Ms. Jean A. Webb
August 2, 2005
Page 5 of 5

5. Unexecuted and partially executed orders shall remain in the order book until the conclusion
of the trading session unless instructions to cancel the orders have been received.

6. Trades of eligible combination of contracts consummated pursuant to Rule 585 shall not trigger
any conditional orders, e.g. stop orders, stop limit orders, MIT orders, etc., in the contract markets
not trading pursuant to Rule 585.

7. The Exchange may establish Market Maker Programs specific to GLOBEX Call Markets for
specific sets of contracts. These programs may be deployed in conjunction with or independent
of similar programs for identical contracts not traded pursuant to Rule 585 established pursuant to
Rule 581.

8. In accordance with a Market Maker Program, designated Lead Market Makers may be required to
regularly provide price indications for some contracts or combinations of contracts eligible for
trading pursuant to Rule 585. These price indications are provided for informational purposes
only and shall not be construed as actual bids or offers for the contracts. In response to any
RFQs, Market Makers may enter bids or offers at any price, irrespective of what price indication
the Market Maker may have provided prior to the RFQ.



Ms. Jean A. Webb
August 2, 2005
Page 4 of 5

APPENDIX: Clean copy of the amended rules

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 on 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.

1.

For the purpose of Rule 585:

a. an eligible contract means a contract deemed eligible to trade pursuant to the algorithm
stipulated hereunder; an eligible combination of contracts means a combination of eligible
contracts deemed eligible to trade pursuant to the algorithm stipulated hereunder;

b. an eligible terminal means a device capable of transmitting to and receiving from GLOBEX
Requests For Quotes (“RFQ”), and sending order instructions in response to RFQs to
GLOBEX;

c. an RFQ means an electronic message soliciting bids and offers for a contract or a
combination of contracts;

d. a trading session means a trading session in which Rule 585 applies. The hours of the trading
session may be determined by the Exchange independent of the trading hours of the identical
contracts not traded pursuant to this rule;

An RFQ for an individual eligible contract or an eligible combination of contracts may be entered
into GLOBEX through an eligible terminal. The RFQ shall be disseminated by GLOBEX to all
eligible terminals for the purpose of quote solicitation.

Following the dissemination of an RFQ, limit bids and limit offers for the specified contract or
combination of contracts may be entered into GLOBEX through an eligible terminal. In
particular, the party initiating the RFQ may also enter orders. GLOBEX shail not recognize any
order other than limit orders.

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
shall be preceded by issuing an RFQ through an eligible terminal. Further, in such cases, the
provisions of Rule 539.C Pre-Execution Discussions Regarding GLOBEX Trades, remain
applicable.

Trade matching occurs whenever tradable pair(s) of bid and offer can be identified in the order
book. Trade matching shall be executed in accordance with an algorithm that gives first priority
to orders at the best price. In the event that multiple orders with the same price are eligible to
execute against an opposing order, an allocation algorithm shall be employed to match the trade.
See Interpretation of Rule 585 - GLOBEX Call Market Trading Algorithm at the end of Chapter


August 2, 2005

Ms. Jean A. Webb

Office of the Secretariat

Commodity Futures Trading Commission
Three Lafayette Centre

1155 21" Street, NW

Washington, DC 20581

RE: Amendment to GLOBEX Call Market Trading Algorithm Rules; z =
Eurodollar Options Trading pursuant to GLOBEX Call Market Trading Algorithm
integrated with regular GLOBEX network.

Submitted per Sec. 5c(c)(1) of the CEA and Regulation Sec. 40.6(a).
CME Submission # 05-77.

Dear Ms. Webb:

Chicago Mercantile Exchange (“CME” or “Exchange”) hereby notifies the Commission of
amendments to Rule 585. GLOBEX Call Market Trading Algorithm and the integration of Eurodollar
Options Trading pursuant to Rule 585 with regular GLOBEX network. The Exchange certifies that these
actions neither violate nor are inconsistent with any portion of the Commodity Exchange Act or of the
tules thereunder.

Options on Eurodollar Futures trading pursuant to GLOBEX Call Market Trading Algorithm,
also known as the Enhanced Options System (EOS), commenced on August 2, 2004. As stated in CME
Submission #04-066 and a subsequent communication dated July 27, 2004 in response to the
Commission’s inquiry, access to EOS required special computer terminals. The Exchange also stated that
it would integrate EOS into its regular GLOBEX trading system at a later date to eliminate the need for
separate access to the EOS.

The Exchange has determined that necessary system development work has been completed to
allow access to EOS through its regular GLOBEX system. Beginning on the trade date of August 15,
2005, the EOS system shall be integrated with the regular GLOBEX system. Participating in EOS
directly through regular GLOBEX system will be possible. However, existing specialized EOS terminals
may continue to be employed for the purpose of accessing EOS. The Exchange shall also continue to
honor requests for additional EOS terminals.

In conjunction, the Exchange amends Rule 585. GLOBEX Call Market Trading Algorithm to
clarify the requirement for issuing a Request For Quotes (RFQs) in connection with solicitation of bids

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


Ms. Jean A. Webb
August 2, 2005
Page 2 of 5

and offers. Specifically, solicitation of bids and/or offers through private discussion shall be preceded by
issuing an RFQ through EOS. The Exchange believes that the requirement would further increase the
transparency in the market. Further, given that the order books for all eligible contracts or combination of
contracts exist at all times in the GLOBEX system, the text in Rule 585.2 regarding the creation of order
books for eligible contracts ceases to be relevant and shall be deleted.

The text of the Rule amendment is as follows, with additions underlined and deletions bracketed
and overstruck. A clean copy of the amended rules can be found in the appendix.

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 on 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.

1. For the purpose of Rule 585:

a. an eligible contract means a contract deemed eligible to trade pursuant to the algorithm
stipulated hereunder; an eligible combination of contracts means a combination of eligible
contracts deemed eligible to trade pursuant to the algorithm stipulated hereunder;

b. an eligible terminal means a device capable of transmitting to and receiving from GLOBEX
Requests For Quotes (“RFQ”), and sending order instructions in response to RFQs to
GLOBEX;

c. an RFQ means an electronic message soliciting bids and offers for a contract or a
combination of contracts;

d. a trading session means a trading session in which Rule 585 applies. The hours of the trading
session may be determined by the Exchange independent of the trading hours of the identical
contracts not traded pursuant to this rule;

2. An RFQ for an individual eligible contract or an eligible combination of contracts may be entered
into GLOBEX through an eligible terminal. [An-order-beokforthe-specified individual contract

beok-shall in-GLOBE. het

h -] The RFQ shall be

‘
disseminated by GLOBEX to all eligible terminals for the purpose of quote solicitation.

3. Following the dissemination of an RFQ, limit bids and limit offers for the specified contract or
combination of contracts may be entered into GLOBEX through an eligible terminal. In
particular, the party initiating the RFQ may also enter orders. GLOBEX shall not recognize any
order other than limit orders.

4. 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
shall be preceded by issuing an RFQ through an eligible terminal. Further, in such cases, the
provisions of Rule 539.C Pre-Execution Discussions Regarding GLOBEX Trades, remain
applicable.



Ms. Jean A. Webb
August 2, 2005
Page 3 of 5

S14).

65].

{6}.

8/7].

Trade matching occurs whenever tradable pair(s) of bid and offer can be identified in the order
book. Trade matching shall be executed in accordance with an algorithm that gives first priority
to orders at the best price. In the event that multiple orders with the same price are eligible to
execute against an opposing order, an allocation algorithm shal! be employed to match the trade.
See Interpretation of Rule 585 - GLOBEX Call Market Trading Algorithm at the end of Chapter
5. Unexecuted and partially executed orders shall remain in the order book until the conclusion
of the trading session unless instructions to cancel the orders have been received.

Trades of eligible combination of contracts consummated pursuant to Rule 585 shall not trigger
any conditional orders, e.g. stop orders, stop limit orders, MIT orders, etc., in the contract markets
not trading pursuant to Rule 585.

The Exchange may establish Market Maker Programs specific to GLOBEX Call Markets for
specific sets of contracts. These programs may be deployed in conjunction with or independent
of similar programs for identical contracts not traded pursuant to Rule 585 established pursuant to
Rule 581.

In accordance with a Market Maker Program, designated Lead Market Makers may be required to
regularly provide price indications for some contracts or combinations of contracts eligible for
trading pursuant to Rule 585. These price indications are provided for informational purposes
only and shall not be construed as actual bids or offers for the contracts. In response to any
RFQs, Market Makers may enter bids or offers at any price, irrespective of what price indication
the Market Maker may have provided prior to the RFQ.

The amendments to the Rule 585 shall become effective on the trade date of August 15,

2005. Please do not hesitate to contact Richard Co at (312)930-3227 or reo@cme.com if any
questions arise during the review of this submission. Please reference our CME Submission
#05-077 on all future correspondence for this submission.

Sincerely,

John W. Labuszewski, Director
Research & Product Development