_CME Rulebook cme®

No clearing member shall accept or carry an account over which a person other than the
account owner, exercises trading authority or control, (hereinafter referred to as a
discretionary, controlled, or managed account) without first obtaining a written power of
attorney, trading authorization, or similar document (hereinafter referred to as a power of
attorney). Such power of attorney must be signed and dated by the account owner and clearly
designate the person to whom discretionary authority has been granted.

The power of attorney shall remain in effect until it is terminated by a written revocation signed
and dated by the account owner or by the death or incapacity of the account owner. Written
revocation may also be made by the person to whom trading authority has been granted.

2. Discretionary Account Listing

A clearing member must clearly identify each discretionary account it carries and promptly
provide the Exchange with a complete and accurate list of such account upon request.
956.B. Presumption of Authority
Except where specifically indicated by the phrase "discretion not exercised” written on the order
ticket, and subsequently confirmed to the customer as such, every trade in a discretionary account
shall be presumed to have been made pursuant to the power of attorney and subject to the
requirements of this rule.
| 956.C. Supervision of Discretionary Trading
1. Discretionary Account Activity
Each clearing member shall have a supervisory employee (other than the person granted
| discretionary authority) centinueusly—supervising activity in discretionary accounts. The
supervision shall include, but is not limited to, a review of excessive trading in amount or
frequency in relation to account equity. This requirement shall only apply to discretionary
accounts controlled by an employee of the clearing member or the clearing member's
guaranteed introducing brokers.
2. Floor Trading
During-Regular-Trading-Heurs, eEach order for a discretionary account executed on the floor
must be executed by a member in the pit other than the person granted discretionary trading
authority over the account unless:

a. The member granted discretionary authority does not trade for his personal account or an
account referred to in Rule 956.E.;

b. The member granted discretionary authority has filed with the Division of Market
Regulation notice of his intention to execute orders for discretionary accounts for which he
has power of attorney; and 45

c. Whenever the member has discretionary authority over more than one account:
(1) The member shall disclose this fact to all persons having an interest in any of the
discretionary accounts;
(2) The member shall have a similar financial interest (including, but not limited to, equity,
brokerage and performance fees) in each such account;
(3) All such discretionary accounts shall be maintained with the member's qualifying
clearing member, and
(4) The member's qualifying clearing member shall monitor the allocation of trades
among such discretionary accounts.
956.D. Position Limits
A person with discretionary trading authority over one or more discretionary accounts shall not
execute or order the execution of trades for such accounts where such trades, by themselves or in

addition to his personal trades, exceed the limits prescribed in these rules regarding total positions
in any contract.

A husband, wife and children are presumed to be a single entity and, as such, must adhere to the
position limits as prescribed by the Exchange rules unless otherwise approved by te Exchange
Staff Chief Executive Officer-upon written application.

| 45 Revised February 1998.

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SECURITY
UNDERLYING | INITIAL MARGIN MAINTENANCE MARGIN
DESCRIPTION OF OFFSET | THE SECURITY | REQUIREMENT REQUIREMENT
FUTURE
Long security future, long put 20% of the current market

option and short call option.
The long security future, long
put and short call must be on
the same underlying security
and the put and call must have
the same exercise price.
(Conversion)

Individual stock
or narrow-based
security index.

value of the long security
future, plus the aggregate
call in-the-money amount, if
any, plus pay for the put in
full. Proceeds from the cail
sale may be applied.

10% of the aggregate exercise
price, plus the aggregate call in-
the-money amount, if any.

Long security future, long put
option and shart call option.
The long security future, long
put and short call must be on
the same underlying security
and the put exercise price must
be below the call exercise price
(Collar)

Individual stock
or narrow-based
security index.

20% of the current market
value of the long security
future, plus the aggregate
call in-the-money amount, if
any, plus pay for the put in
full. Proceeds from call sale
may be applied

The lower of: (1) 10% of the
aggregate exercise price of the
put plus the aggregate put out-
ofthe money amount, if any; or
(2) 20% of the aggregate
exercise price of the call, plus
the aggregate call in-the-money
amount, if any.

Short security future and long
Position in the same security (or
securities basket) underlying
the security future

Individual stock
or narrow-based
security index.

The initial margin required
under Regulation T for the
long stock or stocks.

5% of the current market value,
as defined in Regulation T, of
the long stock or stocks

‘Short security future and long
position in a security
immediately convertible into the
same security undertying the
security future, without
restriction, including the
payment of money

Individual stock
or narrow-based
security index.

The initial margin required
under Regulation T for the
long security.

10% of the current market value,
as defined in Regulation T, of
the long security.

‘Short security future (or basket
of security futures representing
each component of a narrow-
based securities index) and
ong call option or warrant on
the same underlying security
(or index)

Individual stock
or narrow-based
security index.

20% of the current market
value of the short security
future, plus pay for the call in
full.

The lower of: (1) 10% of the
aggregate exercise price of the
call, plus the aggregate call out-
of-the-money amount, if any; or
(2) 20% of the current market
value of the short security future.

‘Short security future, Short put
option and long call option.
The short security future, short
put and long call must be on
the same underlying security
and the put and call must have
the same exercise price.
(Reverse Conversion)

Individual stock
or narrow-based
security index.

20% of the current market
value of the short security
future, plus the aggregate put
in-the-money amount, if any,
plus pay for the call in full.
Proceeds from put sale may
be applied.

10% of the aggregate exercise
price, plus the aggregate put in-
the-money amount, if any.

Long (short) a basket of
security futures, each based on
a narrow-based security index
that together tracks the broad-
based index and short (long) a
broad-based index future

Narrow-based
security index

5% of the current market
value for the long (short)
basket of security futures.

5% of the current market value
of the long (short) basket of
security futures.

Long (short) a basket of
security futures that together
tracks a narrow-based index
and short (long) a narrow-
based index future

Individual stock
or narrow-based
security index

The greater of. (1) 5% of the
current market value of the
long security future(s); or (2)
5% of the current market
value of the short security
future(s).

The greater of: (1) 5% of the
current market value of the long
security future(s); or (2) 5% of
the current market value of the
short security future(s).

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972.

973.

974.— 979.

980.

REDUCTIONS IN CAPITAL *

A. A clearing member must provide written notice to the Audit Department as set forth below of
any substantial reduction in capital as compared to the most recent filing of a financial report.

1. If any event or series of events, including any withdrawal, advance, loan or loss would
cause, on a net basis, a reduction in net capital as reported on the Form 1-FR, or in
tentative net capital as reported on the FOCUS Report for broker/dealers, of 20% or more,
notice must be provided within two business days of the event or series of events causing
the reduction; and

2. If equity capital of the clearing member or a subsidiary or a consolidated affiliate would be
withdrawn by action of a stockholder or a partner or by redemption or repurchase of
shares of stock by any of the consolidated entities or through the payment of dividends or
any similar distribution, or an unsecured advance or loan would be made to a stockholder,
partner, sole proprietor, employee or affiliates, such that the withdrawal, advance or loan
would cause, on a net basis, a reduction in excess net capital of 30% or more, notice must
be provided at least two business days prior to the withdrawal, advance or loan that would
cause the reduction.

The foregoing shall not apply in the case of a reduction in capital resulting from (1) the
repayment or prepayment of subordinated liabilities for which notice has been given in
accordance with Rule 970 or (2) any futures or securities transaction in the ordinary course of
business between a clearing member and any affiliate where the clearing member makes
payment to or on behalf of such affiliate for such transaction and then receives payment from
such affiliate for such transaction within two business days from the date of the transaction.

B. Violation of this rule may constitute a major offense.

CUSTOMER ACCOUNTS WITH THE EXCHANGE *

All customer funds deposited with the Exchange on behalf of customers protected by CFTC
Regulation 1.20 shall be held in accordance with the Commodity Exchange Act and CFTC
Regulation 1.20 in an account identified as Customer Segregated. Such customer funds shall be
segregated by the Exchange and treated as belonging to the customers of the clearing member.
Pursuant to this rule, a clearing member shall satisfy the segregation acknowledgment letter
requirement of CME Rule 971.A.2., the Commodity Exchange Act, and CFTC Regulation 1.20 for
customer deposits held at the Exchange.

All customer funds deposited with the Exchange on behalf of customers protected by SEC
Regulation 15c3-3 shall be held in accordance with the Securities Exchange Act of 1934 and SEC
Regulation 15c3-3 in an account identified as Special Reserve Account for the Exclusive Benefit of
Customers. Such customer funds shall be segregated by the Exchange and treated as belonging
to such customers of the clearing member.

(Next Rule-980)
[RESERVED]
RECORDS AND REPORTS *”
REQUIRED RECORDS AND REPORTS *
A.

f-eEach clearing member shall prepare,
maintain and keep current those books ‘and records required by the rules of the Exchange, the
Commodity Exchange Act and the Regulations thereunder. Such books and records shall be
open to inspection and promptly provided to the Exchange upon request.

B. Each clearing member shall maintain an adequate accounting system, internal accounting
controls, and procedures for safeguarding customer and firm assets as set forth in CFTC
Regulation 1.16(d)(2). This includes, but is not limited to, the following:

1. Preparation and maintenance of complete and accurate reconciliations for all accounts;
and

2. Resolution of reconciling items in a timely manner.

55 Adopted October 1993. Revised June 1996; November 2000.
56 Adopted July 1997. Revised 2002.

57 Adopted October 1993.

58 Revised July 2003.

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House membership: and
L.

It shall submit to the Exchange a written guarantee, on a form provided by the Exchange, from
each person or entity owning 5% or more of the equity securities of the clearing member, that
shall guarantee all obligations of the clearing member to the Exchange arising out of accounts
cleared by the clearing member that are: *

1. non-customer accounts, including proprietary accounts as defined by CFTC Regulation
1.3(y); and

2. accounts carried by another futures commission merchant if such accounts would be
considered non-customer accounts, including proprietary accounts as defined by CFTC
Regulation 1.3(y), of the clearing member, if carried directly by the clearing member.
Notwithstanding anything herein to the contrary, the guarantee required by this Rule
901.L. shall not apply to any obligations of the clearing member to pay an assessment to
the Exchange pursuant to Rule 802.B.

Each clearing member must submit and maintain with the Audit Department a current list
of every person or entity who is directly, or indirectly through intermediaries, the beneficial
owner of 5% or more of any class of equity security of the clearing member. If such
person or entity owns the clearing member indirectly through intermediaries, all
intermediaries must be listed including, if a corporation, all shareholders who own 5% or
more of any class of equity security, or, if a partnership, all general and any limited or
special partners who have contributed 5% or more of the partnership's capital. If the
intermediary's shareholders or partners are not individuals, the clearing member must
include the chain of ownership of 5% shareholders, general partners and 5% limited or
special partners until individuals are listed.

If a corporation directly or indirectly owns 5% or more of the equity securities of the
clearing member, the written guarantee shall be signed by an appropriate officer of the
corporation, and a resolution granting such officer authority to sign the guarantee shall
also be submitted to the Exchange. Exchange staff may also require each person or
entityowning 5% or more of the equity securities of such parent corporation, or of parents
of such parent corporation, to execute guarantees.

For purposes of this Rule 901.L., the term "equity security" shall include any stock,
partnership interest or similar security; or any security convertible, with or without
consideration, into such a security, or carrying any warrant or right to subscribe to or
purchase such a security; or any such warrant or right; or any other security which-that
Exchange staff shall deem to be of similar nature and consider necessary or appropriate

financial integrity of the &: .
It shall guarantee and assume financial responsibility for all trading+through—te-GLOBEX
terminal lectronic-tradi " d-the-tormi

th licabl is-thatit ideos-t
a

Tany PP ig-bystert;
ethers. activity routed through a Globex portal, or routed through any other electronic trading
system to CME for clearing of such transactions, and are quaranteed to CME by the clearing
member via any connection, terminal, link, telecommunications hub or handheld unit provided
by the clearing member to_a third party as _well as any other applicable electronic trading
systems _and terminals that the clearing member provides to _a third party to enter orders. A
clearing member shall also be responsible for the acts of GlobexLOBEX terminal operators
using its terminals and the terminals that it provides to-Rule406-+-—_firms that are under
common ownership with it. It shall be the duty of the clearing member to supervise such
Globex-OBEX terminal operators’ compliance with Exchange rules, and any violation of
Exchange rules by such terminal operators may be considered a violation by the clearing
member. *

It shall agree to guarantee and assume complete responsibility for trades executed on (1) the
Exchange's electronic trading venue(s); or (2) Marketplaces for which the Exchange provides
clearing services per Rule 8B02 and Rule 8-C.

8 Revised August, 1992.
9 Effective February 1989.

10 Adopted April 2002.

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957.

958.

959.

960.

956.E. Exceptions
The provisions of this rule shall not apply to the following accounts:
1. Family Accounts

Accounts controlled or managed by persons for their own family, except with regard to Rule
956.D. For purposes of this rule, members of one's family shall include one's spouse,
brothers, sisters, parents, grandparents, great-grandparents, children, grandchildren, great-
grandchildren and in-laws.

2. Member and Proprietary Accounts

Accounts of members or proprietary accounts as defined by CFTC Regulation 1.3(y), except
with regard to Rules 956.A.1. and 956.D.

956.F. Violation
Violation of this rule may be a major offense.
AUTHORIZED TRADERS “

For an account of a corporation, partnership, trust or similar organization, a clearing member must
maintain a current list of authorized traders. During Regular Trading Hours, if a floor broker
authorized to act on behalf of the organization executes orders for such organization, then the floor
broker may not trade for any other account unless the organization specifically authorizes such
floor broker to do so. A member or clearing member may not open an account in accordance with
Rule 957 to avoid the requirements within Rule 956.

BRANCH OFFICES, GUARANTEED INTRODUCING BROKERS, AND ASSOCIATED
PERSONS ”

A. Each clearing member must maintain a complete and accurate list of all branch offices,
guaranteed introducing brokers, and the associated persons of the clearing member and its
guaranteed introducing brokers. Such list shall be promptly provided to the Exchange upon
request.

B. Branch offices, guaranteed introducing brokers, and the associated persons of the clearing
member and its guaranteed introducing brokers must comply with Exchange rules. Each
associated person of the clearing member or its guaranteed introducing brokers shall be bound
by Exchange rules to the same extent as if such person were a member.

C. Each clearing member must diligently supervise its branch offices, guaranteed introducing
brokers, and the associated persons of the clearing member and its guaranteed introducing
brokers.

D. Each clearing member shall be responsible for the acts or omissions of its branch offices,
guaranteed introducing brokers, and the associated persons of the clearing member and its
guaranteed introducing brokers. Any violation of an Exchange rule by any such person may
be considered a violation by the clearing member.

E. Violation of this rule may be a major offense.

(Next Rule-960)

[RESERVED]

OMNIBUS AND CARRYING BROKER ACCOUNTS “

OMNIBUS AND CARRYING BROKER ACCOUNTS “

A. All clearing members must maintain a complete list of all omnibus and carrying broker
accounts maintained on their books. Such list shall be promptly provided to the Exchange
upon request. Information for each such account must include account name, number and
address, and classification of the account as either customer or house.

B. Aclearing member carrying an omnibus account shall have the responsibility for ensuring that
each person carried in the account does not exceed speculative limits unless granted an
exemption pursuant to Rule 543.

46 Revised February 1996 (formerly Rule 933).
47 Adopted February 1996.

48 Effective December 1993.

49 Revised November 2000

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G.

H.

must include with its certified Form 1-FR or FOCUS Report, a reconciliation from the
certified Form 1-FR or FOCUS Report to the monthly Form 1-FR or FOCUS Report as of
the same date_or a statement that no differences were noted.

3. A clearing member for which CME is the designated self-regulatory organization may
request to change their fiscal year from the Audit Department. Such request will only be
granted for good cause and in accordance with the requirements of CFTC Regulation
1.10(e)(1). The Audit Department's grant of the change in fiscal year will fulfill the
approval requirements of CFTC Regulation 1.10(e)(1).

4. A clearing member for which CME is the designated self-regulatory organization may
request an extension of time to file a monthly Form 1-FR, monthly FOCUS Report,
certified Form 1-FR or certified FOCUS Report from the Audit Department. Such
extension will only be granted for good cause and in accordance with the requirements of
CFTC Regulations 1.10(f) and 1.16(f). The Audit Department's grant of extension will
fulfill the approval requirements of CFTC Regulations 1.10(f) and 1.16(f).

Exchange staff may prescribe additional accounting, reporting, and other financial and/or

operational requirements and clearing members must comply with such requirements. All

clearing members must provide notice to the Audit Department of a failure to comply with the
additional accounting, reporting, financial, and/or operational requirements. The Audit

Department must receive immediate written notification when a clearing member knows or

should know of such failure.

Financia! statement filing requirements under this Rule must be met through Exchange-

approved electronic transmissions, except for certified Form 1-FRs or FOCUS Reports.

Personal Identification Numbers (PINs) must be submitted by authorized signers of the Form
1-FR or FOCUS Report. The PIN will constitute and become a substitute for the manual
signature of the authorized signer to the electronically filed Form 1-FR or FOCUS Report. The
PIN is a representation by the authorized signer that, to the best of his or her knowledge, all
information contained in the statement being transmitted under the PIN is true, correct and
complete.

Exchange staff may grant exceptions to the financial and reporting requirements of Rule 970.
for good cause if it is determined that such exceptions will not jeopardize the financial integrity
of the Exchange.

Special CME Clearing Members shall be subject to reporting and minimum capital
requirements established by the Exchange.

Violation of this rule may constitute a major offense.

971. SEGREGATION AND SECURED REQUIREMENTS *

A.

D.

All clearing members must comply with the requirements set forth in CFTC Regulations 1.20
through 1.30, 1.32, and 30.7. This includes, but is not limited to, the following:

1. Maintaining sufficient funds in segregation or set aside in separate accounts;

2. Computing, recording and reporting completely and accurately the balances in the:
a. Statement of Segregation Requirements and Funds in Segregation; and
b. Statement of Secured Amounts and Funds Held in Separate Accounts;

3. Obtaining satisfactory segregation and separate account acknowledgment letters and
identifying segregated and separate accounts as such; and

4. Preparing complete and materially accurate daily segregation and secured amount
computations in a timely manner.

Exchange staff may prescribe additional segregation and secured amount requirements. *

All clearing members must provide written notice to the Audit Department of a failure to

maintain sufficient funds in segregation or set aside in separate accounts. The Audit

Department must receive immediate written notification when a clearing member knows or
should know of such failure. *

Violation of this rule may constitute a major offense.

52 Adopted October 1993. Revised May 1999; November 2000.
53 Revised November 2000.

54 Revised July 1999,

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the Exchange or the C dity Fite Trading-Ci ission—_or if its financial condition, or the

financial condition of one of its affiliates, is such that its continued operation would jeopardize the
integrity of the Exchange. Members and clearing members suspended in accordance with this rule
shall be notified and may request a hearing before the Board as provided in Rule 411. **

941. SUSPENSION OF OFFICERS OR PARTNERS ”

Whenever an officer, owner or partner of a clearing member is suspended or expelled, the
respective clearing member, may be suspended or expelled for a like term. Members and clearing
members affected by this rule shall be notified and may request a hearing before the Board as
provided in Rule 411.

942. OPEN TRADES OF SUSPENDED CLEARING MEMBERS *

When a clearing member, having open trades, is suspended or expelled, it may designate a
clearing member to close out such transactions through designated personnel and in a manner
acceptable to the Clearing House. The foregoing shall not apply where a member is suspended for
default upon his obligations to the Clearing House or otherwise suspended for insolvency.

When a clearing member whothat_has open positions, ing: trad trades hi
defaultsed to the Clearing House in the deposit of oan he bonds or settlements, or ishas-been
suspended for insolvency, the Chief: tive Offi \d-Exchange-President or the Managing
Director and President of the Clearing Houseand- CH President. may appoint a clearing member to
which all such open positionstrades shall be transferred_for liquidation, te-be-handled_or may

appoint a clearing member to managedii faultare such positions on. behalf cof for such defaulted or
suspended clearing member.; + positi

Whern_lf open positionsa-trade-ortrades. ‘are meen a Sorina Cotoments bonds
associated with these positions anddepesited—thereen—and any settlement payments due or
collected must be delivered to the Clearing House, to be entrusted to the clearing member
designated to liquidaternanage the positions.handlethe—transactions. The managing-clearing
member appointed to liquidate the positions shall have the right, under the direction of the
Managing Director and President of the Clearing House, to buy or sell for the account of the
member such commodities forthe-delivery-andinthe—quantity_inwhel in-part—as may be
necessary to clear the suspended clearing member's contracts with the Clearing House; the
clearing member shall also have the right under the direction of the Chief Executive Officer to make
or take delivery.

The-cleari ber shall-be-entitied-to-ch: h, i the Board. det
g g 2a

943. REINSTATEMENT AFTER SUSPENSION *

A clearing member ef+he-Exehange-suspended for insolvency may be reinstated upon affirmative
Proof to the Board that of itshis financial responsibilty. has “been Fe established. A member
suspended because of the suspension of the clearing membereerperation_parinership-orother
gntity sole-proprietership with which he was connected, may be reinstated upon showing that the
financial responsibility of that clearing member He ip
has been re-established; provided, however, that nothing herein shall ne the rember from
withdrawing from the corporation, partnership or sole proprietorship and making an application for
reinstatement to membership in the Exchange, provided that the previous failure of the clearing

member serperation,_part Bip. 1e-preprietership-was not caused by that member's willful,
reckless or unbusinesslike conduct.
944, LIQUIDATION OF SUSPENDED OR EXPELLED CLEARING MEMBERS “

In the event a clearing member has been placed in liquidation, the clearing member shall comply
with all orders of the Board, the Chief Executive Officer, or the Clearing House Audit Deparmentin
matters relating to that liquidation or transfer of commitments and disbursements of funds.

36 Revised May 1982.

37 Revised March 1979; May 1982; June 2003.

38 Revised November 1979; September 1989; June 1992; November 2000; October 2001; September 2004.
39 Revised June 2003.

40 Revised March 1979; February 1998; November 2000; September 2004.

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925.— 929.

930.

negligently or fraudulently executes or fails to execute.

B. To qualify traders, a clearing member must have established systems in place for trade
submission, clearing, and settlement/banking with the Clearing House.

C. No member may be qualified by more than one clearing member at one time.

D. A member may not transfer his qualification unless he has obtained a written release from the
clearing member last qualifying him. A release shall not be withheld unless a member has
failed to pay any indebtedness to the clearing member last qualifying him that arises out of a
pledge of a membership and a Class B Share as collateral security on any such indebtedness,
or dueto-a-deficit-arising out of futures transactions on the Exchange. Any other disputes
between the parties shall be resolved through the arbitration procedures set forth in Chapter 6.

E. A clearing member may, without prior notice, revoke a member's authorization to trade by
written revocation filed with the Shareholder Relations and Membership Services Department.
Such revocation shall be effective and the member's qualification to trade shall terminate when
notice of the disqualification is posted on the Exchange floor. A member shall not appear upon
the floor of the Exchange until he has been requalified.

F. A member shall place all trades, including trades for his own account or any account which he
controls, on the books of his qualifying clearing member unless written authorization to the
contrary from said clearing member has been filed with the Shareholder Relations and
Membership Services Department. Regardless of such authorization, a member in a deficit
position with any clearing member shall only place trades through his qualifying clearing
member. Any clearing member that has a member's account in a deficit position shall
promptly notify the clearing member that is qualifying such member.

G. No clearing member shall provide a GlobexLOBEX terminal to or clear any trade for an
employee, qualified trader or other representative of another clearing member without the
written consent of such clearing member. No clearing member shall provide a GlobexLOBEX
terminal to or clear any trade for a person in partnership with another clearing member without
the written consent of all partners. Such written consent shall be filed with the Shareholder
Relations and Membership Services Department.

H. In the case of a member who has GlobextOBEX access guaranteed by a clearing member
other than his qualifying clearing member, the qualifying clearing member may terminate the
member's ability to place orders through GlobexLOBEX by notifying the clearing member
providing the member access to GlobextOBEX. The clearing member providing the access to
Globex-OBEX will be responsible for ensuring that the member does not place orders through
GlobexLOBEX.

{Next Rule-930)
[RESERVED]

ACCOUNT HOLDER PERFORMANCE BOND REQUIREMENTS

PERFORMANCE BOND REQUIREMENTS: ACCOUNT HOLDER LEVEL

930.A. Performance Bond System

The Standard Portfolio Analysis of Risk (SPAN®) Performance Bond System is the performance
bond system adopted by the Exchange. SPAN generated performance bond requirements shall
constitute Exchange performance bond requirements. All references to performance bond within
the rules of the Exchange shall relate to those computed by the SPAN system.

Performance bond systems other than the SPAN system may be used to meet Exchange
performance bond requirements if the clearing member can demonstrate that its system will always
produce a performance bond requirement equal to or greater than the SPAN performance bond
requirements.

930.B. Performance Bond Rates

1. Non-Security Futures

Exchange staff shall determine initial and maintenance performance bond rates used in
determining Exchange performance bond requirements. The Board reserves the right to change or
modify any performance bond levels determined by Exchange staff.

2. Security Futures

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provided that the clearing member continues to meet the assignment requirements of this Rule.

In the event a clearing member has a valid claim against a member that it qualifies and the
member's membership and-associated-Glase-B-Shareis assigned to another clearing member, the
clearing member utilizing the membership and-asseciated- Class B-Share-for assignment shail have
10 business days to substitute another membership to fulfill the
assignment requirements of this Rule. Such substitution shall be required to protect the financial
integrity of the Exchange. Violation of this rule may be a major offense.

902.E. Assignment Withdrawal Disputes ”

In the event a member wants to withdraw his assigned membership and-associated Class B-Share
over the objection of the clearing member to which the membership and-asseciated Class-8-Share
is assigned, such member must request permission to do so from Exchange staff. The request
must be in writing with a copy delivered to the clearing member to which the membership is
assigned. Exchange staff may grant such requests under conditions that do not jeopardize the
financial integrity of the Exchange.

902.F. Lien on Membership Interests *

Each clearing member and Special CME Clearing Member hereby grants to CME a first priority and
unencumbered lien against all Membership Interests and any associated shares of common stock
required for clearing membership by the Exchange or the Special CME Gclearing Mmember's
exchange or Market, as applicable. Clearing members and Special CME Clearing Members shall
execute any documents required by the Exchange to create and enforce such lien.

17 Revised November 2000; November 2001
18 Adopted June 2003. Revised October 2004.
19 Adopted September 2003.

20 Adopted September 2003.

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902.

CLEARING MEMBERSHIP ASSIGNMENT REQUIREMENTS "
902.A. Assignment Requirement *

Subject to exemptions granted by Exchange staff, each CME clearing member shall have at least
15,000 Class A Shares assigned to it and shall have at least: two CME memberships, atleasttwo
IMM memberships, and—atteast-two IOM memberships, and_atteast-one GEM membership
assigned. A clearing member which was an IMM Class A clearing member on or prior to May 6,
1987, shall have at least 15,000 Class A Shares assigned to it and shall have at least one CME
membership, three IMM memberships, two |OM memberships, atieast-and one GEM membership
assigned.

A higher Division membership and-asseciated-Class-B-Share—may be substituted for a lower
Division membership to satisfy these requirements. Class A Shares assigned to a clearing
member may not be sold, pledged, hypothecated, lent, reregistered or otherwise transferred
without the prior approval of the Exchange. Each clearing member assigning Class A Shares to
CME hereby acknowledges that CME has control over such Class A Shares and further agrees to
comply with any policies or procedures established by CME to affect control over Class A shares.

All of the membership interests and Class A and B Shares required for clearing memberships
pursuant to this rule must be owned by the clearing member or a person, including a parent
company, with an acceptable proprietary interest_in such clearing member, if such clearing member
was approved for membership after June 1, 2003.

Acclearing member approved for membership on or before June 1, 2003, may continue to maintain
the same number of independent membership assignments and the same ratio of independent
Class A Share assignments as the clearing member held on June 1, 2003 (i.e., up to one CME,
one IMM, and one IOM memberships, the-asseciated-Glass-B-Shares and up to 50 percent of the
Class A Shares). If a clearing member approved on or before June 1, 2003, or a person with an
acceptable proprietary interest in the clearing member, subsequently purchases a membership and
asseciated-Class-B-Share or Class A Shares and substitutes such asset for one which was
previously an independent assignment, such membership and-asseciated-Class-B-Share or Class
A Shares must thereafter be owned by the clearing member or a person with an acceptable
proprietary interest. *

Upon default of a clearing member in meeting its obligations to the Exchange or upon the Clearing
House Risk Committee's determination that a clearing member's financial position jeopardizes the
financial integrity of the Exchange, the Exchange may direct the sale of any or all of the clearing
member's assigned CME memberships and asseciated—Class—B_Class A Shares and any
Membership Interests and associated shares of common stock of a Special CME Clearing Member
held by or pledged to the Clearing House. The proceeds from the sale of the CME memberships,
Gt B-Sh: -and-Membershiptat #6 shall be used to satisfy Rule 110 obligations.

902.B. Trading Privileges for Assigned Memberships “

A member may assign his membership and-asseciated-Class-B-Share-without trading restrictions.
902.C. Assignment Process *

A membership and/or Class A Shares and-Class-8-Shares may be assigned to a clearing member
upon the completion of an Exchange-approved form. A membership and Class A Shares and-Class
B-Shares may be assigned to only one clearing member and may not be subject to any Rule 110
claims at the time of assignment. Upon submitting an assignment form to the Shareholder
Relations and Membership Department, the newly assigned membership and-Glass-B-Share shall
be posted to the membership for ten days. After all Rule 110 claims have been resolved to the
satisfaction of the Exchange, the membership and-Glase-8-Share-shall be assigned to the clearing
member.

902.D. Assignment Substitutions *

A clearing member may substitute a membership and-asseciated-Class-B-Share-and/or Class A
Shares for an assigned membership and—asseciated-Class-B—Share—and/or Class A Shares

11 Revised November 1997; November 2000; April 2001; October 2001; November 2001; June 2003.

12 Revised November 2000; November 2001.

13 Effective September 1989. Revised November 1995; Revised November 2000; November 2001; April 2003.
14 Revised November 2000; October 2001; November 2001.

15 Revised November 2000; November 2001; April 2003.

16 Revised November 2000; October 2001; November 2001; April 2003.

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In the event of refusal of a clearing member to comply with requirements placed upon it, the

Clearing House Audit-Depariment may take whatever means necessary in proceeding with
compliance.

| 945———LIQUIDATION-OF-EXPELLED CLEARING MEMBER“

A clearing member who has been expelled for violation of Exchange rules may be placed in
liquidation by the Board, in accordance with the provisions of Rule 944

(Next Rule-950)

9456.—949, [RESERVED]

950.

951.

952.

953.

954,

955.

956,

SALES PRACTICES AND CUSTOMER PROTECTION *

SUPERVISION *

Each clearing member shall adopt and enforce written procedures pursuant to which it will be-able
te-supervise in accordance with the requirements of these Rules and the CEA and CFTC
Regulations thereunder, adequately-each customer's account(s), including, but not limited to, the
solicitation of any such account(s). For purposes of this rule, the term "customer" does not include
another futures commission merchant. Exchange staff shall determine whether the sales practices
and customer protection requirements set forth in the Rules shall be applicable to Special CME
Clearing Members.

DISCLOSURE REQUIREMENTS

Each clearing member must comply with the disclosure requirements set forth in CFTC Regulation
33.7.

SALES COMMUNICATIONS

No clearing member shall make fraudulent or high-pressure sales communications relating to the
offer or sale of commodity futures and options. Violation of this rule may constitute a major
offense.

PROMOTIONAL MATERIAL

A. No clearing member shall use any promotional material which is likely to deceive or mislead
the public.

B. Each clearing member shall maintain a copy of all written and electronic promotional material
in a central file at the clearing member's principal place of business.

C. Violation of this rule may constitute a major offense.

CUSTOMER COMPLAINTS

Each clearing member shall retain all written customer complaints, and make and retain a record of
the date each complaint was received, the associated person who serviced the account, a general
description of the matter complained of, and what, if any, action was taken by the clearing member
regarding the complaint. With respect to verbal complaints, each clearing member shall develop
and implement a written pri rove nior mani nt that requi learing memb:
iff to direct individuals with verbal complaint lace such complaints in written form and submit
mplaints to the Complian Hficer of the clearing member. Such complaints and related
records must be maintained in a central file at the clearing member's principal place of business.

ASSIGNMENT AND NOTIFICATION OF EXERCISE NOTICES

A. Each clearing member shail adopt written procedures pursuant to which it shall allocate option
exercise notices in a fair and non-preferential manner.

B. Upon notification from the Exchange of assignment of an exercise notice, the clearing member
shall promptly notify the option grantor to whom the notice has been allocated.

DISCRETIONARY, CONTROLLED AND MANAGED ACCOUNTS “
956.A. Requirements
1. Power of Attorney

41 Revised March 1979.

42 Effective December 1993.

43 Revised June 2003.

44 Revised February 1996 (formerly Rule 932) ; September 2004.

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interest in such clearing member's “Assets” contemplated by Rule 816 in accordance with the
terms of the liquidity facility contemplated thereby; provided, however, that in the event that the
Exchange staff determines that all of the foregoing other than (4)
have occurred, the Clearing House Risk Committee may in its discretion authorize the release of
such property.
Generally, Nno such property shall be released prior to the 60th day following the effective date of
the clearing member's withdrawal from membership in the Clearing House. Notwithstanding the
above, Exchange staff may grant an exemption to the above restriction for good cause shown if it
determines that such exemption will not jeopardize the financial integrity of the Exchange. Further,
for purposes of the above paragraph, all obligations of the withdrawing clearing member to the
Exchange, of whatever nature or kind, shall be accelerated and become due and payable upon the
ctive date ided_for_in learing_H Risk Committee decision to_approve the
withdrawal.

(Next Rule-G22)*

914,— 921. [RESERVED]

922.

923.

924.

25 Rule 920,_

FINANCIAL REQUIREMENTS.

FAILURE TO MEET MINIMUM FINANCIAL REQUIREMENTS *

If, in the opinion of the Audit Department, a clearing member fails to meet the minimum financial
requirements as prescribed herein or neglects to promptly furnish a statement upon request, a
recommendation shall be made to the Clearing House Risk Committee to suspend the privileges of
the clearing member. Thereupon, the Clearing House Risk Committee shall conduct a hearing and
the said clearing member shall show cause why his-its privileges shaltshould not be suspended.
Upon finding that the minimum financial requirements are being violated, the Clearing House Risk
Committee may suspend the privileges of such clearing member in accordance with the provisions
of Chapter 4 of these rules. The CFTC shall be immediately notified of any clearing member who
fails to meet the minimum financial requirements. Any suspended clearing member may appeal
the decision of the Clearing House Risk Committee to the Board.

EMERGENCY FINANCIAL CONDITIONS ”

4n-the-eventafteriavestigation—_If the Chief Executive-Officer-or- President or the Managing
Director and President of the Clearing House determines that the financial or operational condition
of a clearing member _or one of its affiliates is such that to allow that clearing member to continue its
operation would jeopardize the integrity of the Exchange, he_or negatively impacts the
semmeditiesfinancial markets by introducing an unacceptable level of uncertainty, volatility or risk.
whether or not the clearing member continues to meet the required minimum financial
requirements, he or she may empanel the Chief Executive Officer, the President, Chairman of the
Board, the Chairman of the Clearing House Risk Committee and the Managing Director and
PresidentGhiet Executive-Officer of the Clearing House. Such panel shall be duly authorized and,
upon a unanimous vote of the cemmitteepanel, be empowered to order (a) an immediate position
limitation, (b) an immediate suspension of the clearing member, (c) that all open trades of said
clearing member be for liquidation only, (d) the liquidation or transfer of all or a portion of the open
positions of the clearing member, or (e) additional performance bond to be deposited with the
Clearing House. The clearing member affected by action taken shall be notified and may request a
hearing before the Board as provided in Rule 411. In the event of suspension, the Chief Executive
Officer shall, promptly after a-withinfive-days-of suspension, set the matter for hearing before the
Board for final determination._To the extent that the panel orders that all open trades of sai
clearing member be for liquidation only, or the panel orders the liquidation or transfer of all_of the
open positions of the clearing member, Rule 913.B shall apply and the clearing member shall be
treated as a withdrawing clearing member.

RESPONSIBILITY FOR QUALIFIED TRADERS

A. Wher-aA_clearing member that qualifies a floor broker or trader thereby it-agrees—to
guarantees and assumes complete responsibility for: 1) all trades and orders executed or
directed to be executed by such floor broker or trader; and 2) all orders that such floor broker

CAPITALIZATION AND POSITIONS and Rule 921.__ REDUCTION !N ADJUSTED NET CAPITAL IN EXCESS OF 20%

rescinded October 1993.
26 Revised February 1998; November 2000.
27 Revised March 1979; November 2000; September 2004.

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981.

982.

983.

C. Aclearing member must file any information requested by the Exchange within the time period
specified in the request.

O. 8 —E£ach clearing member shall maintain at all times the ability to provide to the Exchange in
an acceptable form a complete set of equity system reports (including, at a minimum, the
equity run, open position listing, day trade listing, cash adjustments listing and performance
bond call and debit equity listing). Such reports shall be available to the Exchange in Chicago
no later than 8:00 a.m. Chicago time on the business day following the report date.

—._ Each clearing member shall maintain Lt ility to provide to the Exchange a listin:
of each customer's method of a rkets, including front end applications and
network connections.

ANTI-MONEY LAUNDERING *

Each clearing member shall develop and implement a written anti-money laundering program
approved in writing by senior management reasonably designed to achieve and monitor the
clearing member's compliance with the applicable requirements of the Bank Secrecy Act (31

U.S.C. 5311, et. seq.), and the implementing regulations promulgated thereunder by the

Department of the Treasury and, as applicable, the Commodity Futures Trading Commission. That

anti-money laundering program shall, at a minimum,

(1) Establish and implement policies, procedures and internal controls reasonably designed to
assure compliance with the applicable provisions of the Bank Secrecy Act and the
implementing regulations thereunder;

(2) Provide for independent testing for compliance to be conducted by Member personnel or by a

qualified outside party;

Designate an individual or individuals responsible for implementing and monitoring the day-to-

day operations and internal controls of the program; and

(4) Provide ongoing training for appropriate personnel.

Clearing members must also supervise and ensure that their guaranteed introducing brokers are in
compliance with the anti-money laundering provisions contained in this Rule.

Violation of this rule may be a major offense.
(End Chapter 9)

(3)

RISK MANAGEMENT *

All clearing members must have written risk management policies and procedures in place to

ensure they are able to perform certain basic risk and operational functions at all times. At a

minimum, the following areas must be considered in the firm's policies and procedures, depending

on the firm's size and its business and product mix:

A.__Trade Submission and Account Monitoring. Clearing members must have procedures in place
to demonstrate compliance in the following areas for trades executed through both electronic
platforms and open outcry:
4.__Monitoring the credit risks of accepting trades of specific customers.

2. Monitoring the risks associated with proprietary trading.

3.__Limiting the impact of significant market moves through the use of tools such as stress
testing or position limits.

4.__Maintaining the ability to monitor account activity on an intraday basis.

5. __Ensuring_order_entry_ systems includ ability to_set automated credit controls _or
position limits or requires a firm employee to enter orders.

§6.__Defining sources of liquidity for increased settlement obligations.

B.__Additional and/or Alternative Requirements. Exchange staff may prescribe additional and/or
alternative requirements in order for clearing members to comply with this Rule.

DISASTER RECOVERY AND BUSINESS CONTINUITY *

59 Adopted December 2002.
60 Adopted September 2003.

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20 South Wacker Drive
Chicago, IL 60606-7499
www.cme.com

November 27, 2006

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 Nine
Submission No. 06-104R

Dear Ms. Webb:

Chicago Mercantile Exchange Inc. (“CME” or “Exchange") hereby notifies the
Commission that the Exchange has approved revisions to CME Rulebook Chapter 9 (“Clearing
Members”). These changes were made to streamline and consolidate or eliminate rules where
appropriate and to improve and update rule language to increase the clarity of the rules in

CME's Rulebook.

Attached is Chapter 9 with additions underlined and deletions lined out. The main

changes are summarized below:

Rule 900 (Categories of Clearing Members)

This rule was modified to update and to more accurately describe the different
categories of clearing members at CME. A description of “In-Active” Clearing Members
was added to the rule since in-active clearing members were not previously described in
the Rules.

Rule 901.M. (General Requirements and Obligations)

This rule was modified to more accurately reflect a clearing member's financial
responsibility for the electronic trading activities of the individuals and entities it
guarantees and includes transactions routed through the Globex platform as well as
transactions routed through other electronic trading facilitates that are cleared at CME.

Rule 923 (Emergency Financial Conditions)
This rule was broadened to allow for the determination of a “clearing member

emergency financial condition” if an affiliate of a clearing member experiences a financial
or operational condition that may jeopardize the integrity of the Exchange. This change


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ii)During at least 50% of the trading day the Market Maker has bids or offers in the
market that are at or near the best market, except in unusual market conditions as
determined by the Exchange (such as a fast market in either a Security Futures
Contract or a security underlying a Security Futures Contract), with respect to at least
25% (in the case of an Unlimited Assignment) or at least one (in the case of a Limited
Assignment) of its assigned Security Futures Contracts; and

{The requirements in (ii) and (iii) are satisfied on (a) at least 90% of the trading days in
each calendar quarter by Market Makers who have undertaken an Unlimited
Assignment; or (b) at least 80% of the trading days in each calendar quarter by
Market Makers who have undertaken a Limited Assignment; or (c) on at least 80% of
the trading days in each calendar quarter by Market Makers who have undertaken
either an Unlimited Assignment or Limited Assignment but where the Exchange is
listing four (4) or fewer Security Futures Contracts.

For purposes of clauses (1) and (2) above, beginning on the 181" calendar day after the
commencement of trading of Security Futures Contracts on the Exchange, a “meaningful
proportion of the total trading volume of Security Futures Contracts on the Exchange” shall
Mean a minimum of 20% of such trading volume.

Any Market Maker that fails to comply with the applicable Rules of the Exchange, CFTC
Regulations 41.41 through 41.49 and SEC Regulations 242.400 through 242.406 shall be
subject to disciplinary action in accordance with Chapter 4. Appropriate sanctions in the
case of any such failure shall include, without limitation, a revocation of such Market
Maker's registration as a Security Futures Dealer.

c. The Exchange shail establish initial and maintenance performance bond requirements
applicable to Security Futures and held in a futures account, provided that the
performance bond requirement for any long or short position held by a clearing member
on behalf of a Customer shall not be less than 20% of the current market value of the
relevant Contract; or, such other requirement as may be established by the CFTC and
SEC for purposes of CFTC Regulation 41.45(b)(1) and SEC Regulation 242.403(b)(1)
except as provided below.

d. Initial and maintenance performance bond requirements for offsetting positions involving
Security Futures and related positions are provided in the schedule below, for purposes of
CFTC Regulation 41.45(b)(2) and SEC Regulation 242.403(b)(2).

PERFORMANCE BOND (or “MARGIN”) REQUIREMENTS FOR OFFSETTING POSITIONS

SECURITY
UNDERLYING —_ | INITIAL MARGIN MAINTENANCE MARGIN
DESCRIPTION OF OFFSET | THE SECURITY | REQUIREMENT REQUIREMENT
FUTURE
Tong security future (or basket The lower of. (1) 10% of the
of security futures representing | 14. i412) stock | 20% of the current market | aggregate exercise priceTM of the
4 | each component of a narrow- o narrow-base ‘| Yalue of the long security put plus the aggregate put out-
based securiies index) and | SF Pit index future, plus pay for the long | of-the-money** amount, if any;
long put option” on the same put in full, or (2) 20% of the current market
underlying security (or index) value of the long security future

28 Baskets of securities or security futures contracts must replicate the securities that comprise the index, and in the same proportion.

29 Generally, for the purposes of these rules, unless otherwise specified, stock index warrants shall be treated as if they were index options.

30 “Aggregate exercise price,” with respect to an option or warrant based on an underlying security, means the exercise price of an option or
warrant contract multiplied by the numbers of units of the underlying security covered by the option contract or warrant. “Aggregate exercise
price” with respect to an index option, means the exercise price multiplied by the index multiplier.

31 “Out-of.the-money” amounts shall be determined as follows:

(1) for stock call options and warrants, any excess of the aggregate exercise price of the option or warrant over its current

market value (as determined in accordance with Regulation T of the Board of Governors of the Federal Reserve System);

(2) for stock put options or warrants, any excess of the current market value (as determined in accordance with Regulation T of

the Board of Governors of the Federal Reserve System) of the option or warrant over Its aggregate exercise price;

@) for stock index call options and warrants, any excess of the aggregate exercise price of the option or warrant over the

product of the current index value and the applicable Index multiplie

(4) for stock index put options and warrants, any excess of the product of the current index value and th

multiplier over the aggregate exercise price of the option or warrant. See, 0.g., NYSE Rule 431 (Exchange Act No. 42011

(October 14, 1999), 64 FR 57172 (October 22, 1999) (order approvi NYSE-99-03)); Amex Rule 462 (Exchange Act Release No.

43582 (November 17, 2000), 65 FR 71151 (November 29, 2000) (order approving SR-Amex-99-27)}; CBOE Rule 12.3 (Exchange Act

icable Index

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a. Initial and maintenance performance bond (or “margin") rates used in determining
Exchange performance bond requirements applied to Security Futures on behalf of
Customers, whether effected on the Exchange or on a Marketplace apart from Exchange
but cleared by the Clearing House per Chapter 8B, and held in a futures account, shall be
established at levels no lower than those prescribed by CFTC Regulation Section 41.45;
and, SEC Regulation 242.403, including any successor Regulations.

b. As used in this Rule, the term “Customer” does not include (a) an “exempted person” as
defined in CFTC Regulation 41.43(a)(9) and SEC Regulation 242.401(a)(9); or (b) Market
Makers as defined below.

A Person shall be a “Market Maker” for purposes of this Rule, and shall be excluded from
the requirements set forth in CFTC Regulations 41.42 through 41.49; and, SEC
Regulations 242.400 through 242.406 in accordance with CFTC Regulation 41.42(c)(2)(v)
and SEC Regulation 242.400(c)(2){v), with respect to all trading in Security Futures for its
own account, if such Person is an Exchange Member that is registered with the Exchange
as a “Security Futures Dealer.”

Each Market Maker shall (a) be a member of the Exchange and be registered as a floor
trader or a floor broker with the CFTC under Section 4f(a)(1) of the CEA; or, be registered
as a dealer with the SEC under Section 15(b) of the Exchange Act; (b) maintain records
sufficient to prove compliance with the requirements set forth in this Rule and CFTC
Regulation 41.42(c)(2)(v) and SEC Regulation 242.400(c)(2)(v), including without
limitation, trading account statements and other financial records sufficient to detail activity
and verify conformance with the standards set forth herein; and (c) hold itself out as being
willing to buy and sell Security Futures for its own account on a regular or continuous
basis.

A Market Maker satisfies condition (c) above if, at a minimum, any of the following three
requirements are fulfilled:

The Market Maker:

{Provides continuous two-sided quotations throughout the trading day for all delivery
months of Security Futures Contracts representing a meaningful proportion of the
total trading volume of Security Futures Contracts on the Exchange, subject to
relaxation during unusual market conditions as determined by the Exchange (such as
a fast market in either a Security Futures Contract or a security underlying a Security
Futures Contract) at which times the Market Maker must use its best efforts to quote
continuously and competitively; and

¢ijWhen providing quotations, quotes with a maximum bid/ask spread no more than the
greater of $0.20 or 150% of the bid/ask spread in the primary market for the security
underlying each Security Futures Contract.

42)The Market Maker:

{Responds to at least 75% of the requests for quotation for all delivery months of
Security Futures Contracts representing a meaningful proportion of the total trading
volume of Security Futures Contracts on the Exchange, subject to relaxation during
unusual market conditions as determined by the Exchange (such as a fast market in
either a Security Futures Contract or a security underlying a Security Futures
Contract) at which times the Market Maker must use its best efforts to quote
competitively; and

4i)When responding to requests for quotation, quotes within five seconds with a maximum
bid/ask spread no more than the greater of $0.20 or 150% of the bid/ask spread in the
primary market for the security underlying each Security Futures Contract.

(3)The Market Maker:

{Ils assigned to a group of Security Futures Contracts listed on the Exchange that is
either unlimited in nature (“Unlimited Assignment’); or, is assigned to no more that
20% of the Security Futures Contracts listed on the Exchange (“Limited
Assignment”);.

iJAt least 75% of the Market Maker's total trading activity in Exchange Security Futures
Contracts is in its assigned Security Futures Contracts, measured on a quarterly
basis;

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9035.— 909. [RESERVED]

910.

911.

912.

913.

APPLICATION PROCEDURES FOR CLEARING MEMBERS

APPLICATION FORMS ”

Applicants for clearing membership shall submit an application, -and-shatLinelude-therewith_such
financial statements and other documentation as Exchange staff shall require.

SCREENING PROCEDURES ”

Upon receipt of an application, the Audit Department shall investigaterrake—a—cemplete
investigation-of the applicant's qualifications, which may include an examination of the books and
records of the applicant. The Audit Department shall coordinate its investigation with staff at the
applicable exchange or market if the applicant is also applying for clearing membership at such
exchange or market.

APPROVAL *

An applicant for clearing membership receiving a majority vote of the full membership of the
Clearing House Risk Committee shall be approved effective immediately.

An applicant that fails to receive a majority vote shall be informed by the Clearing House Risk
Committee chairman and shall have 10 days thereafter to file an appeal to the Board seeking
further consideration. The Board may approve the applicant by a majority vote if it is satisfied that
the Clearing House Risk Committee's decision was-cleary_erreneeus—orunreasonable arbitrary,
capricious or an abuse of the Committee's discretion.

WITHDRAWAL FROM CLEARING MEMBERSHIP *

913.A. Voluntary Withdrawal

A clearing member may applyte—withdraw from clearing membership_upon approval of —and
Exchange staff, and ratification by the Subject to-ralification by the Clearing House Risk Committee,
Exchange staff shall base its decision on shal-hi di h-application
based—er—all relevant factors, including, but not limited to, whether the ‘era would-beis
consistent with the best interests of the Exchange, the membership and the public. The withdrawal
shall be effective on the date that the withdrawal is posted.

913.B. Release of Security Deposit, Membership and Class B Share Proceeds and
Assignments

When a clearing member withdraws from clearing membership (whether voluntarily or
involuntarily), its security deposit, the proceeds effrom the sales of its memberships and-asseciated
Glass-B-Shares- and of the_its Class A Shares and-Class-B-Shares assigned te-it for clearing
qualification_or_any_ membership equivalent amounts, and any remaining assignments—ofassets
available to the Exchange including, but not limited to, membershipser Class A and-Glass-B
Shares,;-as—well-as-any-Membership Interests and any associated shares of common stock ofa
Special CME—Clearing-Member held by or pledged to the Clearing House, if applicable, will be
released when the-Clearing-House-Risk-Committee Exchange staff determines that the following
has occurred: (1) all contracts and obligations with the Exchange have been settled_and paid, (2)
all sums owing to the Exchange have been paid, (3) all obligations to other members and
customers arising out of claims directly related to futures transactions cleared on the Exchange
have been paid or otherwise provided for, and (4) all obligations to other members and customers
arising out of other arbitration claims filed pursuant to Chapter 6 have been paid or otherwise
provided for and (5) the requisite liquidity providers for the Exchange have released the security

21 Revised March 1979; November 2000.

22 Revised February 1998; November 2000; June 2003.

23 Revised March 1979; Revised November 2000; December 2001.

24 Adopted April 1993; Revised November 2000; October 2001; November 2001; April 2002; June 2003; September 2004.

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c.

Each clearing member carrying an omnibus account must at all times reflect in its records the
gross long and short positions held in such omnibus account.

Prior to the first delivery day in a contract month or as otherwise required by the Clearing
House, each clearing member carrying an omnibus account must maintain a complete and
accurate list of the purchase and sale dates of all open positions held in such omnibus account
for that contract month. Such list must be current throughout the contract month to ensure that
the delivery procedure is not impaired.

D. Each clearing member that maintains an omnibus account with another clearing member shall
also bear financial responsibility to the Exchange for that omnibus account.
{Next Rule-970)

961.— 969. [RESERVED]

FINANCIAL REQUIREMENTS *

970. FINANCIAL REQUIREMENTS *

A. Subject to exceptions granted by Exchange staff-t .

GME4 ts_(Rules-970-073 all clearing members, including n non-

FCMs, must comply with the requirements set forth in CFTC Regulations 1.10, 1.12, 1.17 and

1.18. This includes, but is not limited to, the following:

1. Maintenance of minimum capital requirements;

2. Submission of a Form 1-FR, FOCUS Report or other requested information within the
specified period of time;

3. Notification requirements when a clearing member:

a. Fails to maintain minimum capital requirements;

b. Fails to maintain early waming capital requirements;

¢. Fails to maintain current books and records; or

d. Determines the existence of a material inadequacy as specified in CFTC Regulation
1.16(d)(2);

e. Changes its fiscal year; or

f. | Changes its public accountant;

In addition to the notifications required by CFTC regulations, all clearing members must

provide written notice to the Audit Department of the above events.

4. Completely and accurately computing and recording the balances in the net capital
computation including capital requirements;

5. Subordination agreement requirements, including the filing of such agreements; and

6. Preparation of a monthly computation of adjusted net capital and minimum financial
requirements.

B. For non-FCMs, all filing, notification, and approval requirements set forth in CFTC Regulations
1.10, 1.12, 1.17 and 1.18 and in the rules of the Exchange must be submitted to or obtained
from the Audit Department, if necessary, rather than the Commission.

C. In conjunction with the requirements set forth in CFTC Regulations 1.10, 1.12, 1.17, and 1.18,
clearing members must comply with the following requirements:

1. Submit a monthly Form 1-FR or FOCUS Report and the Exchange Supplementary
Information schedule including an unaudited monthly Form 1-FR or FOCUS Report as of
the clearing member's fiscal year-end, within the time requirements set forth in CFTC
Regulation 1.10. A clearing member must include with its Form 1-FR or FOCUS Report a
Statement of Income (loss) for the period between the date of the most recent financial
statement or, at the option of the clearing member, the most recent certified financial
‘statement file with the Audit Department and the date for which the report is made.

2. Submit a certified Form 1-FR or FOCUS Report as of the clearing member's fiscal year-
end within the time requirements set forth in CFTC Regulation 1.10. A clearing member

50 Adopted October 1993.

51 Adopted October 1993, Revised June 1996; March 1997; April 1998; July 1998; May 1999; July 1999; November 2000; June 2001; October

2001; November 2000; December 2001; June 2003.

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_CME Rulebo

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ok Chicago Mercantile Exchange

i tion-of it bership: *

It shall have an authorized representative (i.e., officer, principal, or partner) who shall represent
the clearing member before the Exchange and its committees. Such authorized representative
shall be responsible to the Exchange for any representations made to the Exchange as if such
person was a member as defined by Rule 400.

It shall be qualified to do business in the State of Illinois or have a valid aAgency aAgreement
with an entity qualified to do business in the State of Illinois;

It shall be engaged in or demonstrate immediate capacity to engage in the conduct of the
business of a clearing member;

{t shall demonstrate such fiscal and moral integrity as would justify the Clearing House's
assumption of the risks inherent in clearing its trades;

It shall demonstrate financial capitalization commensurate with Exchange requirements as set
by the Clearing House Risk Committe

If any person directly or indirectly controls, owns 10% or more of, or has the right to 10% or
more of the profits of two or more Glass-A-clearing members, then each such clearing member
shall guarantee the obligations of the others to the Exchange and shall execute a written
guarantee | to the Exchange ona form approved by t the Exchange. Exchange stalt_may grant

rdize-the-Fi

1 i 7 orey ger
it shall notify the Exchange prior to any significant business transaction or significant change in
operations which shail include, but is not limited to the following:
1. The merger, combination or consolidation between the clearing member and another
person or entity;

2. The assumption or guarantee by the clearing member of all or substantially all of the
liabilities of another in connection with a direct or indirect acquisition of all or substantially
all of that person's or entity's assets;

3. The sale by the clearing member of a significant part of its business and/or assets to
another person or entity;

4. A change in the direct or indirect beneficial ownership of 20% or more of the clearing
member,

5. Any change in the system provider used by the clearing member to process its trades; and

6. An increase in the number of members that a clearing member qualifies as determined by
the Clearing House Risk Committee or Exchange staff.

Additionally, a clearing member that qualifies members must provide fifteen days’ notice to
the Exchange of any proposal to terminate such business or any material part of such
business.

The Clearing House Risk Committee or Exchange staff, upon such notice, may disapprove or
approve subject to certain conditions such changes in structure or operations if it determines
that the proposed change could jeopardize the financial or operational integrity of the
Exchange.

x

A-vielation-of this Rul stitute. ior-off 2
i i -

It shall agree to guarantee and assume complete responsibility for; 1) all trades executed or
directed to be executed in any division by floor brokers and traders qualified by it, and 2) all
orders that floor brokers qualified by it negligently execute or fail to execute;

d.and K. [Reserved)

| Wt shalt to—t)-abide_by-all-CME-rules-and- ‘i
+ y + P
‘bh Rerithae-withe riag- member-for-any-violations-of CME-Ruloi
te-of-cleari bers inchidi financial
K ¢ inchuding-alt
ion_and tion_of ite_Ch
P is

5 Revised December 1993.
6 Revised July 1987; April 1991; November 2000.
7 Revised February 1995,

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_CME Rulebook

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‘Chicago Mercantle Exchange

SECURITY
UNDERLYING __| INITIAL MARGIN MAINTENANCE MARGIN
DESCRIPTION OF OFFSET | THE SECURITY | REQUIREMENT REQUIREMENT
FUTURE
The greater of. (1) 3% of the ,
The greater of: (1) 3% of the
Long (short) a security future
and ater (eng) an idol | Mividual stock | Curent mantel value of Re | current market value ofthe long
18 | security future traded on a aie (2) 3% of the current market secu futurets) oF (2) 3M
different market. value ef the shor securtly | Short secunyfuura().
| 930.C. Acceptable Performance Bond Deposits

1. Non-Security Futures

Clearing members may accept from their account holders as performance bond cash
currencies of any denomination, readily marketable securities (as defined by SEC Rule 15c3-
1(c)(11) and applicable SEC interpretations), money market mutual funds allowable under
CFTC Regulation 1.25, and bank—issued letters of credit.

Clearing members shall not accept as performance bond from an account holder securities
that have been issued by the account holder or an affiliate of the account holder unless the
clearing member files a petition with and receives permission from Exchange staff.
Bank-issued letters of credit must be in a form acceptable to the Exchange. Such letters of
credit must be drawable in the United States. Clearing members shall not accept as
performance bond from an account holder letters of credit issued by the account holder, an
affiliate of the account holder, the clearing member, or an affiliate of the clearing member.

All assets deposited by account holders to meet performance bond requirements must be and
remain unencumbered by third party claims against the depositing account holder.
Except to the extent that Exchange staff shall prescribe otherwise, cash currency performance
bond deposits shall be valued at market value. All other performance bond deposits other than
letters of credit shall be valued at an amount not to exceed market value less applicable
haircuts as set forth in SEC Rule 240.15c3-1.

2. Security Futures

a. Clearing Members may accept from their Customers as performance bond (or “margin”)
for Security Futures held in a futures account, deposits of cash, margin securities (subject
to the limitations set forth in the following sentence), exempted securities, any other
assets permitted under Regulation T of the Board of Governors of the Federal Reserve
System (as in effect from time to time) to satisfy a performance bond deficiency in a
securities margin account, and any combination of the foregoing, each as valued in
accordance with CFTC Regulations 41.46(c) and 41.46(e); and, SEC Regulations
242.404(c) and 242.404(e). Shares of a money market mutual fund that meet the
requirements of CFTC Regulation 1.25 may be accepted as a performance bond deposit
from a Customer for purposes of this Rule.

b. A Clearing Member shall not accept as performance bond from any Customer securities
that have been issued by such Customer or an Affiliate of such Customer unless such
Clearing Member files a petition with and receives permission from the Exchange for such
purpose.

c. All assets deposited by a Customer to meet performance bond requirements must be and
remain unencumbered by third party claims against the depositing Customer.

930.D. Acceptance of Orders

Clearing members may accept orders for an account provided sufficient performance bond is on
deposit in the account or is forthcoming within a reasonable time.

For an account which has been subject to calls for performance bond for an unreasonable time,
clearing members may only accept orders that reduce the performance bond requirements of
existing positions in the account.

Clearing members may not accept orders for an account that has been in debit an unreasonable
time.

| 33 Two security futures will be considered “identical” for this purpose if they are issued by the same clearing agency or cleared and
guaranteed by the same derivatives clearing organization, have identical contract specifications, and would offset each other at the
clearing level.

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931.— 934.

935.

2. Security Futures

if a Customer fails to comply with a performance bond (or “margin”) call within a reasonable
period of time (the clearing member may deem one hour to be a reasonable period of time),
the relevant clearing member shall take the deduction required with respect to an
undermargined account in computing its net capital under applicable CFTC Regulations-and
SEC Regulations.

If at any time there is a liquidating deficit in an account in which security futures are held, the
clearing member shall take steps to liquidate positions in the account promptly and in an
orderly manner.

930.L. Failure to Maintain Performance Bond Requirements

If a clearing member fails to maintain performance bond requirements for an account in accordance
with this rule, the Exchange may direct such clearing member to immediately liquidate all or part of
the account's positions to eliminate the deficiency.

930.M. Violation

Violation of this rule may constitute a major offense.

-{Next-Rule-935)

[RESERVED]

CUSTOMER ORDERS

RESPONSIBILITIES OF CLEARING MEMBER UPON RECEIPT OF CUSTOMER
ORDER *

All orders received by a clearing member shall, immediately upon receipt from a customer, be
reduced to writing, with the customer's designation indicated, and be time-stamped. Ali such
orders shall be retained by the clearing member for a minimum of five years. In addition, all orders
received by a clearing member for execution pursuant to the Mutual Offset System must be time-
stamped upon transmission to the executing clearing member.

936. CONFIRMATIONS TO CUSTOMERS
A clearing member shall confirm to the customer every transaction made for the customer no later
than the following business day. Such confirmation shall be in weitiagelectronic or written form and
shall show the commodity bought or sold, the quantity, the price, the delivery month and, for
options, strike price, put or call and expiration month.
(Next Rule 040)
937.— 939. [RESERVED]
SUSPENSION AND EXPULSION
940. SUSPENSION OF CLEARING MEMBERS *
If a clearing member becomes insolvent, the fact of such insolvency shall be announced by the
President or the Managing Director and President of the Clearing House Chief Executive-Officer-of
and thereupon such member shall be deemed automatically suspended. If a
corporation, limited liability company or cooperative association member of the Clearing House
becomes insolvent, or for other reasons is suspended from the Clearing House, the officers who
are members of the Exchange may also be suspended from the Exchange. If a partnership is
suspended from the Clearing House, the partners who are members of the Exchange may be
suspended from the Exchange.
A clearing member shall be deemed insolvent:
1. Ifit files a voluntary petition in bankruptcy or is adjudicated as bankrupt;
2. Ifit fails to fulfill or promptly adjust all of its Exchange obligations; or
3. If satisfactory proof is made to the Clearing House Risk Committee that it is unable to pay its
debts as they fall due in the ordinary course of business.
A clearing member may be suspended by the Board if it fails to meet the capital requirements of
34 Effective October 1985.

35 Revised November 2000; October 2001; April 2002; September 2004.

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CME Rulebook Chicago Mercantile Exchange

900.

901.

Chapter 9
Clearing Members

GENERAL

* CATEGORIES OF CLEARING MEMBERS ?

The Exchange may establish different clearing member categories and alter the _rights_and
reer of such categories.f ti 4 ig t-forth
ge:

dified-by-the-Exeh

900 A. Clearing Members

The term “clearing member” as used in the Rules, shall include all clearing member categories set
forth in this Rule 900-er-etherapplicable-ule, unless otherwise specifiedstated in-a-_particular-rule,
policy-or-the- Manual,

900.B. CME Clearing Members

CME Clearing Members shall be fully-vested-clearingmerbers-withhave all the-applicable rights,
responsibilities and privileges attendant thereof, subject to the provisions of these rules and shall
be qualified to clear transactions for all CME products.

900.C. Inactive Clearing Members

Inactive clearing members shall: (i) have no customers, (ii) not qualify traders, and (iii) have no
direct clearing relationship with the Exchange.- Inactive clearing members must meet all clearing
membership_requirements _except_certain_financial_capital_and reporting requirements as
determined by Exchange staff.

900.BD. Special CME Clearing Members

Netwithstandi inthe-Rules; aAll individuals and firms that were CBOT
Clearing Members on or wears April 16, 2003, shall bewere eligible to be admitted as Special CME
Clearing Members_at CME. Individuals and firms that become CBOT Clearing Members after April
16, 2003, shall be admitted as Special CME Clearing Members_at CME if such CBOT Clearing
Members meet GME’s's CME’s requirements for clearing membership.

Except as otherwise provided in the Rules, CBOT Clearing Members admitted as Special CME
Clearing Members shall not be subject to the assignment ownership—requirements of CME
memberships and Class A and—B Shares. Applicants seeking for Special CME Clearing
Membership at CME must apply for membership on the homeCBOT—exehange.

Special CME Clearing Members shall, unless otherwise stated in the Rules, be-fully-vested-clearing
Frembers—with-have all ef theapplicable rights, responsibilities and privileges attendant thereof,
subject to the provisions of the Rules. Unless otherwise provided by the Exchange, Special CME
Clearing Members shall only be qualified to clear products traded on such Special CME Clearing
Member's home exchange.

GENERAL REQUIREMENTS AND OBLIGATIONS °

Membership in the Clearing House is a privilege and license granted by the Board and may be
withdrawn by the Board for cause at any time. Exchange staff may grant exemptions to the
General Requirements and Obligations set forth below for Special CME-Clearing Members. iS
determined that such_an exemption will not jeopardize the financial integrity of the Exchange.
Subject to such exemptions, each applicant for qualification as a clearing member must satisfy the
following requirements:
A. It shall be a corporation (defined by the Rules of the Exchange to include a limited liability
company), partnership or ceeperative-asseciationother entity approved by Exchange staff; It
shall agree to: 1) abide by all CME Rules and to cooperate in thei rcement,_2) be
responsible, even after it has withdrawn as a clearing member, for any violations of CME Rules
committed by it while it was a clearing member; and ‘ 3) continue to meet all requirements of
clearing members, including all financial requirements provided by these rules.—er-suffer

1, NOTE: Associate broker and sub-broker membership classifications eliminated March 1979; inoperative negotiated commissions March 1978;
also reference to IOM clearing members deleted November 1984. Revised November 1995; October 2001.

2 Revised June 2003.

3 Rule 901.N. eliminated July 1998; Revised November 2000; June 2003.

4 Revised August, 1992.

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All clearing members must have written disaster recovery and business _continuit licies_an
lures in place to ensure they are able erform certain basic operational functions in the
vent _of a significant internal_or external _interruption ir ration: At inimum, the

following areas must be considered in the firm’s policies and procedures, depending on the firm's
size and its business and product mix:

A.__Clearing members must have procedures in place to allow them to continue to operate during

periods of stress or to transfer accounts to another fully operational clearing member with
inimal_disruption_to_either_the Exchani heir In_order_to_satisfy this

requirement, clearing members must perform:
1. Periodic testing of disaster recovery and business continuity plans.
2. Duplication of critical systems at back up sites.

.__ Periodic back-up of critical information.

B._Key iff Contacts. Clearing members must maintain and, at the request of the Exchan:
provide accurate and complete information for their key personnel. Clearing members must
inform the Exchange in a timely manner whenever a change to its key personnel is made.

C.__Additional and/or Alternative Requirements. Exchange staff may prescribe additional and/or
alter ir i rin bers to comply with this Rule.

| 61 Adopted September 2003.

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provides added flexibility to the Exchange to declare an emergency exists and suspend a
clearing member when an affiliate of a clearing member has a financial or operational problem
and the clearing member itself is not in immediate financial or operational difficulties.

Rule 940 (Suspension of Clearing Member)

This rule was modified to allow for the suspension of a clearing member if the financial
condition of one of its affiliates is such that the clearing member's continued operation would
jeopardize the integrity of the Exchange.

Rule 942 (Open Trades of Suspended Member)

This rule was clarified to allow the trades of a suspended clearing member to not only be
transferred to another clearing member for liquidation but to allow another clearing member to
be appointed to liquidate the positions while the positions are maintained on the suspended
clearing member's books.

Rule 980 (Required Records and Reports)

This new rule was created to require each clearing member to maintain the ability to provide the
Exchange with a list of each customer's method of access to CME markets, including front-end
applications and network connections. During the Refco matter, it became apparent that having
the above information would make it easier to attempt to manage a clearing member
emergency.

The Exchange certifies that this regulatory advisory 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/eim/5999 SUB 06-104R.doc


CME Rulebook __

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Chicago Mercantile Exchange

DESCRIPTION OF OFFSET

SECURITY
UNDERLYING
THE SECURITY
FUTURE

INITIAL MARGIN
REQUIREMENT

MAINTENANCE MARGIN
REQUIREMENT

‘Short security future (or basket
of security futures representing
each component of a narrow-
based securities index) and
short put option on the same
underlying security (or index)

Individual stock
or narrow-based
security index

20% of the current market
value of the short security
future, plus the aggregate put
in-the-money amount, if any.
Proceeds from the put sale
may be applied.

20% of the current market value
of the short security future, plus
the aggregate put in-the-money
amount, if any'32

Long security future and short
position in the same security (or
securities basket) underlying
the security future

Individual stock
or narrow-based
security index

The initial margin required
under Regulation T for the
short stock or stocks.

5% of the current market value
as defined in Regulation T of the
stock or stocks underlying the
security future.

Long security future (or basket
of security futures representing
each component of a narrow-
based securities index) and
short call option on the same
underlying security (or index)

Individual stock
or narrow-based
security index

20% of the current market
value of the long security
future, plus the aggregate
call in-the-money amount, if
any. Proceeds from the call
sale may be applied.

20% of the current market value
of the long security future, plus
the aggregate call in-the-money
amount, if any.

Long a basket of narrow-based
security futures that together
tracks a broad-based index and
short a broad-based security
index call option contract on the
same index

Narrow-based
security index

20% of the current market
value of the long basket of
narrow-based security
futures, plus the aggregate
call in-the-money amount, if
any. Proceeds from the call
sale may be applied.

20% of the current market value
of the long basket of narrow-
based security futures, plus the
aggregate call in-the-money
amount, if any.

Short a basket of narrow-based
security futures that together
tracks a broad-based security
index and short a broad-based
security index put option
contract on the same index

Narrow-based
security index

20% of the current market
value of the short basket of
narrow-based security
futures, plus the aggregate
put in-the-money amount, if
any. Proceeds from the put
sale may be applied.

20% of the current market value
of the short basket of narrow-
based security futures, plus the
aggregate put in-the-money
amount, if any.

Long a basket of narrow-based
security futures that together
tracks a broad-based security
index and long a broad-based
security index put option
contract on the same index

Narrow-based
security index

20% of the current market
value of the long basket of
narrow-based security
futures, plus pay for the long
put in full.

The lower of: (1) 10% of the
aggregate exercise price of the
put, plus the aggregate put out-
of-the-money amount, if any; or
(2) 20% of the current market
value of the long basket of
security futures.

Short a basket of narrow-based
security futures that together
tracks a broad-based security
index and long a broad-based
security index call option
contract on the same index

Narrow-based
security index

20% of the current market
value of the short basket of
narrow-based security
futures, plus pay for the long
call in full.

The lower of: (1) 10% of the
aggregate exercise price of the
call, plus the aggregate call out-
of-the-money amount, if any; or
(2) 20% of the current market
value of the short basket of
security futures.

Long security future and short
security future on the same
underlying security (or index)

Individual stock
or narrow-based
security index.

The greater of: 5% of the
current market value of the
long security future; or (2)
5% of the current market
value of the short security
future.

The greater of: 5% of the
current market value of the long
security future; or (2) 5% of the
current market value of the short
security future.

Release No. 41658 (July 27, 1999), 64 FR 42736 (August 5, 1999) (order approving SR-CBOE-97-67)); or NASD Rule 2520 (Exchange Act
Release No. 43581 (November 17, 2000), 65 FR 70854 (November 28, 2000) (order approving SR-NASD-00-15)).
32 “In-the-money” amounts must be determined as follows
O) for stock call options and warrants, any excess of the current market value (as determined in accordance with Regulation T
ot the Board of Governors of the Federal Reserve System) of the option or warrant over its aggregate exercise price

for stock put options or warrants, any excess of the aggregate exercise price of the option or warrant over its current
market value (as determined in accordance with Regulation T of the Board of Governors of the Federal Reserve System);

@) for stock index call options and warrants, any excess of the product of the current index value and the applicable index
multiplier over the aggregate exercise price of the option or warrant; and
4) for stock Index put options and warrants, any excess of the aggregate exercise price of the option or warrant over the

product of the current index value and the appilcable index multiplier.

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930.E. Cails for Performance Bond

1. Clearing members must issue calls for performance bond that would bring an account up to

the initial performance bond requirement: a-) when performance bond equity in an account
initially falls below the maintenance performance bond requirement; and b). subsequently,
when performance bond equity plus existing performance bond calls in an account is less than
the maintenance performance bond requirement.
Such calls must be made within one business day after the occurrence of the event giving rise
to the call. Clearing members may call for additional performance bond at their discretion.
Notwithstanding the foregoing, a clearing member is not required to call for or collect
performance bond for day trades.

2. Clearing members shall only reduce a call for performance bond through the receipt of
performance bond deposits permitted under subsection C. of this rule. Clearing members may
[delete]_cancel a call for performance bond through: a-) the receipt of performance bond
deposits permitted under subsection C. of this rule only if such deposits equal or exceed the
amount of the total performance bond call; or b-) inter-day favorable market movements and/or
the liquidation of positions only if performance bond equity in the account is equal to or greater
than the initial performance bond requirement. Clearing members shall reduce an account
holder's oldest outstanding performance bond call first.

3. Clearing members must maintain written records of all performance bond calls issued_and
satisfied in whole or in part. redused,and-deleted-

930.F. Disbursements Release of Excess Performance Bond

Subject_to_exceptions_granted_by Exchange staff, Gclearing members may only release
performance bond deposits from an account if such deposits are in excess of initial performance
bond requirements.

930.6. Loans to Account Holders
Clearing members may not extend-make loans to account holders to satisfy their fer-performance
bond requirements purpeses—unless such loans are secured as defined in CFTC

Regulation 1.17(c)(3). The proceeds of such loans must be treated in accordance with CFTC
Regulation 1.30.

930.H. Aggregation of Accounts and Positions

Clearing members may aggregate and net positions in accounts under identical ownership within
the same classifications of customer segregated, customer secured, special reserve account for
the exclusive benefit of customers, and nonsegregated for performance bond purposes. Clearing
members may compute performance bond requirements on identically owned concurrent long and
short positions on a net basis.

930.1. Hedge Positions

Clearing members shall have reasonable support to classify positions asfer bona-fide hedge and
tisk management positions, as defined by Rule 543, that are afforded hedge performance bond
rates.

930.J. Omnibus Accounts

1. Clearing members shall collect performance bond on a gross basis for positions held in
domestic and foreign omnibus accounts.

2. For omnibus accounts, initial performance bond requirements shall equal maintenance
performance bond requirements.

3. Clearing members shall obtain and maintain written instructions from domestic and foreign
omnibus accounts for positions which are entitled to spread or hedge performance bond rates.

930.K. Liquidation of Accounts

1. Non-Security Futures
If an account holder fails to comply with a performance bond call within a reasonable time (the
clearing member may deem one hour to be a reasonable time), the clearing member may
close out the account holder's trades or sufficient contracts thereof to restore the account
holder's account to required performance bond status. Clearing members shail maintain full

discretion to determine when and under what circumstances positions in any account shall be
liquidated.

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