All customers need to be aware that certain market conduct are prohibited under the Securities and Futures Acts (“SFA”). Relevant prohibited market conduct are set out below:

False trading and market rigging transactions

197.—(1) No person shall do any thing, cause any thing to be done or engage in any course of conduct, if his purpose, or any of his purposes, for doing that thing, causing that thing to be done or engaging in that course of conduct, as the case may be, is to create a false or misleading appearance —

      (a) of active trading in any capital markets products on an organised market; or

      (b) with respect to the market for, or the price of, any capital markets products traded on an organised market.

(1A) No person shall do any thing, cause any thing to be done or engage in any course of conduct that creates, or is likely to create, a false or misleading appearance of active trading in any capital markets products on an organised market, or with respect to the market for, or the price of, any capital markets products traded on an organised market, if —

      (a) he knows that doing that thing, causing that thing to be done or engaging in that course of conduct, as the case may be, will create, or will be likely to create, that false or misleading appearance; or

      (b) he is reckless as to whether doing that thing, causing that thing to be done or engaging in that course of conduct, as the case may be, will create, or will be likely to create, that false or misleading appearance.

(2) A person must not maintain, inflate, depress, or cause fluctuations in, the market price of any capital markets products —

      (a) by means of any purchase or sale of any capital markets products that does not involve a change in the beneficial ownership of the capital markets products; or

      (b) by any fictitious transaction or device.

(3) Without prejudice to the generality of subsection (1), it is presumed that a person’s purpose, or one of a person’s purposes, is to create a false or misleading appearance of active trading in capital markets products on an organised market if the person —

      (a) effects, takes part in, is concerned in or carries out, directly or indirectly, any transaction of purchase or sale of the capital markets products, being a transaction that does not involve any change in the beneficial ownership of the capital markets products;

      (b) makes or causes to be made an offer to sell the capital markets products at a specified price, where the person has made or caused to be made or proposes to make or to cause to be made, or knows that a person associated with the person has made or caused to be made or proposes to make or to cause to be made, an offer to purchase the same number, or substantially the same number, of the capital markets products at a price that is substantially the same as the firstmentioned price; or

      (c) makes or causes to be made an offer to purchase the capital markets products at a specified price, where the person has made or caused to be made or proposes to make or to cause to be made, or knows that a person associated with the person has made or caused to be made or proposes to make or to cause to be made, an offer to sell the same number, or substantially the same number, of the capital markets products at a price that is substantially the same as the firstmentioned price.

(4) The presumption under subsection (3) may be rebutted if the defendant establishes that the purpose or purposes for which he did the act was not, or did not include, the purpose of creating a false or misleading appearance of active trading in the capital markets products on the organised market.

(5) For the purposes of this section, a purchase or sale of capital markets products does not involve a change in the beneficial ownership if any of the following persons has an interest in the capital markets products after the purchase or sale:

      (a) a person who had an interest in the capital markets products before the purchase or sale;

      (b) a person associated with the person mentioned in paragraph (a).

(6) In any proceedings against a person for a contravention of subsection (2) in relation to a purchase or sale of capital markets products that did not involve a change in the beneficial ownership of the capital markets products, it is a defence if the defendant establishes that the purpose or purposes for which the defendant purchased or sold the capital markets products was not, or did not include, the purpose of creating a false or misleading appearance with respect to the market for, or the price of, the capital markets products.

(7) The reference in subsection (3)(a) to a transaction of purchase or sale of the capital markets products includes —

      (a) a reference to the making of an offer to purchase or sell the capital markets products; and

      (b) a reference to the making of an invitation, however expressed, that expressly or impliedly invites a person to offer to purchase or sell the capital markets products.

Market manipulation in relation to securities and securities-based derivatives contracts

198.—(1) A person must not effect, take part in, be concerned in or carry out, directly or indirectly, 2 or more transactions in securities, or securities-based derivatives contracts, of a corporation, being transactions that have, or are likely to have, the effect of raising, lowering, maintaining or stabilising the price of securities, or securities-based derivatives contracts, as the case may be, of the corporation on an organised market, with the intent to induce other persons to subscribe for, purchase or sell securities, or securities-based derivatives contracts, as the case may be, of the corporation or of a related corporation.

(2) A person must not effect, take part in, be concerned in or carry out, directly or indirectly, 2 or more transactions in securities, or securities-based derivatives contracts, of a business trust, being transactions that have, or are likely to have, the effect of raising, lowering, maintaining or stabilising the price of securities, or securities-based derivatives contracts, as the case may be, of the business trust on an organised market, with the intent to induce other persons to subscribe for, purchase or sell securities, or securities-based derivatives contracts, as the case may be, of the business trust.

(3) In this section —

      (a) a reference to transactions in securities or securities-based derivatives contracts of a corporation includes —

           (i) a reference to the making of an offer to purchase or sell such securities or securities-based derivatives contracts, as the case may be; and

           (ii) a reference to the making of an invitation, however expressed, that directly or indirectly invites a person to offer to purchase or sell such securities or securities-based derivatives contracts, as the case may be; and

      (b) a reference to transactions in securities or securities-based derivatives contracts of a business trust includes —

          (i) a reference to the making of an offer to purchase or sell such securities or securities-based derivatives contracts, as the case may be; and

          (ii) a reference to the making of an invitation, however expressed, that directly or indirectly invites a person to offer to purchase or sell such securities or securities-based derivatives contracts, as the case may be.

False or misleading statements, etc.

199. No person shall make a statement, or disseminate information, that is false or misleading in a material particular and is likely —

      (a) to induce other persons to subscribe for securities, securities-based derivatives contracts or units in a collective investment scheme;

      (b) to induce the sale or purchase of securities, securities-based derivatives contracts or units in a collective investment scheme, by other persons; or

      (c) to have the effect (whether significant or otherwise) of raising, lowering, maintaining or stabilising the market price of securities, securities-based derivatives contracts or units in a collective investment scheme, if, when he makes the statement or disseminates the information —

           (i) he does not care whether the statement or information is true or false; or

           (ii) he knows or ought reasonably to have known that the statement or information is false or misleading in a material particular.

Fraudulently inducing persons to deal in capital markets products

200.—(1) No person shall —

      (a) by making or publishing any statement, promise or forecast that he knows or ought reasonably to have known to be misleading, false or deceptive;

      (b) by any dishonest concealment of material facts;

      (c) by the reckless making or publishing of any statement, promise or forecast that is misleading, false or deceptive; or

      (d) by recording or storing in, or by means of, any mechanical, electronic or other device information that he knows to be false or misleading in a material particular,

     (e) induce or attempt to induce another person to deal in capital markets products.

(2) In any proceedings against a person for a contravention of subsection (1) constituted by recording or storing information as mentioned in subsection (1)(d), it is a defence if it is established that, at the time when the defendant so recorded or stored the information, he had no reasonable grounds for expecting that the information would be available to any other person.

(3) In any proceedings against a person for a contravention of subsection (1) in relation to the dealing in capital markets products that are securities, securities-based derivatives contracts or units in a collective investment scheme, the opinion of any registered or public accountant as to the financial position of any company at any time or during any period in respect of which he has made an audit or examination of the affairs of the company according to recognised audit practice shall be admissible, for any party to the proceedings, as evidence of the financial position of the company at that time or during that period, notwithstanding that the opinion is based in whole or in part on book-entries, documents or vouchers or on written or verbal statements by other persons.

Employment of manipulative and deceptive devices

201. No person shall, directly or indirectly, in connection with the subscription, purchase or sale of any capital markets products —

      (a) employ any device, scheme or artifice to defraud;

      (b) engage in any act, practice or course of business which operates as a fraud or deception, or is likely to operate as a fraud or deception, upon any person;

      (c) make any statement he knows to be false in a material particular; or

(d) omit to state a material fact necessary in order to make the statements made, in the light of the circumstances under which they were made, not misleading.

Manipulation of price of derivatives contracts and cornering

201B. A person must not, directly or indirectly —

      (a) manipulate or attempt to manipulate the price of a derivatives contract traded on an organised market, or of any underlying thing which is the subject of such derivatives contract; or

      (b) corner, or attempt to corner, any underlying thing which is the subject of a derivatives contract.

For the SFA proper, please refer to Securities and Futures Act

In addition to SFA, please see the following for the rules regarding prohibited market practices of the following exchanges. Please visit the relevant exchanges for more details, or follow the links below:-

SGX-Futures Trading Rules

SGX Rulebooks - Chapter 3 Conduct of Members, Approved Traders and Representatives

Rule 3.4.1: Market Manipulation

A Member, Approved Trader or Registered Representative shall not manipulate or attempt to manipulate the price of a contract or of any underlying, or corner, or attempt to corner, any underlying.

Rule 3.4.3: False Trading, Bucketing, Fraudulent Inducement to Trade and Employment of Fraudulent Device

A Member, Approved Trader or Registered Representative shall not:

      (a) engage in, or knowingly act with any other Person in, any act or practice that will or is likely to create a false or misleading appearance of active trading in any contract or a false or misleading appearance with respect to the price of any contract;

      (b) knowingly execute, or hold out as having executed, an order for the purchase or sale of a contract, without having effected a bona fide purchase or sale of the contract in accordance with this Rules;

      (c) induce or attempt to induce another person to trade in a contract:

           (i) by making or publishing any statement, promise or forecast that it knows or ought reasonably to know to be false, misleading or deceptive;

           (ii) by any dishonest concealment of material facts;

           (iii) by the reckless making or publishing of any statement, promise or forecast that is false, misleading or deceptive; or

           (iv) by recording or storing in any mechanical, electronic or other device information that is knowingly false or materially misleading;

or

      (d) directly or indirectly in connection with any trading in a contract:

           (i) employ any device, scheme or artifice to defraud;

           (ii) engage in any act, practice or course of business which operates as a fraud or deception, or is likely to operate as a fraud or deception upon any Person;

           (iii) make any false statement of a material fact; or

           (iv) omit to state a material fact necessary in order to make any statements made, in the light of the circumstances under which they were made, not misleading.

Rule 3.4.9 Fictitious Transactions Without Change In Ownership

The creation of fictitious transactions or the placing of orders which do not involve any change in ownership, or the execution of such an order with knowledge of its character by a Member, Approved Trader or Registered Representative is prohibited. A Member, Approved Trader or Registered Representative shall not accept buying and selling orders at the same time and price from a Customer for the same contract month of the same futures contract or in the case of option contracts, a put or call option contract with the same class of options, the same strike price and expiration month. This Rule does not apply if orders are entered in the following circumstances:

      (a) the orders are from a fund manager whose instructions are intended to switch the contract from one (1) sub-account to another for legitimate commercial reasons;

      (b) the orders will be booked out finally to different beneficial owners; or

      (c) if the Member or the Approved Trader establishes to the Exchange that it was not a purpose of the orders to create a false market.

APEX

Asia Pacific Exchange Pte. Ltd.Trading Rulebook

Rule 405 Prohibited Conduct

(a) No Member, Member’s Trader, Member’s Representative or other Person subject to the Rules shall knowingly or recklessly permit the use of his, her or its services, facilities or membership by any Person in a manner which is in the opinion of the Exchange liable to bring the Exchange or its Members into disrepute, impair the dignity or degrade the good name of the Exchange. No Member, Member’s Trader, Member’s Representative or other Person subject to the Rules shall knowingly or recklessly create or maintain or exacerbate manipulations (or attempted manipulations), corners (or attempted corners) or Violations (or arrangements, provisions or directions made or given thereunder), or otherwise be substantially detrimental to the interests or welfare of the Exchange.

(b) No Member, Member’s Trader, Member’s Representative or other Person subject to the Rules, in relation to Contracts entered into, or orders placed, on the Market or otherwise in accordance with the Rules, shall:

           (1) commit any act of fraud or bad faith;

           (2) act dishonestly;

           (3) engage or attempt to engage in extortion;

           (4) continue (otherwise than to liquidate existing positions) to trade or enter into such Contracts or provide margin to or accept margin from the Exchange when not in compliance with the minimum financial requirement currently in force in relation to the category of membership to which it belongs;

           (5) knowingly or recklessly disseminate false, misleading or inaccurate reports concerning any Contract, product or market information or conditions that affect or tend to affect prices on the Market;

           (6) manipulate or attempt to manipulate the Market, or create or attempt to create a disorderly Market, or assist its clients, or any other person to do so;

           (7) make or report a false or fictitious trade;

           (8) knowingly front-run a Client’s order, unless the Client has prescribed that the order be executed under specified conditions and the order cannot be executed by reason of those conditions;

           (9) enter into any Contract or fail to close out the same either intending to default in performance of the same or having no reasonable grounds for thinking that it would be able to avoid such default; or

           (10) use or reveal any information, records, materials or documents provided to or obtained by another Person by reason of participating in any investigation or disciplinary proceedings.

(c) No Member, Member’s Trader, Member’s Representative or other Person subject to the Rules shall engage in any of the following acts of misconduct:

           (1) any conduct contrary to Rule 103;

           (2) participating in conduct by a third party which would be a violation or attempted violation of these Rules if that third party were subject to these Rules;

           (3) failing to pay a fine or order for costs imposed by a Disciplinary Panel that has not been overturned by an Appeals Panel;

           (4) any other event or practice which has developed or is developing on the Exchange and is thought to be capable of impairing the orderly conduct of business on the Exchange or affecting the due performance of Contracts;

           (5) provision to the Exchange of information (including information for the purpose of obtaining membership) which is false, misleading or inaccurate;

           (6) ceasing to meet eligibility criteria for membership as set out in the Rules without notifying the Exchange in a timely manner; or

           (7) any other matter of which the Exchange may, from time to time, notify Members through Regulatory Notices issued to Members.

(d) After receiving a notice, pursuant to Rule 502(c), that the Regulatory Department is conducting an investigation, it shall be considered a violation of the Rules for the Person who is the subject of the notice (and, if the subject of the notice is an individual employed by a Member, such Member) to:

           (1) fail to appear before the Regulatory Department, other Exchange staff, the BCC or Disciplinary Panel at a duly convened hearing, scheduled interview or in connection with any investigation;

           (2) fail to fully answer all questions and produce all books and records at such hearing or in connection with any investigation;

      (3) fail to produce any books or records requested by duly authorised Exchange staff, in the format and medium specified in the request, within ten (10) Business Days after such request is made or such shorter period of time as determined by the Regulatory Department in exigent circumstances (unless such Person is granted an extension of time to produce such books and records by duly authorised Exchange staff);

      (4) make any false or misleading statements to the Board, Regulatory Department, Exchange staff, the BCC, Disciplinary Panel or Appeals Panel; or

      (5) fail, after a hearing, to comply with an order of the Board, Regulatory Department, Exchange staff, the BCC, Disciplinary Panel or Appeals Panel.

(e) A Member, Member’s Trader, Member’s Representative and other Person subject to the Rules whose behavior amounts to any behavior prohibited under Part XII of the SFA shall be in breach of these Rules.

(f) The making of a Contract by a Member with a client (whether or not a Member) otherwise than on the Market and not properly qualifying as a Block Trade or an EFRP shall constitute a violation of these Rules. Any Contract so made will be deemed not made by the Member subject to the Rules, save that the Member will be subject to disciplinary Rules and procedures.

Rule 407 Pre-arranged Trades Prohibited

(a) A Member or Member’s Trader shall not make any purchase or sale which has been prearranged, or for which such Member or Member’s trader engaged in pre-execution communications, except for:

           (1) an EFRP as contemplated in these Rules; or

           (2) a Block Trade as contemplated in these Rules /p>

(b) For purposes of this Rule 407, pre-execution communications means communications for the purpose of discerning interest in the execution of a transaction in a Contract prior to the terms of an order being submitted to the Market.

Rule 140 Wash Trades Prohibited

(a) No Person shall place or accept buy and sell orders in the same Contract and expiration month, and, for a put or call option, the same strike price, where the Person knows or reasonably should know that the purpose of the orders is to avoid taking a bona fide market position exposed to market risk (transactions commonly known or referred to as wash sales).

(b) Buy and sell orders for different accounts with common beneficial ownership that are entered with the intent to negate market risk or price competition shall also be deemed to violate the prohibition on wash trades.

(c) No Person shall knowingly execute or accommodate the execution of such orders by direct or indirect means.

Rule 411 Disruptive Trading Practices Prohibited

(a) All orders must be entered for the purpose of executing bona fide transactions.

(b) All non-actionable messages must be entered in good faith for legitimate purposes.

(c) No Person shall:

      (1) enter or cause to be entered an order with the intent, at the time of order entry, to cancel the order before execution or to modify the order to avoid execution;

       (2) enter or cause to be entered an actionable or non-actionable message or messages with intent to mislead other market participants;

      (3) enter or cause to be entered an actionable or non-actionable message or messages with intent to overload, delay, or disrupt the systems of the Exchange or other market participants;

      (4) engage in, or knowingly act with any other Person in, any act or practice that will or is likely to create a false or misleading appearance of active trading in any Contract or a false or misleading appearance with respect to the price of any Contract;

      (5) knowingly execute, or hold out as having executed, an order for the purchase or sale of a Contract, without having effected a bona fide purchase or sale of the Contract in accordance with these Rules;

      (6) induce or attempt to induce another person to trade in a Contract:

           (i) by making or publishing any statement, promise or forecast that it knows or ought reasonably to know to be false, misleading or deceptive;

           (ii) by any dishonest concealment of material facts;

           (iii) by the reckless making or publishing of any statement, promise or forecast that is false, misleading or deceptive; or

           (iv) by recording or storing in any mechanical, electronic or other device information that is knowingly false or materially misleading;

or

     (7) directly or indirectly in connection with any trading in a Contract:

           (i) employ any device, scheme or artifice to defraud;

           (ii) engage in any act, practice or course of business which operates as a fraud or deception, or is likely to operate as a fraud or deception upon any Person;

           (iii) make any false statement of a material fact; or

           (iv) omit to state a material fact necessary in order to make any statements made, in the light of the circumstances under which they were made, not misleading.

Rule 806 Cross-Trades Prohibited

(a) A Member shall not, and shall ensure that its Member’s Traders shall not, knowingly fill or execute a Client’s order for the purchase or sale of any Contract by off-setting against the order or orders of any other person at the same price, for the same Contract Month or Contract Date of the same Contract, without effecting such purchase or sale in the Trading Facilities.

(b) Where the Exchange suspects that a cross-trade was pre-arranged, the onus is on the Member to show otherwise.

IFSG

ICE Singapore Futures Rule

G.4 PRIOR ARRANGEMENT PROHIBITED

It shall be an offence for a Member or Member's Representatives to prearrange a Contract made or intended to be made on the Market, except a Contract made or to be made under Rule F.5.A or Rule F.7. It shall also be an offence for a Member or Member Representative to engage in pre-execution communications, except in accordance with the following procedures:

      (a) for the purposes of this Rule, pre-execution communications shall mean communications for the purpose of discerning interest in the execution of a transaction in a Product prior to the terms of an order being submitted to the ICE Platform;

      (b) a Member or Member Representative may engage in pre-execution communications subject to it complying with the following conditions:

           (i) if a customer order is involved, the customer has previously consented to such communications being made on its behalf;

           (ii) the details of such communications shall not be disclosed to any person who is not a party to the communications;

           (iii) no order shall be entered, and no trade shall be executed, to take advantage of information conveyed during such communications, except in accordance with this Rule; and

           (iv) each order that results from pre-execution communications shall be executed in accordance with Rule G.6A.

G.20 DISORDERLY TRADING

It shall be an offence for a Responsible Individual or Member to engage in disorderly trading whether by high or low ticking, aggressive bidding or offering, or otherwise.

TFEX

Thai Futures Exchange Rules

410.02 Supervision of Trading

For the purpose of preventing and halting unfair acts relating to derivatives contracts as well as the trading of derivatives contracts in an inappropriate manner, a member shall not do any acts of the following descriptions either in its capacity as an agent or in its own name:

      (1) To trade in or submit an order, buy or sell or submit an order to buy or sell a commodity, or take any action in connection with a variable with an intent to maintaining the price of derivatives contracts at a level in contradiction to normal market conditions, or to cause the price of any derivatives contracts to rise or fall in contradiction to normal market conditions, or in a manner that results in or is likely to result in the maintenance of the price of derivatives contracts at a level in contradiction to the normal market conditions, or causes or is likely to cause the execution price of any derivatives contracts to rise or fall in contradiction to normal market conditions, unless such action is taken in good faith to protect its rightful interest.

      (2) To take action with an intent to unduly seeking benefit from a derivatives position either for itself or for another person, to corner, dump, control or take any action in connection with a commodity underlying any derivatives contracts which results in a significant increase or decrease in the amount of commodity deliverable under such derivatives contracts.

      (3) To make or disseminate any statement or make a representation which is false or might be misleading in materiality in connection with derivatives contracts, a commodity or a variable, if at the time of making or disseminating such statement or making such representation, it knows or should know that such statement or representation is false or might be misleading in materiality and that such act induces or is likely to induce other persons to trade in derivatives contracts, or causes or is likely to cause the price of any derivatives contracts to rise or fall, or results in or is likely to result in the maintenance of price level of derivatives contracts.

      (4) To make any forecast regarding derivatives contracts, a commodity or a variable by distorting a fact or information which forms the basis of such forecast, or knowingly using false information as the basis of such forecast, or neglect to consider the truthful of the information, and such act will or is likely to induce other persons to trade in derivatives contracts, or will or is likely to cause the price of any derivatives contracts to rise or fall, or will or is likely to result in the maintenance of the price level of derivatives contracts.

      (5) To disseminate any statement which signifies that the price of any derivatives contracts will or is likely to rise or fall, or which results in or is likely to result in the maintenance of price level of derivatives contracts because there is an act under (1), (2), (3) or (4) whereby such member is the person who commits the act under (1), (2), (3), or (4) or who receives or will receive any consideration or benefit in connection with the dissemination of such statement.

      (6) Other conduct in the trading of derivatives contracts as well as any other acts as prescribed by TFEX.

Regulations for Trading Derivatives Trading

Code of Conduct on Derivatives Trading

In order to provide a code of conduct for the orderly and impartial performance of members and authorized traders with respect to the trading of derivatives contracts in TFEX, and to supervise and ascertain that the trading of derivatives contracts complies with the purposes of TFEX Regulation 410.02 (1), the acts in the manners described below will be deemed as the inappropriate trading of derivatives contracts, and no member may undertake such acts, whether as an agent, or in its name.

      1. Entering orders without intent to trade: the submission of a large number of trading orders of any derivatives contract during the pre-open period, without the intention to buy or sell such derivatives contracts, or the submission of trading orders at the best bid price or ask price and amending or cancelling such orders immediately when such orders will be matched, whereby such price or number of trading orders may affect the calculation of the opening price and the normal trading conditions of the market

      2. False or misleading appearance: the submission of trading orders, or the trading, of any derivatives contract which is likely to, or will, mislead the general public with respect to the price, or the quantity, in relation to the trading of such derivatives contract

      3. Price manipulation: the submission of trading orders, or the trading, of any derivatives contract which is likely to, or will, set the price, or cause the price of such derivatives contract to deviate, or not deviate, from the normal market conditions

      4. Wash trades: the submission of trading orders, or the trading, of any derivatives contract which may involve matching orders belonging to the same person or related persons, or matching orders involving derivatives accounts with the same beneficiary

      5. Marking the close: the submission of trading orders, or the trading, of any derivatives contract, before the close of trading hours which affect the daily settlement price, in order to acquire benefits from holding positions in such derivatives contract, or to avoid additional margin calls in the case where the margin placed is lower than the relevant criteria due to the changed price of the derivatives contract

      6. Inter-market manipulation: the trading of any derivatives contract concurrently with the trading of an underlying, or any trading which may affect, or which affects, the index. In this respect, the results from the change, or non-change, to the price of the underlying or the index will be beneficial to the holding of positions in such derivatives contract

The foregoing code of conduct includes Pool, which is the submission of trading orders or the trading of any derivatives contract, whether by itself or in concert with other persons, for the joint or several benefits from the change, or non-change, to the price of such derivatives contract, or the price of the underlying or the index.

CME Group

CME Rulebook

534. WASH TRADES PROHIBITED

No person shall place or accept buy and sell orders in the same product and expiration month, and, for a put or call option, the same strike price, where the person knows or reasonably should know that the purpose of the orders is to avoid taking a bona fide market position exposed to market risk (transactions commonly known or referred to as wash sales). Buy and sell orders for different accounts with common beneficial ownership that are entered with the intent to negate market risk or price competition shall also be deemed to violate the prohibition on wash trades. Additionally, no person shall knowingly execute or accommodate the execution of such orders by direct or indirect means.

539. PREARRANGED, PRE-NEGOTIATED AND NONCOMPETITIVE TRADES PROHIBITED

539.A. General Prohibition

No person shall prearrange or pre-negotiate any purchase or sale or noncompetitively execute any transaction, except in accordance with Sections B. and C. below.

539.B. Exceptions

The foregoing restriction shall not apply to block trades pursuant to Rule 526, Exchange for Related Positions transactions pursuant to Rule 538 or LOX Orders pursuant to Rule 549.

539.C. Pre-Execution Communications Regarding Globex Trades

Parties may engage in pre-execution communications with regard to transactions executed on the Globex platform where one party (the first party) wishes to be assured that a contra party (the second party) will take the opposite side of the order under the following circumstances:

      1. A party may not engage in pre-execution communications with other market participants on behalf of another party unless the party for whose benefit the trade is being made has previously consented to permit such communications.

      2. Parties to pre-execution communications shall not (i) disclose to a non-party the details of such communications or (ii) enter an order to take advantage of information conveyed during such communications except in accordance with this rule.

      3. Permissible Entry Methods for Orders: The following order entry methods for futures, options, spreads and combinations vary by product, as set forth in the Rule 539.C. Crossing Protocols Table (“Table”) in the Interpretations Section at the end of Chapter 5.

           a. Globex Cross (“G-Cross”)

               The first party’s order is entered into the Globex platform first. The second party’s order may not be entered into the Globex platform until a period of 5 seconds has elapsed from the time of entry of the first order.

           b. Agency Cross (“A-Cross”)

              A Cross Sequence (“CS”) is used by a broker to enter the buy and the sell orders into Globex. Following the pre-execution communication, a Request for Quote (“RFQ”) for the particular futures, options, spread or combination is entered into the Globex platform. Thereafter, a Cross Sequence, which is defined as the entry of a day-limit order followed immediately by the entry of a day-fill-and-kill order, must be entered into the Globex platform no less than fifteen (15) seconds and no more than thirty (30) seconds after the entry of the RFQ in order to proceed with the trade. The first party’s order must be entered first, as a day-limit order, followed immediately by the entry of the second order as a day-fill-and-kill order. The CS must occur within the same trading session. Failure to enter the buy and sell orders within 30 seconds after the entry of the RFQ will require a new CS to be initiated in order to proceed with the trade.

           c. Committed Cross (“C-Cross”)

               Following the pre-execution communication, a Request for Cross (“RFC”) order which contains both the buy and the sell orders must be entered into the Globex platform. Upon entry of the RFC, the Globex platform will display an indication that a cross will occur in five (5) seconds. In certain products as set forth in the Table in the Interpretations Section at the end of Chapter 5, a certain percentage of the quantity on the RFC will cross if the price of the RFC represents a new best price level at the time of submission of the RFC to the Globex platform and a better price for either the buy or sell order has not been entered into the Globex platform during the five (5) second period between entry of the RFC and the cross occurring.

           d. RFQ + RFC Cross (“R-Cross”)

               Following the pre-execution communication, a Request for Quote (“RFQ”) for the particular futures, options spread or combination must be entered into Globex. Thereafter, the RFC order must be entered no less than fifteen (15) seconds and no more than thirty (30) seconds after the entry of the RFQ in order to proceed with the trade, except the RFC order in Agricultural futures and options must be entered no less than five (5) seconds and no more than thirty (30) seconds after the entry of the RFQ. The RFQ and the RFC order must be entered within the same trading session. Failure to enter the RFC order within 30 seconds after the entry of the RFQ will require a new RFQ to be entered prior to the entry of the RFC order, which must be entered in accordance with the time parameters described above in order to proceed with the trade.

547. DISCRETIONARY ORDERS

Other than DRT orders, no Member (as defined in Rule 400) shall accept an order that gives more latitude than price and time in execution of the order, except in accordance with the provisions of Rule 956.

The above restriction shall not apply to those orders:

1. placed by another member for an account owned by such member;

2. placed by the member’s immediate family which includes a spouse, parent, child, grandparent, grandchild, brother, sister, aunt, uncle, nephew, niece or in-law; and

3. placed for proprietary accounts of member firms.

562. POSITION LIMIT VIOLATIONS

Any positions, including positions established intraday, in excess of those permitted under the rules of the Exchange shall be deemed position limit violations.

If a position exceeds position limits as a result of an option assignment, the person who owns or controls such position shall be allowed one business day to liquidate the excess position without being considered in violation of the limits. Additionally, if, at the close of trading, a position that includes options exceeds position limits when evaluated using the delta factors as of that day’s close of trading, but does not exceed the limits when evaluated using the previous day’s delta factors, then the position shall not constitute a position limit violation.

A clearing member shall not be in violation of this rule if it carries positions for its customers in excess of the applicable position limits for such reasonable period of time as the firm may require to discover and liquidate the excess positions. For the purposes of this rule, a reasonable period of time shall generally not exceed one business day.

A customer who exceeds the position limits as a result of maintaining positions at more than one clearing member shall be deemed to have waived confidentiality regarding his positions and the identity of the clearing members at which they are maintained. A clearing member carrying such positions shall not be in violation of this rule if, upon notification by the Market Regulation Department, it liquidates its pro-rata share of the position in excess of the limits or otherwise ensures the customer is in compliance with the limits within a reasonable period of time.

575. DISRUPTIVE PRACTICES PROHIBITED

All orders must be entered for the purpose of executing bona fide transactions. Additionally, all non-actionable messages must be entered in good faith for legitimate purposes.

      A. No person shall enter or cause to be entered an order with the intent, at the time of order entry, to cancel the order before execution or to modify the order to avoid execution;

      B. No person shall enter or cause to be entered an actionable or non-actionable message or messages with intent to mislead other market participants;

      C. No person shall enter or cause to be entered an actionable or non-actionable message or messages with intent to overload, delay, or disrupt the systems of the Exchange or other market participants; and

      D. No person shall enter or cause to be entered an actionable or non-actionable message with intent to disrupt, or with reckless disregard for the adverse impact on, the orderly conduct of trading or the fair execution of transactions. To the extent applicable, the provisions of this Rule apply to open outcry trading as well as electronic trading activity. Further, the provisions of this Rule apply to all market states, including the pre-opening period, the closing period and all trading sessions.

 


Begin your trading journey now