchange.
(b) To determine whether a Person is complying with any position limit or

accountability reporting requirement established by the Exchange or Commission regulations (1) all

positions in accounts for which a Person, by power of attorney or otherwise, directly or indirectly holds

37


qd) Member ID;

(2) Contract and Contract Month;
(3) buy or sell;

(4) price; and

(5) quantity.

(d) A Member or Member Organization submitting Quotes must comply with the

requirements of Commission Rule 1.35(a).
Rule E18 Order and Quote Matching.

(a) PBOT XL matches Orders and Quotes in price priority with the highest bid or
lowest offer for a Contract having priority over all other Orders and Quotes for the same Contract Month.

When the PBOT XL has multiple Orders or Quotes at the highest bid or lowest offer, then

(1) Customer Orders receive priority over Orders for Members or Member
Organizations and Market Maker Quotes; and among Customer Orders the first Customer Order in time at

a price has priority over all other Customer Orders for the same Contract at the same price; and

(2) Orders for Members and Member Organizations and Market Maker Quotes at the
same price participate in proportion to the Order or Quote quantity relative to the total quantity of all
Member or Member Organization Orders and Market Maker Quotes for the same Contract at the same
price.

(b) When PBOT XL receives an Order for a Contract that crosses the PBOT Best

Bid and Offer (i.e., the Order is either a bid that exceeds the lowest offer or is an offer that is less than the

25


PBOT XL Electronic Trading Rules ~
Rule E1 Electronic Trading Generally.

PBOT XL related activity is governed by Rules El through and including E37, which
prevail in the event of any conflict with any other Exchange Rule. Except for the General Trading Rules
of Section 3, which are inapplicable, all other Rules and By-Laws of the Exchange apply to PBOT XL

telated activity unless expressly excluded from application.
Rule E2 Definitions and Rules of Construction.

(a) When used in these Rules, these terms have the following meanings:

Authorized Trader Contact. The term “Authorized Trader Contact” means an
employee or other individual associated with a Member or Member Organization who is authorized by
that Member or Member Organization and the Exchange to submit Quotes or Orders into PBOT XL.

Only a natural person can be an Authorized Trader Contact.

Block Trade. The term “Block Trade” shall mean a transaction in Contracts negotiated
outside the PBOT XL but executed through the Exchange that complies with the requirements of Rule

E23.

Bunched Order. The term “Bunched Order” means a single Order for two or more

Customer Accounts entered into PBOT XL pursuant to Rule E13.

Clearing Account Number. The term “Clearing Account Number” means the unique
identification code assigned by the Clearing Corporation which identifies a particular Clearing Member

and an account maintained by that Clearing Member with the Clearing Corporation.


PBOT XL Complex. The foregoing shall apply regardless of whether a claim arises in contract, tort,
negligence, strict liability or otherwise. The foregoing shall not limit the liability of any Member,
Member Organization, Clearing Member, or any of their respective officers, directors or employees for

any act, incident, or occurrence within their control.

(b) No express or implied warranties or representations regarding the PROT XL
Complex are provided by the Exchange, including, but not limited to, warranties of merchantability and

warranties of fitness for a particular purpose or use.

(c) Any dispute arising from the use of PBOT XL or the Clearing Corporation in
which the Exchange or any of its or their respective officers, directors, employees or agents is a party
shall be construed and enforced in accordance with the laws of the State of Pennsylvania, without
reference to that State’s choice of law principles. Any actions, suits, or proceedings against any of the
above must be brought within two years from the time that a cause of action has accrued, and any party
bringing such action consents to the exclusive jurisdiction of the U.S. District Court for the Eastern
District of Pennsylvania and the Court of Common Pleas of Philadelphia County, Pennsylvania, and

waives any objection to venue and any right to trial by jury.

(d) This provision shall in no way create a cause of action and shall not authorize an.

action that would otherwise be prohibited by the Rules of the Exchange.


(a) understand and acknowledge that the Exchange has a proprietary interest in
Market Data, the PBOT Best Bid and Offer, and all related trade data and settlement prices relating to all

Contracts traded through PBOT XL and the Exchange;

(b) agree not to take any action contrary or detrimental to the Exchange’s interest

and to take reasonable measures to ensure that no such action is taken by any Person affiliated with them.

Rale E36 Notices to the Exchange, Members, and Member Organizations.

(a) Members and Member Organizations shall provide any required notice to the
Exchange in the manner set forth in these Rules, Notices to Members, or Exchange regulatory or

operational orders or procedures, as applicable.

(b) A Notice to Members shall become effective at the time published by the
Exchange on its website or at any later time as determined appropriate by the Exchange and as stated in
the notice. As soon as reasonably practicable, the Exchange shall provide each Member and Member

Organization with a copy of a Notice to Members by:

(6) handing a copy to the Member or Member Organization, or

(2) mailing a copy to the Member or to the address supplied to the Exchange
by the Member or Member Organization for receipt of Notices to
Members, or

(3) transmitting electronically a copy to the Member or Member
Organization (including, through a facsimile or electronic-mail
transmission) to the address supplied to the Exchange by the Member or

Member Organization for receipt of Notices to Members.

42



(c) To maintain its Clearing Member designation under Rule E9(b), the Clearing
Member must at all times continue to satisfy all criteria established by the Clearing Corporation and the

Exchange for designation as a Clearing Member for specified Contracts.

(d) A Clearing Member must provide the Exchange with a copy of each written
agreement guaranteeing the performance of the Non-Clearing Member with respect to a Contract
(referred to in Rules E9(d), (e), and (f) as a “Guarantee”). For purposes of this Rule E9(d), a Guarantee
(1) guarantees and indemnifies the performance for the Contracts governed by the Guarantee; (2) remains
in effect until terminated pursuant to Rule E9(e) notwithstanding any change to the Rules, the terms of
any Contract, or the composition of any partnership (including, but not limited to, the death, retirement,
admission or withdrawal of a partner); (3) applies to defaults by the Non-Clearing Member on any
obligation related to a Contract or other claims governed by the Guarantee; and (4) supplements, but does
not substitute, any other agreement whereby the Clearing Member guarantees or indemnifies the Non-

Clearing Member.

(e) To terminate a Guarantee, either party to the Guarantee (the Clearing Member or
Non-Clearing Member) must immediately notify the Exchange of the termination of the Guarantee using
the form, providing the information, and following the procedures established by the Exchange. Upon
Teceipt of a request for termination of a Guarantee, the Exchange will act as promptly as required by the
circumstances, A Guarantee remains in effect until the Exchange authorizes its termination and notifies
both parties. Notwithstanding the termination of the Guarantee, the Clearing Member remains bound by
the Guarantee for all Contracts governed by the Guarantee entered into by the Non-Clearing Member
before termination of the Guarantee, but is not bound for any Contract made by, or transferred to, the

Non-Clearing Member after termination of the Guarantee.

(f) If a dispute arises between the Clearing Member and the Non-Clearing Member

concerning whether a Contract was entered into or transferred before or after the termination of a

12


(1) No Member or Member Organization shall effect a transaction or carry a
Customer Account without obtaining margin at the times, in the amounts,

and in the forms required by this Rule.

(2) If a Member or Member Organization fails to obtain and maintain the
required minimum margin deposits for a Customer Account pursuant to
this Rule, the Exchange may require that the Member or Member
Organization immediately liquidate all or part of the positions in the

Customer Account to decrease or eliminate the margin deficiency.

(3) Nothing in this Rule prevents the Exchange, the Clearing Corporation, a
Member, or a Member Organization from imposing margin rates or
requirements on a Customer that are higher or more stringent than the

tates or requirements imposed by this Rule.

(4) Terms used in this Rule, but not otherwise defined by these Rules, have
the meaning set forth in the Joint Audit Committee’s Margins Handbook.
In addition, a Member or Member Organization must follow the
procedures specified in the Joint Audit Committee’s Margins Handbook
for the computation, issuance, collection, and offsets for margin calls and
corresponding capital charges for the Member or Member Organization
unless the Manual is inconsistent with these Rules, in which case these

Rules prevail.
(b) Rates and Requirements:

(i) A Member or Member Organization carrying a Customer Account with

Contracts must collect at least the minimum margin requirements


TABLE OF CONTENTS

Rule E35 Proprietary Nature of Market Data...

Rule E36 Notices to the Exchange, Members, and Member Organizations...
Rule E37 Limitation of Liability For PBOT XL.....

-iii-


(3) the Customer Order was executed in the wrong Contract, Contract
Month, or direction (i-e., a buy rather than a sell or vice versa) and if the
Erring Member executed the original Customer Order at the current
market price the Customer would receive a worse price than the price

teported to the Customer.

(d) An Erring Member that discovers an error after the market has closed for the
relevant Contract must comply with the price improvement provisions of Rule E24(b) except that the
Daily Settlement Price for the Contract serves as the reference price to determine whether the price

teported to the Customer was better or worse than the current market price.

(©) If the Erring Member traded in the wrong Contract, Contract Month, or direction
(i.e., a buy rather than a sell or vice versa), then the Erring Member need only offer the net improvement,

if any, to the Customer as described in Rule E24(b).

(f) If the Erring Member has not executed a trade or executed a trade in the wrong
Contract, Contract Month, or direction (i.e., a buy rather than a sell or vice versa) and the current market
price for the Order at the time the error is discovered is better than the price erroneously reported to the
Customer, then the Erring Member must execute the Customer Order on PBOT XL and may not use the

provisions of this Rule.
Rule E26 Transaction Nullifications or Modifications,

(a) The Exchange, in its sole discretion, may nullify a transaction in a Contract that
(1) has taken place outside the “No-Bust Range” as defined in the relevant Contract specifications and (2)

which the Exchange determines has taken place at an unrepresentative price.

(b) When determining whether to nullify a transaction the Exchange may consider

one or more of the following factors:

35


Contracts executed for the Bunched Order were allocated, as required by Commission regulation 1.35(a-

1)(5)(iv)(C).
Rule E14 Order Instructions.
Types of Order instructions accepted by PBOT XL are the following:

(a) Cancel Leave Order, which is an instruction to cancel a portion, but not all, of
the quantity of a Limit Order and leave the remaining quantity for execution without changing the price or

duration parameters of the Order then on the Order Book;

(b) Cancel Order, which is an instruction to cancel an Order;

(c) Cancel Replace Order, which is an instruction to cancel a Limit Order and
replace it with a new Limit Order that has a different quantity, price, and/or instruction;

(d) Day Order, which is an instruction that a Limit Order, if not executed, expires at
the end of the Trading Day for which it was entered. Unless otherwise specified, an Order for the
purchase or sale of a Contract has a Day Order instruction;

() Good ‘Til Cancelled Order, which is an instruction that a Limit Order to buy or
sell remains in effect until it is either executed or cancelled; and

(f) Immediate or Cancel Order, which is an instruction to execute a Limit Order as
soon as the Order is entered into PBOT XL; any part of an Immediate or Cancel Order executed is

reported immediately and any portion not immediately executed is cancelled.
Rule E15 Timely Order Entry.

Unless a Customer instructs otherwise, a Member or Member Organization that receives
an Order for the account of another Person shall submit the Order to PBOT XL immediately through an

Authorized Trader Contact, or as soon as practicable, and in the sequence received. Unless a Customer

23


Rule E1

Rule E2

Rule £3

Rule E4

Rule E5

Rule E6

Rule E7

Rule E8

Rule E9

Role E10
Rule E11
Rule E12
Rule E13
Rule E14
Rule E15
Rule E16
Rule E17
Rale E18
Role E19
Rule E20
Rale E21
Rule E22
Rule E23
Rale E24
Rule E25
Rule E26
Rale E27
Rale E28
Rule E29
Rale E30
Rule E31
Rule E32
Rale E33
Rule E34

TABLE OF CONTENTS

Electronic Trading Generally.....
Definitions and Rules of Construction.
Listed Contracts

Trading Days and Hours

Market Opening
General Trading Standards and Prohibited Practices...

Clearing Arrangements
Market Makers
Customer Margin...
Submission of Orders
Bunched Orders.
Order Instructions........

Timely Order Entry ................
Order Status, Change, or Cancellation
Quote Status, Change, or Cancellation and Submission
Order and Quote Matching.....
Automated Order-Routing Systems
Average Price Transactions.....
Trade Confirmations and Objections.

Pre-Negotiated Business and Cross Transactions
Block Trades
Price Improvement
Customer Order Error Correction Procedures......
Transaction Nullifications or Modifications
Establishment of Settlement Prices.....
Position Limits
Reportable Positions..
Transfers of Positions...
Daily Trading Information
Trading Restrictions and Suspensions.
Regulatory Trading Halts..............
Restrictions on Message Traffic.



multiple Customer Accounts may enter into a Block Trade on behalf of its Customers but only if each of
those Customers is an Eligible Contract Participant. For Block Trades negotiated or executed on behalf
of a Customer Account, the Member or Member Organization must obtain from the Customer prior

written approval to execute Block Trades, which either provides general or Order specific consent.

(e) When negotiating or executing a Block Trade, a Member or Member
Organization must ensure that the price quoted represents a fair price for the Block Trade (i.e., the price
that the Member or Member Organization considers the best available for a transaction of that size and
type). When determining a fair price for a Block Trade, a Member or Member Organization should
consider the prevailing price and volume currently available through the PBOT XL, the prices and sizes
of transactions in other relevant markets at the relevant time, and general market conditions.

(69) In addition to the requirements of Rule E12(b) and Rule E12(c), for a Block
Trade each Member or Member Organization shall record on an Order ticket the identity of the individual
arranging the Block Trade and time stamp the Order when negotiation ends. Unless a different time

period is designated by the Exchange through a Notice to Members:

(qd) for Block Trades negotiated during the trading hours of a Trading Day
promptly but no later than 15 minutes after negotiations end for the
Block Trade (i) the Member or Member Organization on the selling side
of the Block Trade must obtain from the Exchange a trade authorization
identification number and provide that trade authorization identification
number to the Member or Member Organization on the buying side of
the Block Trade and (ii) each Member or Member Organization must

submit to the Exchange a completed Block Trade request form.

(2) for Block Trades negotiated at times other than the trading hours of a

Trading Day, promptly but no later than 45 minutes before the next open

31


Rule E32 Trading Restrictions and Suspensions.

(a) The President or his delegate is authorized at any time to restrict or suspend
trading in any Contract if he believes that the restriction or suspension is necessary or appropriate to
preserve market integrity, maintain fair and orderly trading, or otherwise further the public interest or for

the protection of investors.

(b) Any trading restrictions or suspensions imposed pursuant to Rule E32(a) may

include without limitation:

qd) a change in the closing time and/or the time for determining the Daily

Settlement Prices for that Trading Day; and/or

(2) a setting of Daily Settlement Prices by the President or his delegate based

on the following:

(0) the mid-point of PBOT Best Bid and Offer for the Contract

Month immediately before the restriction or suspension;

(ii) if the mid-point of the PBOT Best Bid and Offer appears
unrepresentative of fair market value, then the PBOT Best Bid
and Offer will be adjusted by the last representative basis

differential; or

(iii) any other methodology deemed appropriate by the President or

his delegate under the circumstances.

(c) The President or his delegate may lift a trading restriction or suspension imposed
by this Rule if the President or his delegate believes that trading can resume on a fair and orderly basis

and the public interest is served.

40


highest bid), PBOT XL will reject the Order and notify the Member or Member Organization through

which the Order was submitted of the rejection.

(c) When PBOT XL receives a Quote for a Contract that crosses the PBOT Best Bid
and Offer (the “Crossing Quote”), PBOT XL (1) establishes a new PBOT Best Bid and Offer reflecting a
locked market (i-e., the highest bid equals the lowest offer) and the Crossing Quote becomes either the
highest bid or lowest offer as applicable and (2) executes at the new PBOT Best Bid and Offer against the
Crossing Quote in price priority Orders and Quotes at or better than the new PBOT Best Bid and Offer

until no other executable bids or offers exist and/or the quantity associated with the Crossing Quote is

exhausted.
Rule E19 Automated Order-Routing Systems.

(a) If any Member or Member Organization provides any Customer, other Members
or Member Organizations, or any other Person access to an electronic or automated order-routing system
that enables the submitting of Orders directly to the PBOT XL, then that Member or Member

Organization must:

(1) adopt and enforce written procedures reasonably designed to protect the
reliability and confidentiality of Customer Orders and Customer Account
information at all points during the order-routing process, and assign
tesponsibility for overseeing the process to individuals who understand
how the order-routing process works and who are capable of evaluating

whether the process complies with relevant procedures;

(2) adopt and enforce written procedures reasonably designed to maintain

adequate personnel and facilities for the timely and efficient delivery of

26


the Exchange, the Act, Commission regulations and related requirements, and all Exchange regulatory
and operational orders and procedures. Among other duties and responsibilities that the Exchange may

impose, an Authorized Trader must:

(6) Have the authority to modify or withdraw any Order or Quote entered

under his or her Member Organization’s Member ID;

(2) Have the ability to identify immediately for the Exchange the sources of
all Orders or Quotes submitted under his or her Member Organization’s

Member ID;

(3) Ensure that all activity conducted under his or her Member
Organization’s Member ID complies with all applicable provisions of the
Act, Commission regulations and related requirements, all Rules
(including Notices to Members), and all Exchange regulatory and

operational orders and procedures; and

(4) Ensure that any Person conducting business under his or her Member

Organization’s Member ID is competent and appropriately trained.

(d) No Member, Member Organization, or Person associated with a Member
Organization shall submit an Order or a Quote to PBOT XL unless the Order or Quote is submitted with
Member ID attached in the manner, format, and following the procedures established by the Exchange.
Each Member, Member Organization, Authorized Trader Contact, and Person associated with a Member
Organization must reasonably ensure that no Member ID is used by any Person not so authorized by the

Member, Member Organization, Authorized Trader Contact, or these Rules.

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Guarantee: (1) the Clearing Member has the burden to demonstrate that the Non-Clearing Member
entered into the Contract after termination of the Guarantee and (2) the Exchange may, within its
discretion, provide the Clearing Member and Non-Clearing Member with information regarding the time

at which the Non-Clearing Member entered into or transferred a Contract.

Rale E10 Market Makers.

(a) To facilitate liquidity and orderliness, the Exchange may, in its sole discretion,
appoint one or more Members or Member Organizations to act as Market Makers for one Contract or

more,

(b) The Exchange may enter into a written agreement with a Market Maker
establishing the Market Maker’s rights and obligations. Among other possible obligations, the Exchange
may require a Market Maker to (1) facilitate a liquid and orderly market, (2) enter into a written
agreement specifying the frequency and competitiveness of its Quotes, and (3) maintain records sufficient

to prove compliance with the written agreement.

(c) Through a Notice to Members, the Exchange will describe the type and nature of

obligations imposed on, and rights received by, Market Makers.

(d) The Exchange may suspend or revoke a Market Maker’s designation if, in the
Exchange’s sole discretion, a Market Maker fails to satisfy any obligations to the Exchange, including

any contractual or other obligations.

Rule E11 Customer Margin.

(a) General Rules:

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