... 

·I 

l 

j 

AGREEMENT FOR SERVICES 

Thf s Agreement is entered into as of the FIRST 1ay of · MAY . , 1984, 

by and between the Board of Trade of the City of Chicago, Board Qf Ira de of. Kansas 

City, Chicago Mercantile Excha~ge, Chicago Rice and Cotton Exchange, Coffee, Sugar & Cocoa Ex~hange, Inc., Commodity Exchange, Inc., MidAmerica Commodity Exchange, 

1-tinneapolfs Grain Exchange, Natfona1 Futures Association, New York Cotton . Exchange, tlew York Futures Exchange, Inc., and the New York Mercantile Exchange, 

(collectively the .,Parties"). 

WHEREAS, each of the Parties is a self-regulatory organization under the 

Commodity Exchange Act, as amended, (the "ACT") and under applicable regulations, 

is a designated self-regulatory organization ("DSRO") and is required to maintain 

an affirmative action program to assure compliance with its own rules and· 

regulations and with certain provisions of the ACT and certain provisions of the 

rules and re'}ulations of the Commodity Futures Trading Convnission ("CFTC"); and 

· WHEREAS, each of the Parties agrees to (i) delegate to other Parties 

("designated DSROs") the responsitility of auditing and monitoring Futures 

Corrmission Nerchants ("FCMs") which are members ·of one. or more of the Parties, as . pennitted by CFTr. Regulation Sections 1.5l(a)(3) an~ 1.52; and (ii) ~elegate to the ~ppropriate DSRO the duties of NFA under Part 33 of the CFTC Rules wi.th respect to 

auditing the sales practices of r-tember FCHs ":hich are also a member of one or more 

of the contract markets; 

NOW, THEREFORE, in consideration of the promises and convenants co,":ained 

herein, it is mutually agreed as foPows: 

• 

1. Effective Date. This Agreement shall become effecthe irrmediateiy upon its appr~val by the CFTC pursuant to Regulation §1.52. 

2. Term. This Agreement shall continue in effect until six months after any 

party givesnotice of termination to the other Parties. 

This Agreement shall continue in effect among all nonterminating Parties, 

except that any nonterminating party l!loJ.Y provide written notice ·Of tennination 

within 30 days after the origi:ial Mtice of termination is given. Such termination 

shall be effective six months after the original notice of tennination was given. ~lo later notice ·of termination will be effective until six months after ft is given. 

3. Joint Audit Cor.rnittee. ·A Joint Audit Committee ("JAC'') made up of one 

representative appointed by each of the Parties shall be constituted upon the 

effective date of this Agreement. If there is a merger between any of the Parties, 

the remaining party is entitled to one representative on the JAC. Each · representative may designate in writing ancther employee of the party whfch he 

represents to tct at any meeting of the JAC. 

Th~ JAC shall elect its own officers, including a Chainnan. The JAC shall act 

by majority of those present. The Chai nnan shall. vote only 1 n the event of a tie. 

tteeti"ngs shall be called by the C.hairman or by any three members. A quorum shall 

consist of a majority of the members. Mir.utas of the proceedings of the JAC shall 

be promptly prepared and provided to each party. 
,. 

I . I 

Page 2 

The JAC shall have the responsibility of overseeing ~he implementation and 

functioning of ~11 terms and conditions of this Agreement and shall determine the 

practices and procedures to be followed by each designated DSRO in the cond.uct of· 

audits and financial reviews of the FCHs listed in Appendix A attac'fied hereto. 

Such practices and procedures shall be established to conform with the requi rernents 

of CFTC Regulations §1.51(a){3). §1.52, §33.4(c) and to the Commodity Futures 

Trading Commission's Division of Trading and f.farkets Financial and Segregation · Interpretation No. 4, 1 Comr.t. Fut. L. Rep. (CCH) V7114 (Hay 17. 1979) as it relates 

to the frequency of i\Udits. Any extraordinary e"penses ap·proved by the JAC which 

are incurred by a party pursuant to the approval of the JAC shall be shared equally by all Partf'es hereto and shall be reimbursed to the party that bears such cost. 

4. Services. FCHs and their designated DSROs are listed in Appendix B 

attached hereto. The JAC may amend Appendix B from time to time in order to 

further the purposes of this Agreement; provided, however, that no party shall be 

de sf gnated as a DSRO for a particular FCt-1 without the consent of the representative 

to the JAC of that party. 

Each party hereto shall mon~t~r and audit the financial and operational condition of the FCMs for which ft acts a~ designated DSRO. Such ~ctivities shall 

conform to the practices and procedures established by the JAC and shall include a 

review of the options sales practices of the FCr~s for those options traded on the 

contract markl!ts which are Parties to. this Agreement. 

A report of.each full audit and options sales practice review shall be 

furnished to each of the Parties of "·~i c:h the r:Jdi ted FCM is a member. 

All required financial filings, as set forth by the JAC, shall be furnished by the designated DSRO to each of the Pa rtf es of which the FCM 1s a member unless 

otherwise agreed by the designated DSRO and such other party. The designated DSRO 

shall also furnish those Parties with a summary sheet analyzing the filing as 

agreed upon by the JAC. · 

Any party to this Agreement may require. on a routine basis .• supplemental $Chedules and additional financial filings from its member FCHs. Such surJplemental schedules and fin~ncial filings shall be submitted by each of the party•s member FCt~s to the FCWs designated DSRO; provided. however, that the designated DSRO is 

not r~quired to analyze such supplemental schedules and additional financial 

filings. 

5. Access to Documents. In addition to reports provided under paragraph 4, a 

DSRO shall, upon written request, provide to each of the Parties of which the 

audited FCM is a member. full access to the working papers generated during the 

aut. it of an FCM. 

The ~mployees of the Parties shall cooperate in the exchang.e of information 

regarding the_financial ann operational condition of their respective members. 

6... Retenti.on of Ritt of Inspection and Right to Reguest Infonnation. Nothing contained herein shall e deemed a waiver of or a limitation on the right of any 

party to inspect th~ books and records of any of its members or to request infonnation directly from any of its members. 

7. Payment. 

(a) Each of the Parties will bear its own costs and expenses associated 

with its activities as a DSRO. 
Page 3 

(b) The Board of Trade of the City of Chicago, The Board of Trade of 

K!!nsas City,. the Minneapolis Grain Exchange, and the Chicago Rice ar.d 

Cotton Exchange are not Parties to the NYSE/DSRO Agreement set-forth 

in Appendix c. Accordingly, they are not obligated to assume anY 

liability, make any payments or share any costs in connection with the 

New York Stock Exchange, the NYSE/DSRO Agreement or Paragraphs 7( c)·. 

and (d) hereinafter. ~urther, with respect to those FCMs which are 

set forth in-Appendix C hereto and are the subject of the NYSE/DSRO 

Agreement, the Board of Trade of the City of Chicago, the Board of 

lrade of Kansas City, the Minneapolis Grain Exchange, and the Chicago Rice and Cotton Exchange are neither entitled to receive from, nor 

required to provide to, the Parties to the .NYSE/DSRO Agreement, except 

as is or shall be established by separate agreement, the services and 

access to documents as provided in Paragraphs 4 and 5 of this 

Agreement. · 

(c) The fee of the NYSE for services rendered pursuant to Section 1 af the 

NYSE/DSRO Agreement shall be apportioned among the Parties to that 

agreement as follows: .. i) NFA's proportionate share shall be one-eighth (1/S)·of the· total 

NYSE/DSRO Agreement fee. 

* U) · One-half of the rer.:aining fee (NYSE/DSRO Agreement fee minus 

NFA' ~- po,.tion) shall be apportioned equally among the Parties. 

* iii) One-half of the remaining fee (tlYSE/DSRO Agreement fee minus 

NFA's portion) shall be allocated in direct ratio to each 

party's proportionate share of the tota, number of contracts 

traded by them as computed on the. basis of statistfcs published bY the Futures Industry Associ at ion (" FIA") for the period January 1, 1983, through December 31, 1983. This proportionate share shall be recalculated each Janua~ of the succeeding year ba~ed on FIA's statistics for the preceding calendar year. Each 

party's current proportionate share based on these statistics is 

as follows: 

EXCHANGE 

Chicago Hercantile Exchange Coffee, Sugar & Cocoa Exchange, Inc. 

Commodity Exchange, Inc. 

HidAmerica Commodity Exchange flew York Cotton Exchange tlew York Futures Exchange, Inc. 

New York t~crcantile Exchange 

PERCENTAGE SHARE 

50.42 

6.50 

26.68 

4.22 

2.27 

4.68 

5.23 

(d) The party requesting, pursuant to Section 2 of the tlYSE/OSRO 

Agreement, the NYSE to conduct a special examination shall compensate the NYSE directly for such service in accordance with Section S(c) of 

the NYSE/DSRO Agreement. 

*For purposes of Paragraph 7(c) 11 and iii, the tenn Parties or party's shall mean 

only those Parties which are a party to the NYSE/DSRO Agreement excluding the 

National Futures Association. 
Page 4 

(e) Any expenses incurred pursuant to the approval of t~e J.AC shall be 

_shared equally by all Parties hereto and shall be reimbursed to the 

DSRO that bears such cost. 

a. Confidentiality. All reports. working papers, SU11111ary sheets, financial 

filings. and other documents ( .. i nfonnati on") generated or received by the OSRO 

pursuant to its functions umler this Agreement hereinafter shall be confidentfal 

and shall not be disclosed by the designated DSRO or by any other party to this 

Agreement except ·as ·-set for•.n in Sections 4 and 5 of this Agrecruent and as provided 

herein: 

(a) Such information may be disclosed to any registered futures 

association or contract mark~t of which the FCM is a member. 

(b) Such information may be disclosed t~ any Clearing House/Association/ 

Corporation ("clearing entity") which cle!rs trades effected on that 

contract market. The sharing of information between a.DSP.O and its · _clearing entity .is recognized as a normal and necessary adjunct to 

self-regulation and the cooperative sharing of such infoMmation ~hall 

not be a violation of the disclosure or confidentiality provisions of 

this Agreement. 

(c) The ~Jew Y'>rk Futures Exchange is penni tted to disclose such 

information as set forth in this Section and Sections 4 and 5 of this 

Agreement to the New York Stock Exchange for those FCMs who are 

members of the New York Futures Exchange. 

(d) -Such infonnation may be diSclosed: 

i) to any party of which the FCt1 is a member in connection with disciplina~ proceedings or other formal proceedings or actions 

of and/or before a duly authorized c·onmittee or governing body 

of the designated OSRO or -an.v party of which the FCt.1 is a 

member; 

ii) in response to a duly authorized demand by an administrative or 

legislative body of government having jurisdiction of the 

subject matter and authority to obtain the information 

requested; 

iii) or. as otherwise required by law. 

(e) Provided, however. such information shall not be disclosed in re$ponse 

to a civil subpoena or summons until five (5) business d~s after the · designated DSRO and all Parties of which the FC~1 fs a member and the 

FCt-f Hself have been notified of the subpoena or for such shorter 

period of time as may be provided pursuant to an order issued by a 

court of co~petent jurisdiction, and in no event shall be disclosed in 

violation of Section 8c(1) of the Act. 
Page 5 

9. Limitations on liability. Neither the designated DSRO nor any of its 

directors:-oTficers or employees shall be liable. to a~ party or any of its 

directors, officers, employees, or to any other person for any lfJbUity, loss or da~age resulting from or claimed to have resulted from: 

(a) Any delays, inaccuracies, errors, or omissions with respect to any . audit or review conducted by the designated DSRO or with respect to 

any performance by the designated DSRO of any other term or condition 

of the Agreement with respect to a particular FCM; 

(b) The nonperformance or delay or interruption in the performance or any 

term of condition of this Agreement due .to acts of God, the. public enemY, war (including civil war), directives or jurisdiction, acts of 

any government, delays in perfonning or failure to perfonn by a public utility, fires, explosions, the elements, epidemics, quarantine~, 

strikes, labor disputes, embargoes, and other cau$es of a similar 

nature; 

(c) The inadequacy or insufficiency of the programs or procedures adopted by the JAC; or 

(d) The failure of a party to enforce compliance by member FCMs of the 

party with its financial standards, bylaws, rules or regulations. 

Nothing herein shall affect the right of any party to bring an action against the designated DSRO for breach of this Agreement or affect the right of any party 

to hold the designated DSRO responsible for any action, claim or controversy arising from the acts anc1/or omissions of the designated OSRO which are caused 

directlY by the .intentional wrongful act or acts or intentional wrongful omissions 

by the designated DSRO. 

10. Subcontracting. A designated DSRO shall not subcontract or assign its 

oblfgatio,u respecting any FCt1 to any entity not a party to this Agreement without 

the written consent of all Parties to this AgreeiTient of wf\ich that FCM 1s a 

member. However, those subcontract agreements in effect at the effective date of 

this Agreement ~ill continue in full force notwithstanding the aforementioned. 

11. Arbit~ation. All disputes or controvers-ies between or among any of the 

Parties wll1Cll ar1se out of or relate to this Agreement or its validity or 

interpretation or any breach or ~lleged brPach hereof shall be determined by the 

disinterested Parties' representatives to the JAC. The award of a majority of the 

dhinterested Parties shall be final, conclusive and bindirig on the ·interested 

Parties, and judgment ·may be entered on such award fn any court of appropriate jurisdiction. 

In the event that the dispute cannot be resolved by the determination of such 

disinterested Parties• representatives to the JAC or in the event that a quorum of 

the Parties is not disinterested, then the dispute or controversy shall be 

submitted to and .settled by arbitration i:1 the City of Claimant's choice (flew Yoric 

or Chicago) in accordance with tha rules of the American Arbitration Association, 

and judgment may be entered upon the award rendered by the arbi tratorC s) in any 

court of appropriate jurisdiction. 
Page 6 

Notwithstanding the foregoing, each party shall have the right in any action 

brought in. a federal or state court against any party ("defendant party") .to 

implead or otherwise join any other party in such action if the basf's or alleged basis for the action against the defendant party is directlv or indirectly related 

to the perfonnance or nonperfonnance of this Agreement by such other party. 

12. Amendments. This Agreement m~ not be amended or modified, except by an 

instrument in writ;ng duly executed by each of the Parties. · 

l3. Notfces. Wherever, in this Agreement, written notice fs required of one 

party to the other, such written notice shall be. either hand delivered (with 

receipt acknowledged in writing by an employee of the recipient party) or shall be 

by certified mail (all required postage prepaid) addressed to the headquarters location of the .recipient party as follows: 

Board of Trade of the City of Chicago 141 West Jackson Boulevard 

Chicago, Illinois 60604 

Attn: Administrator, Office of 

Investigations & Audits 

Board of Trad·~ of Kansas City 4800 t~ain Street · Kansas City,·Missouri 64112 

Attn: President 

Chicago t~ercantile Exchange 30 South Wacker Drive 

Chicago, Illinois 60606 

Attn: Director of Audits 

Chicago Rice and Cotton Exchange 44~ West Jackson Boule~ard 

Chicago. Illinois 60606 

Attn: President 

Coffee, Sugar & Cocoa Exchange, Inc. 

Four World·Trade Center 

New York, New York 10048 

Attn: Department of Audits 

Commodity Exchange, Inc. 

Four l~orl d Trade Center 

New·York, New York 10048 

Attn: Manager Financial 

Surveillance & Audits 

MidAmerica Commodity Exchange 444 West Jackson Boulevard 

Chicago, Illinois 60606 

Attn: Vice President and General Counsel 
Minneapolis Grain Exchange 400 South Fourth Street 

Minneapolis, Minne~ota 45415 

Attn: President 

National Futures Association 

200 West 11adison Street 

Chicago, Illinois 60606 

At.tn: Director of Compliance 

New York Cotton Exchange four World Trade Center 

New York, New York 10040 

Attn: Director of Compliance. 

New York Futures Exchange, Inc. 

20 Broad Street 

New York • r~ew York 10005 

Attn: Director, Audits and 

Investigations 

New York Hercantil e Exchange Four World Trade Center 

New York, ~lew York 1 0048 

Attn: Director, Financial Surveillance 

Page 7 

1 

14. Applicable La\'1'. This Agreement and any controversy between the Parties 

with respect thereto or arising thereunder shall be governed by t~e laws of the 

State of New York. 

15. Duplicate Originals. This Agreement may be executed in duplicate 

originals, and each duplicate original bearing the original signatur~ of the 

Parties or their duly authorized officials shall be deemed to be the original of 

the Agreement for all purposes. 
I. 

I 

I 

; 

Page· 8 

IN WITNESS WHEREOF, the Parties hereto have executed thfs Agreement as of 

the date and year first above wrf tten. 

. Date: ~ /7, tl./'l 

Date: 

Date: 

Date: 

DatE": 

Date: 

BOARD OF TRADE OF THE 

CITY OF CHICAGO 

By:.._;g, _}£~ .-

Title:~ 

BOARD OF TRADE OF KANSAS CITY 

By: 

Title: 

CHICAGO MERCANTILE EXCHANGE 

By: 

Title: 

CHICAGO RICE AND COTTON EXCHANGE 

9y: 

Title: 

COFFEE, SUGAR & COCOA EXCHAMiE, INC. 

By: 

Title: 

COMMODITY EXCHANGE, INC. 

By: 

Title: 
Page 8 

IN ~IT~ESS WHEREOF, the Parties hereto have executed this Agreement as of 

the date and year first above written. 

Date: 

Date: {l.{~_., •. f G I I ~ fi· 

Date: 

Date: 

Date: 

Date: 

BOARD OF TRADE OF THE 

CITY OF CHICAGOBy: ---------------------- Title: 

BOARD OF TRADE OF KANSAS CITY 

CHICAGO MERCAtHILE EXCHAP.GE 

By: 

Title: 

CHICAGO RICE ArlO CCiTOt: EXCHAt,~E 

By: 

Title: 

COFFEE, SUGAR & CQt:OAEXCHAIJSE, INC. 

By: 

THle: 

ey: 

iitle: 
Page 8 

IN WITNESS ~HEREOF, the Parties hereto have executed this Agreement as of 

the date and year first above written. · 

Date: 

Date: 

Date: 

Date: 

Date: 

BOARD OF TRADE OF THE 

CITY OF CHICAGO 

By: 

Title: 

BOARD OF TRADE OF KANSAS CITY 

By: 

Title: 

CHICAGO MERCANTILE EXCHA~~E 

By:~~ 

CHICAGO RICE AND COTTON EXCHA~~E 

By: 

Title: 

COFFEE, SUGAR & COCOA EXCHANGi, INC. 

By: 

Title: 

COMt.,ODITY EXCHANGE, INC. 

By: 

Title: 
Page 8 

IN WITNESS WHEREOF. the Parties hereto have executed thfs Agreeme~t as of 

the date and year first above written •. 

Date: 

Date:. ----------

Date: 

Date: '-pril 23, 19S4 

Date: 

Date: 

BOARD OF TRADE OF THE 

CITY OF CH!CAGO 

By: 

Title: 

BOARD OF TRADE OF KANSAS CITY • 

By: 

Title: 

CHICAGO t·fERCAtlTILE EXCHAJ.MlE 

By: 

Title: 

CHICAGO RICE AND COTTON EXCHANGE 

By: ~~ ~~-fl~tR~ 1/ . . 

Title: President 

COFFEE. SUGAR & COCOA EXCHAtJGE. INC. 

By: 

Title: 

C0f11·10DITY EXCHAtiGE. INC. 

By: 

Title: 
Page 8 

IN WITNESS WHEREOF. the Partfes hereto have executed this Agreement as of. 

the date and year first above written. - · · 

BOARD OF TRADE OF THE 

CITY OF CHICAGO 

By: 

Date: Title: 

BOARD OF TRADE OF KAtlSAS CITY 

By: 

Date: Title: 

CHICAGO t-1ERCANTILE EXCHANGE 

By: 

. Date: Title: 

CHICAGO niCE AND COTTON EXCHAUGE 

By: 

Date: Title: 

COFFEE, SUGAR ~ COCOA EXCHAtlGE, INC •. 

By: ?!;~Qe::t/~~ 

Date: 0~ ~ !l, tSS".J& Title: __§enior Vice President 

COHHODITY EXCHANGE, INC. 

By: 

Date: Title: 
-. 

Page 8 

IN WITNESS WHEREOF, the Parties hereto have executed this Agreement as of 

the date and year f; rst above written. · 

Date: 

Date: 

Date: 

Date: 

Date: 

Date: 

BOARD OF .TRADE OF THE 

CITY OF CHICAGO 

By: 

Title: 

BOARD OF TRADE OF KAtlSAS CITY 

By: 

Title: 

CHICAGO t·~ERCANTILE EXCHANGE 

By: 

. r;tle: 

CHICAGO RICE AND COTTON EXCHAllGE 

By: 

Title: 

COFFEE, SUGAR & COCOA EXCHAtlGE, INC.-

By: 

Title: 

Title: 
·\ 

Date: 

Oa~~= 

Date: 

r•:a•.:.· """ .. ... 

r"·~ •t:. • .. .. ... . 

.... 

Page 9 

By: 

!~H;f:j:~!S G~:.H: E:XCHA~ 

By: \_~i.k... t'(, ~1/Zi.~,tii!.-

fl~~~ 1)&''7'./T 

!JAil c~;:.!. FUiUR£5 ~.SSOC I AT ICtl 

1:), •• 

•J. 

,.-. ,: .. 

Title: 

2y: 

~ ... -.'. 

1 
Page 9 

MIDAMERICA COMMODITY EXCHA~E 

By: 

Date: Title: 

MINNEAPOLIS GRAIN EXCHANGE 

By: 

Date: Title: 

NATIONAL FUTURES ASSOCIATION 

:'7 -F' (] ~ 9r, By: :L:::;)t.".' ,, {1.'4/-t't/Et-"-r ~ . 

Date: Ma=ch JO, 1984 Title: ~~ ~~---------------

NEW YOR~ COTTON EXCHANGE 

By: 

Date: Title: 

NEW YORK FUTURES EXCHANGE, INC. 

By: 

Date: Title: 

NEW YORK t~ERCANTILE EXCHANGE 

By: 

Date: Title: 
Page 9 

MIDAP~ERICA COt-'.MODITY EXCHANGE 

By: 

Date: Title: 

MINNF.APOU.S GRAIN EXCHANGE 

By: 

Date-: Title: 

NATIONAl FUTURES ASSOCIATION ..... 1 

By: 

Date: Title: 

NE~ YORK COTTON EXCHANGE 

Date: APRIL 20. 1984 . EXECUTIVE VICE PRESIDZNT ----

NEW YORK FUTURES EXCHA~~E, JNC. 

By: 

O!te: Title: 

NEW YORK J.IERCANTI LE EXCHANGE 

By: 

Date: Title: 
Page 9 

MIDAf.IERICA CotflOOITY EXCHANGE 

- By: 

Date: Title: 

r~INNEAPOLIS GRAIN EXCHANGE . 

. By: 

Date: Title: 

-· NATIONAL FLlTURES ASSOCIATIOfJ 

By: 

Date: Title: 

NEW YORK COTTOtl EXCHANGE 

By: 

Date: Ti t1 e: 

I~EW YORK FUTURES EXCHAtJGE, INC. 

By: 

Date: Title: 

NEW YOr.K MERCAtJTILE EXCHANGE 

Date: APRIL 2 4 • 1 9 84 EXECUTIVE VICE PRESIDENT 
:_ .. ·. i'~~~;~:~;~:~ / .. . . .. ~- ~ ~ . .. . "·=· . -' ... , 

:~i&~/·· ·. -

"-I 

, 

... 

- -¥ 

j 

i 

; 

, 

; 

t 

: ... 

. z 

-·· 

Date: 

Date: 

Date: 

Date: 

Date: 

Date: 

Page 9 

MI DA~1ERICA CONJ.fODITY EXCHANGE 

By: 

Title: 

· MHl.lEAPOLIS GRAIN EXCHAt:G E 

By: 

Title: 

NATIONAL FUTURES ASSOCIATIOM 

By: 

Title: 

NEW YORK COTTON EXCHANGE 

By: 

Tjtle: 

NEW YORK FUTURES EXCHANGE. INC. 

July 25, ""1984 Title: Vice President 

NEW YORK MERC~NTILE EXCHANGE 

By: 

Title: