CME will also establish in all electronic equity index markets revised order entry restrictions so that orders greater than 250 contracts must be entered as multiple entries of 250 contracts or fewer. This enhancement will help filter out potentially erroneous trades and protect customers from keyboard errors. CME is the first exchange to apply this additional layer of customer protection on its electronic trading system. Previously, CME had imposed a 30-contract order quantity limit in E-mini S&P 500 futures. Similar restrictions in E-mini Nasdaq-100 contracts were lifted last summer.
Also on May 6, CME will institute price "banding" for electronic trading of equity index products on GLOBEX2. Price banding is an automated order-entry screening process designed to prevent entry of buy orders priced 2.5 percent or more above and sell orders priced 2.5 percent or more below the last price in equity index contracts. Price banding is a safeguard to help prevent erroneously priced orders from being entered and executed by the system. GLOBEX2 will continue to support normal price movements.
CME maintains an error trade policy for electronically traded products which allows the exchange to cancel, or "bust" erroneous or disputed trades under specified circumstances. In addition, CME’s price limits, set quarterly and coordinated with limits on cash equity markets, prevent trades below specified prices that are reset on a quarterly basis. Together, CME’s new price banding, error trade policy and equity index price limits provide a series of checks on potential erroneous trades filtering into the system.
Chicago Mercantile Exchange Inc. (www.cme.com) is an international marketplace that brings together buyers and sellers on its trading floors and GLOBEX2 around-the-clock electronic trading system. CME offers futures contracts and options on futures primarily in four product areas: interest rates, stock indexes, foreign currencies and agricultural commodities. On Nov. 13, 2000, CME finalized its transformation into a for-profit, shareholder-owned corporation as it became the first U.S. financial exchange to demutualize by converting its membership interests into shares of common stock that can trade separately from exchange trading privileges. The exchange moves about $1 billion per day in settlement payments, manages $30 billion in collateral deposits and administers more than $1 billion of letters of credit.
