CME Rule 533. Simultaneous Buy and Sell Orders for Different Beneficial Owners (crossing)

Elise Fleischaker Rules And Regulations

cmegroup

A member who is in possession of both buy and sell orders for different beneficial owners for the same product and expiration month, and, for a put or call option, the same strike price, may execute such orders for and directly between such beneficial owners provided that in pit trading, a member executing such orders shall first bid and offer by open outcry three times at the same price, stating the number of contracts, and, thereafter, if neither the bid nor the offer is accepted, the orders may be matched in the presence, and with the approval, of a designated Exchange official. The foregoing shall not apply to LOX Orders executed in accordance with Rule 549. [The reference to Rule 549 appears solely in CME Rule 533.]

The member making such transactions shall, by appropriate descriptive words or symbols, clearly identify all such transactions on his trading card or other similar record made at the time of the execution. The member executing such trade must ensure that it is reported to Exchange price reporting staff for entry into the Exchange Price Reporting System. Failure to identify the transaction to Exchange price reporting staff as a cross trade shall constitute a violation of this rule.

On the Globex platform, opposite orders for different beneficial owners that are simultaneously placed by a party with discretion over both accounts may be entered into the Globex platform provided that one order is exposed for a minimum of 5 seconds in the case of futures or swaps [the reference to swaps appears solely in CBOT Rule 533] orders or a minimum of 15 seconds in the case of options orders. An order allowing for price and/or time discretion, if not entered immediately upon receipt, may be knowingly entered opposite another order entered by the same firm only if this other order has been entered immediately upon receipt and has been exposed on the Globex platform for a minimum of 5 seconds for futures or swaps [the reference to swaps appears solely in CBOT Rule 533] orders or a minimum of 15 seconds for options orders.

source: http://www.cmegroup.com/content/dam/cmegroup/rulebook/files/cme-group-ra1501-5.pdf