3. Except for block trades conducted pursuant to Rule 417 and exchange of
future for physical transactions conducted pursuant to Rule 416, a period of
four seconds shall elapse between entering the first order or quote and
entering the second order for the opposite side. The order or quote initially
entered may be filled or lifted by a third party during the four-second waiting
period rather than consummating the transaction with the intended party as
contemplated by the pre-execution discussions.

Cross Trades

In accordance with OneChicago Rules 409 and 610, a Member may cross orders,
provided that the Member enters one side of the trade (which shall be the Customer’s side
in the event that the Member or its affiliate is taking the other side) into OneChicago’s
trading system at least four seconds before entering the order for the opposite side.


Piro & Associates
1300 Pennsylvania Ave NW, Suite 700
Washington DC 20004
(202) 204-3088 (202) 204-3089 fax

0°940

February 2, 200

1
inal a
Ms. Eileen A. Donovan 8 2
Secretary yo oY
Commodity Futures Trading Commission 2 nw
Three Lafayette Centre =

1155 21st Street, N.W.
Washington, D.C. 20581

Re: Security Futures Products Rule Submission and Rule Certification

Dear Ms. Donovan:

On behalf of my client, OneChicago, LLC, and pursuant to section
5c(c)(1) of the Commodity Exchange Act, as amended (the “Act”), and section 41.24 of
the regulations promulgated by the Commission under the Act, submitted herewith is a
tule amendment to the OneChicago, LLC (“OneChicago”) “Policies: Block Trades, Pre-
Execution Discussions and Cross Trades” (“Block Trade Policy”). The rule amendment
will be effective on February 5, 2007. OneChicago is amending the minimum contract
size of its Block Trade Policy.

There are no opposing views that are not incorporated into this rule
amendment.

On behalf of OneChicago, I hereby certify that that the amendment to the
initial listing standard for single stock futures complies with the Act and regulations
promulgated thereunder.

Regards,

/s/ Madge M. Piro”

Not Licensed in the District of Columbia. Licensed in Michigan and Illinois. Practice Limited to
Federal Securities and Commodity Futures Law.

~ fr



OneChicago Policies:
Block Trades, Pre-Execution Discussions and Cross Trades

Block Trades

Pursuant to OneChicago Rule 417, the Exchange permits eligible contract participants,
see Rule 417(a), to execute block trades away from the public auction market in privately
negotiated transactions for a minimum of 100 contracts per transaction, or a minimum
number of contracts equivalent to 10,000 shares of the underlying security (or combined
securities if'a relevant corporate event has occurred) for futures contracts based on a
single security (“Single Stock Futures”) that have trading units greater than 100 shares of
the underlying security (or combined securities if a relevant corporate event has
occurred). All block trades must be executed no earlier than one-half hour before trading
begins in the Contract of the block trade on the Business Day of execution and no later
than one-half hour after trading ends in the Contract of the block trade on the Business
Day of execution.

Each firm executing a side of a block trade must have at least one designated person
preauthorized to report block trades. Only OneChicago member firms with a clearing
relationship at The Options Clearing Corporation or the Chicago Mercantile Exchange
Clearing Division will be allowed to report a block trade.

All block trades must be reported to OneChicago without delay after the trade is executed
and must include the basic terms of the trade, including the relevant Contract, contract
month, price,' quantity, time of execution, counterparty clearing member for each block
trade and, if applicable, the underlying commodity. Except for electronically generated
forms, the seller is obligated to call OneChicago Operations Management (“OOM”) Help
Desk without delay after the trade is negotiated to notify the Exchange of the basic terms
of the trade, including the Contract, contract month, price, quantity, time of execution and
contra-party information. If the transaction is a spread or combination, such as when one
party is rolling a position into the next contract month,” the seller of the month closest to
expiration is responsible for reporting the entire transaction. In the case of phoned in
reports, the OOM Help Desk will provide the caller a Trade Identification (“Trade ID”)
for the block trade. After the parties have reported a block trade, the OOM Help Desk
will report both sides of the trade to the OneChicago trade engine. The trade engine will
then relay the block trade terms to the OneChicago price distribution mechanism, and
OneChicago’s matched trade database.

In all cases, the buyer and seller must complete and transmit a Block Trade Report in a
form and method approved by OneChicago. In case of a phoned in trade report, both

In some cases a combination of trades may be necessary to achieve a specific price differential for the
overall trade event. In these cases, sufficient information must be provided to link related legs to the
block trade event.

For purposes of this policy, regardless of the type of form used to report the trade, the total quantity of
the legs of a spread or a combination must meet the minimum contracts requirement.


sides must include the Trade ID given by the OOM Help Desk to the seller at the time of
his call. It is the responsibility of the buying and selling firms to effect any subsequent
allocations or necessary updates to non-critical matching fields utilizing their chosen
post-trade processing system.

To protect market integrity during the negotiation and reporting period, any party with
knowledge of the pending block trade is prohibited from entering offsetting orders in the
specific or any related OneChicago product for the benefit of the account or accounts
related to a party to the block trade until the block trade has been reported to and
disseminated by the OneChicago price distribution mechanism. Additionally, no party
with knowledge of the pending block trade report is allowed to exercise discretion by
withholding (or placing) orders for any account that would have (or would not have) been
placed but for the knowledge of the pending block trade until the block trade has been
reported to and disseminated by the the OneChicago price distribution mechanism.
Parties subject to the jurisdiction of a member or an affiliate of

the Intermarket Surveillance Group (“ISG”) are further prohibited from submitting
related offsetting orders on OneChicago if they utilize block trade reporting facilities of
any other ISG participant exchange until such trades have been disseminated to the
marketplace via the standard public reporting mechanism for that exchange.

OneChicago considers busting block trades to be a serious matter and may deny a bust
request based on the factors surrounding the request, including but not limited to the
market impact of the original report, the amount of variation between the block trade
price and the market price at the time of the report and the length of time transpiring
since the block trade was reported to the public. Fees may be levied for busting a block
trade.

Any attempt to circumvent this policy or misrepresent a transaction as a block trade will
be forwarded to the appropriate party for investigation.

Pre-Execution Discussions

In accordance with OneChicago Rule 614, the Exchange permits Members and Access
Persons to engage in pre-execution discussions pursuant to which one party may agree in
advance to take the opposite side of the other party’s order for a transaction to be
executed on the Exchange, on the following conditions:

1. Customers of each such party must consent to allow pre-execution discussions
with other market participants;

2. Any Member or Access Person who is solicited to participate in a OneChicago
transaction through pre-execution discussions shall not (i) disclose to any
other party the details of such discussions or (ii) enter an order or quote
through the Exchange to take advantage of information conveyed during such
discussions unless such Member or Access Person has agreed during the pre-
execution discussions to participate in the transaction in accordance with this
policy and the order or quote is entered to implement that agreement; and