CME Group takes emergency action following CHF volatility, amends price fluctuation rules

On January 20, 2015, a Panel of the Chicago Mercantile Exchange Inc. (CME) Business Conduct Committee took emergency action pursuant to Rule 402.C. to provide additional authority to the CME Group Global Command Center (GCC) with respect to CME products subject to Rule 589 (“Special Price Fluctuation Limits”). The emergency action authorizes the GCC to:

1. Modify the amount of a price limit expansion;

2. Remove price limits at any time;

3. Determine whether a specified trading halt will be observed;

4. Determine the products considered a Primary Futures Contract for purposes of expanding price limits.

The emergency action was authorized as a result of trading activity in the Swiss Franc spot market on January 15, 2015, which created a dislocation with the CME Swiss Franc futures market. The Emergency Action authorizes the GCC to take the foregoing actions where it is determined, in its discretion, that it is necessary to preserve market integrity.

Additionally, and pending all relevant CFTC regulatory review periods, CME, the Board of Trade of the City of Chicago, Inc. (“CBOT”), New York Mercantile Exchange, Inc. (“NYMEX”) and Commodity Exchange, Inc. (“COMEX”) will adopt a new provision in Rule 589 which will provide the GCC with authority to take any action it deems necessary to promote market integrity in the context of those products subject to Rule 589.

The revisions to CME, CBOT, NYMEX and COMEX Rule 589 are identical, and are set forth below with additions underscored. The revisions will become effective on Thursday, February 5, 2015.

For the official announcement from CME, click here.

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