cme group customer forum q2 2014 group customer forum q2 2014 hong kong april 3, 2014 seoul april 8,...

CME Group Customer Forum Q2 2014 Hong Kong April 3, 2014 Seoul April 8, 2014 Singapore April 10, 2014 New York April 24, 2014 London April 30, 2014 Chicago May 14, 2014

http://www.cmegroup.com

© 2013 CME Group. All rights reserved. © 2013 CME Group. All rights reserved.

E-Trading & Technology Topics

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1. Market Data Platform 3.0

2. New iLink Architecture: Market Segment Gateway

3. New Functionality

• In-Line Credit Controls

• Mass Order Status

• Mass Order Cancel

• User Defined Spreads for Futures

• Self-Match Prevention Phase 2

4. Global Partner Exchange Update

5. OTC Trading, Clearing & STP

6. Benefit of Executing Firm

7. CME Co-location Services Update

8. Quiz and Q&A


MDP 3.0: Next Generation Platform - Summary

• Simple Binary Encoding replaces FAST Encoding with event-based messaging

• Tie Incremental Messages to a Single Event; Tag 5799-MatchEventIndicator used to delimit events in the incremental stream.

• Events will always be sequential.

• End of Event Indicator will be sent prior to messages from the next event that occurs in the Match Engine.

• Also used to group trade summaries, volume, book updates, statistics and implied quotes.

• Messaging Improvements • Support independence between number of events, messages, and packets,

including: • Allowing multiple messages per packet or single message over multiple packets

• Microsecond timestamp granularity for event start (tag 60) and sending time (tag 52) • Performance Expectations

• Reduce dissemination gap for trades between market data and order entry

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• Based on simple primitive encoding

• 20% increase overall in bandwidth

• Very low latency

• Optimized for direct data access

Direct access by security id

Direct access by message type

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MDP 3.0: Next Generation Platform – FIX Binary

<PacketSeq… Volume Quotes Stats Trades

<PacketSeq… Trades Quotes <48=735761…> <48=516781…> <48=516781…> <48=735761…>

Implied Quotes


MDP 3.0:Next Generation Platform - Deployment Plan

• New Release (NR) Environment Deployment Schedule • Opensource C++ and Java decoders available

• NR now available for all channels

• AC+ Test Suite Availability: May/June

• Production Rollout: Q3 2014 • Production channels will be rolled out over multiple weekends

• Production parallel for 6 months

• Note bandwidth impacts of running in parallel

• Order Routing Partner Exchanges and streamlined FIX/FAST will be migrated at a later date

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8. Quiz and Q&A


FIFO At The Gateway

• Planning new order entry architecture that extends FIFO message handling to the gateway

• CME Globex has always supported FIFO order handling at the trading engine • Phased deployment to better manage the necessary customer changes

• Phase 1: Trade At Settlement (TAS) markets Launched!

• Phase 2: Extend Market Segment Gateway access to all markets 2nd Half of 2014 • Simplifies access and order routing; fosters scalability • New Session ID access model • Market Segments are defined in tag 1300-MarketSegmentID in the MDP Security Definition

messages

• Current iLink Convenience Gateways (CGWs) will continue to be supported and will route through the new Market Segment Gateways

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New iLink Architecture: Market Segment Gateways


Three Distinct Issues to Address

• Physical iLink Architecture • 56 iLink Gateways result in numerous paths to match engines • Perfect determinism not possible across gateways • Solution: Single entry point for all traffic specific to a single market segment

• Gateway Application Architecture • Reordering at the gateway possible due to heavy traffic load (microburst) • Interaction between gateway application and operating system • If messages exist on multiple sockets, the order in which they are given to the gateway application

may not be in wire order • Solution: Custom FPGA solution that replaces NIC • iLink Webinar Presentation

• Network Architecture • Large over-subscription rate in current network topology

• Reordering at various network layers possible during heavy traffic load (microburst) • Solution:

• State-of-the-art network topology • New hardware • Completed on March 22

• Network Webinar Presentation

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Achieving FIFO at the Market Segment Gateway

http://www.cmegroup.com/globex/files/NewiLinkArchitecture2014.pdf

http://www.cmegroup.com/globex/files/NewiLinkArchitecture2014-part-II.pdf


Gateway Comparison

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New iLink Architecture: Market Segment Gateways

Functionality As Is To Be (MSGW) FIFO Order Handling At the trading engine At the gateway

Routing to Trading Engine CME Globex managed Customer managed

iLink Session IDs (Effective with Phase 2)

Unique across all CGWs Duplicated across all MSGWs • Differentiated by IP and

TargetSubID

Fault Tolerance Connect and trade through either primary or backup gateway

Trade through primary gateway only


Phase 1 – Trade At Settlement (TAS) Markets

March 9, 2014 Launched the first MSGW instance for TAS markets only

• Addressed a critical FIFO-sensitive market

• Extended FIFO to the gateway for TAS markets during Pre-Open

• Five minutes after the start of the pre-open, TAS orders are accepted through any iLink session

• Observations from Crude Oil and Natural Gas markets: • Most competitive TAS pre-open markets • Top 40-50 orders:

• Arrive within 15-20 μs • Gap between orders ~ 200-250 ns • Slightly less than 10G line rate

• All messages for a specific contract received within ~ 3 ms • FIFO ordering has been maintained

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Market Segment Gateways


Phase 2 - Market Segment Gateway Access to All Markets

Different Session ID Model

• Currently 1:1 relationship b/w sessions and session identifiers

• With MSGW, a single session ID gives access to all MSGWs • Sequence streams are unique per market segment gateway, not per Session ID

New sessions required for MSGW access

• Multiple sessions not needed to mitigate variability • Variability will impact the entire market equally • Message order maintained at the MSGW

• Revised session ID policy will be announced prior to NR rollout

Benefits • Simple session ID administration process

• The same session ID and port will be reserved across all MSGWs • Different IP addresses for each of the primary and backup MSGWs

• Minimal customer impact for future changes like the addition of new market segments

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Market Segment Session Model


iLink Gateway-1

SessionID:Port AB1:9000 AB2:9001 AB3:9002 AB4:9003

IP:10.228.2.149

iLink Gateway-1

SessionID:Port AB1:9000 AB2:9001 AB3:9002 AB4:9003

IP:10.228.2.149

Customer Sessions

iLink Gateway-2

SessionID:Port BC1:9000 BC2:9001 BC3:9002 BC4:9003

IP:10.228.2.150

iLink Gateway-3

SessionID:Port CD1:9000 CD2:9001 CD3:9002 CD4:9003

IP:10.228.2.151

iLink Gateway-m

SessionID:Port DE1:9000 DE2:9001 DE3:9002 DE4:9003

IP:10.228.2.152

Trading Engine-1

Trading Engine-2

Trading Engine-n

Unique SessionID across all iLink gateways

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Current: Convenience Gateways and Session Model

Session AB1 is unique across all iLink Gateways

AB1 has a single sequence stream comprised of messages to/from all Market Segments/Trading Engines

CME GROUP CONFIDENTIAL © 2013 CME Group. All rights reserved.


MSGW-n

SessionID:Port EF1:9000 EF2:9001 EF3:9002

IP:10.10.10.3

MSGW-n


IP:10.10.10.3

MSGW-n


IP:10.10.10.3

MSGW-01


IP:10.10.10.1

MSGW-02


IP:10.10.10.2

iLink Sessions

iLink Convenience Gateway-1

SessionID:Port

AB1:9000 AB2:9001

IP 10.228.2.149

iLink Convenience Gateway-2

SessionID:Port

BC1:9000 BC2:9001

IP 10.228.2.151

iLink Sessions

Trading Engine 1

Trading Engine 2

Trading Engine n

Session EF1 will not be unique across MSGWs

A MSGW session will have different IPs and the same port across MSGWs

MSGW sequence stream will be determined by session & Market Segment Indicator • Sequenced by FIX sequence number,

SessionID <and> TargetSubID

MSGW-01


IP:10.10.10.1

MSGW-01


IP:10.10.10.1

MSGW-2


IP:10.10.10.2

MSGW-02


IP:10.10.10.2

MSGW-02


IP:10.10.10.3

MSGW-01


IP:10.10.10.1

MSGW-n


IP:10.10.10.5

Shared SessionID Among All MSGWs

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New: Market Segment Gateways and Session Model

Presenter

Presentation Notes

CGW will route throughMSGWs


Customer impacts • iLink certification required

• Sequence streams are unique per market segment gateway, not per Session ID • May require adjustments to customer side order management systems • Customer systems must identify and route to appropriate MSGW

• Drop Copy certification required • Sequencing changes and impacts to current AppResend model

• Post-certification, may request production MSGW session IDs from Global Account Managers

• Customers who want to access MSGW must be able to run in parallel with CGWs

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Market Segment Session Model



Rollout: • Client Impact Document available: June 2014

• New Release and AutoCert+: early September • iLink and Drop Copy certifications required

• Mock Trading Sessions: mid-late October

• Phased Production Rollout: November • Will start with one market, followed by groups of other markets over 2 – 3

weekends • All paired with mock trading sessions on Saturday prior

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Market Segment Gateways

Please review webinars. Look for more information in the Globex Notices



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8. Quiz and Q&A


In-Line Credit Controls (ICC)

New risk tool which will allow for daily quantity position limits, per product, at the account level

• Optional, more granular risk management at the product and account level • Initial rollout for Globex only

No latency disadvantage • All orders submitted to Globex will pass through ICC check, regardless of whether the

account is registered within the tool

Account registration and limit management via CME Account Manager (RAV Manager) • Same interface leveraged for CME Direct, EOS Trader and ClearPort risk

management

Functionality includes: • Excel upload for account limits management • Configurable email alerts & Risk Admin dashboard for monitoring

Enforcement policies are set by Clearing Firms for Executing Firms • May grant Executing Firms’ Risk admins access to register accounts/set limits • Executing Firms cannot override or exceed limits placed by clearing firm

Production Launch: Q1 2015

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Optimized messaging to status working orders • New! Single inbound message – Order Mass Status Request (35=AF) • Multiple outbound status – Execution Report (35=8, 39=0 or 1, 150=I) • One Execution Report for each order • Status for all working orders accepted within the request parameters

• Working and partially filled Status Request Parameters: • Entity Identifier – SenderCompID (Required), Account, SenderSubID • Market Identifier (one required) – Instrument, Security Group, all working orders • Order Identifier (optional) –Time in Force Messaging Impacts • New FIX-compliant iLink inbound messages • New FIX tag will be disseminated on iLink and Drop Copy outbound messages Certification Requirements • iLink certification tests required for systems using Mass Order Status

Production Launch : March 23, 2014

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Mass Order Status


Mass Order Status

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Message Sequence Single inbound request and multiple outbound responses

iLink Client

System

CME

Globex

Order Mass Status Request (35=AF)

584-MassStatusReqID – assigned by customer 585-MassStatusReqType – specifies the scope of the request by instrument,

Security Group, or all Working Orders 5000-OrdStatusReqType – specifies the scope of the request by Account or

SenderSubID

Execution Report – Order Status (35=8, 39=0 or 1 ,150=I, 912=N)

39-OrdStatus–status of the order 150-ExecType-indicates type of execution report

912-LastRptRequested-new tag, indicates if this message completes the response

Execution Report – Order Status (35=8, 39=0 or 1 ,150=I, 912=Y)

912-LastRptRequested – new tag, indicates this message completes the response




Optimized messaging to cancel working orders • Cancels all working orders that match request criteria for an iLink session

• Does not cancel Mass Quotes • New single inbound message – Order Mass Action Request (35=CA) per market segment

• New bundled outbound message – Order Mass Action Report (35=BZ) per market segment • New Drop Copy outbound messages

Cancel parameters: • Entity Identifier – SenderCompID (Required), Account, SenderSubID • Market Identifier (one required) – Market Segment, Security Group, Instrument • Order Identifier (optional) – Order Type, Time in Force, Side

Certification Requirements • iLink certification required for systems using Mass Order Cancel • Global Drop Copy certification required by Friday, May 2.

Production Launch : April 27, 2014 (Metal futures) & May 4, 2014 (all markets)

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Mass Order Cancel


Mass Order Cancel

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Message Sequence Bundled outbound message – Order Mass Action Report (35=BZ)


Spreads Created by Customers in Real Time

• Extend User-Defined Spreads (UDS) functionality to Futures • Currently, all options spreads on CME Globex are UDS

• Technology Goals • Provide capability to create spreads in real-time • Optimize messaging & content • Keep functionality for futures consistent with existing options behavior to minimize

impact

• Phase 1 Launch: Q2/Q3 2014 • UDS and exchange-defined spreads will both exist in futures markets • Initial target: Energy and Metals markets

• Watch the CME Globex Notices for Client Impact Assessment and Messaging Specifications • Certification and launch timelines will be announced

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User-Defined Spreads for Futures


Next Phase of Functionality

Self-Match Prevention (SMP) today • When an aggressing order is trading at a price level where there is a resting

order with the same SMP ID, the resting order is cancelled • Even if the resting order wouldn’t have been filled

Phase 2 Changes 1. Order-by-order choice to cancel resting or aggressing order

• For all markets • Optional iLink tag; when not sent, default behavior is to cancel the resting

order • Aggressing order instruction always applied in case of instruction conflict

2. Only cancel the order when actual fills would occur • FIFO-only markets: include all markets with 100% FIFO allocation • Pro-Rata, Split FIFO/Pro-Rata, LMM and TOP markets: functionality will

remain as-is and orders will be cancelled when a match could occur • Avoids negative performance impacts

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Self-Match Prevention Phase 2


Bid Ask 10 @ 1301 – Foreign 20 @ 1301 – Foreign 30 @ 1301 – Foreign 500 @ 1301 – Foreign 450 @ 1302 – Foreign 20 @ 1302 - Self, Cancel Resting Instruction 30 @ 1302 – Foreign

Aggressing order 1000 @ 1302 Cancel Aggressing or Resting instruction

Scenario – FIFO Market without Self-Match Event

Aggressing order executes against all resting orders at 1301. Remaining quantity 440.

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Bid Ask 10 @ 1301 – Foreign 20 @ 1301 – Foreign 30 @ 1301 – Foreign 500 @ 1301 – Foreign 450 @ 1302 – Foreign 20 @ 1302 - Self, Cancel Resting Instruction 30 @ 1302 - Foreign

Aggressing order Remaining Qty 440 @ 1302 Cancel Aggressing or Resting instruction

Scenario – FIFO Market without Self-Match Event

Aggressing order executes against top resting order at 1302 and is fully filled. No Self-Match event is triggered; unlike today where the Self order for 20 would have been

cancelled. • All matches stand

• 560 @ 1301 • 440 @ 1302

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Aggressing order 1000 @ 1302 Cancel Aggressing instruction

Scenario – FIFO Market with Cancel Aggressing



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Aggressing order Remaining Qty 440 @ 1302 Cancel Aggressing instruction

Scenario – FIFO Market with Cancel Aggressing

Aggressing order executes against resting orders at 1302 until it hits the Self order for 20. The Self-Match event is triggered • The aggressing order’s instructions take priority and the remaining unfilled quantity of

430 is cancelled • All matches made prior to the Self-Match event stand

• 560 @ 1301 • 10 @ 1302

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Order Cancel Remaining Qty 430 Cancelled due to Self-Match


Bid Ask 10 @ 1301 – Foreign 20 @ 1301 – Foreign 30 @ 1301 – Foreign 500 @ 1301 – Foreign 10 @ 1302 – Foreign 20 @ 1302 - Self, Cancel Aggressing Instruction 30 @ 1302 – Foreign

Aggressing order 1000 @ 1302 Cancel Resting instruction

Scenario – FIFO Market with Cancel Resting


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Bid Ask 10 @ 1301 – Foreign 20 @ 1301 – Foreign 30 @ 1301 – Foreign 500 @ 1301 – Foreign 10 @ 1302 – Foreign 20 @ 1302 - Self, Cancel Aggressing Instruction 30 @ 1302 - Foreign

Aggressing order Remaining Qty 440 @ 1302 Cancel Resting instruction


Aggressing order executes against resting orders at 1302 until it hits the Self order for 20.

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Bid Ask 10 @ 1301 – Foreign 20 @ 1301 – Foreign 30 @ 1301 – Foreign 500 @ 1301 – Foreign 10 @ 1302 – Foreign 20 @ 1302 - Self, Cancel Aggressing Instruction 30 @ 1302 - Foreign



The Self-Match event is triggered • The aggressing order’s instructions take priority and the resting Self order for 20 is

cancelled • The aggressing order continues to execute through the remaining orders for a total fill:

• 560 @ 1301 • 40 @ 1302

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Aggressing order 1000 @ 1302 Cancel Aggressing instruction

Scenario – Pro-Rata Market with Cancel Aggressing



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Aggressing order Remaining Qty 440 @ 1302 Cancel Aggressing instruction

Scenario – Pro-Rata Market with Cancel Aggressing

A potential self-match at price level 1302 is recognized and the Self-Match event is triggered

• The aggressing order’s instructions take priority and the remaining unfilled quantity of 440 is cancelled

• Trades at the 1st price level stand • 560 @ 1301

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Order Cancel Remaining Qty 440 Cancelled due to Self-Match


Bid Ask 10 @ 1301 – Foreign 20 @ 1301 – Foreign 30 @ 1301 – Foreign 500 @ 1301 – Foreign 10 @ 1302 – Foreign 20 @ 1302 - Self, Cancel Aggressing Instruction 30 @ 1302 – Foreign

Aggressing order 1000 @ 1302 Cancel Resting instruction

Scenario – Pro-Rata Market with Cancel Resting


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A potential self-match at price level 1302 is recognized and the Self-Match event is triggered

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• The aggressing order’s instructions take priority and the resting Self order for 20 is cancelled

• The aggressing order continues to execute through the remaining orders for a total fill: • 560 @ 1301 • 40 @ 1302

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• Targeting Q3 2014 launch

• Impacts • New optional tag on iLink and Drop Copy • At least 6 weeks testing in New Release

• No impact to registration or Firm Admin Dashboard (FADB)

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Next Phase of Functionality

Self-Match Prevention Phase 2

Presenter

Presentation Notes

Steve, Alan, EG at mtg



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8. Quiz and Q&A


Global Partner Exchange Updates Korea Exchange

• KRX announced intent to allow its clearing firms to connect directly to CME Globex via CME hubs in Seoul to trade Kospi200 Futures

• Currently, all Kospi 200 Futures customers must go through their KRX clearing member firm via KRX’s “USG” system, and the is the sole means of access to the market

• Will provide flexibility to leverage CME Globex certified front ends to trade Kopsi 200 Future. Dates TBA

• On March 3rd, KRX has successfully launched Exture+ a next generation low-latency trading system Bursa Malaysia • Launching a new contract, USD RBD Palm Olein futures (FPOL) in Q2 2014

• Credit Suisse Securities Malaysia Bhd was recently approved as a new clearing member of Bursa Malaysia Derivatives Exchange

• A new single trading right for derivative products will be introduced by the second half of 2014. For more information, contact Sarjit Kaur, [email protected], ph: +6019 300 1630

• BMD has a volume based incentive in the form of exchange fee discount for HFTs. Clients interested should contact the following from BMD Business Development:

• Suresh Maniam [email protected], ph: +6019 212 9121 or Andrew Tan Kah Loong [email protected], ph: +6012 207 4413

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Presenter

Presentation Notes

KRX Exture+: -Ultra-low latency matching engine architecture across cash equity, fixed income and derivatives markets on a single platform. -Order process performance enhancements (reported to be 70 microsec from the past 20 millisec), an increase of 285 times compared to the previous system, Exture. -Expected to solve issues presented by old platform, such as order/market data delay and system malfunction. -Optimized to service domestic/foreign algo traders, so expected to attract more latency sensitive trading firms around the world. -KRX would also plan a tie-up with other exchanges, especially from the frontier markets, by exporting the new platform. BMD Palm Olein Futures: -Strong market demand for a palm olein futures contract led to the development of this contract -Physically Delivered, denominated in USD -Alongside the benchmark BMD CPO Futures (FCPO) on the CMEG Globex Platform. -CME and BMD now together have the widest array of palm oil futures and swaps products that complement each other

mailto:[email protected]





Bursa Malaysia Derivatives Initiative

Introduction of BMD RBD Palm Olein Futures (FPOL)

Underlying RMD Palm Olein

Settlement Method Physical Delivery via e-Negotiatied Storage Receipts (e-NSRs). Ex-tank as per FCPO

Contract Size 25 MT

Price Quotation US$ per MT

Minimum Price Flucuation US$0.50 / MT

Contract Month Spot month and the next 5 succeeding months, and thereafter, alternate months up to 24 months ahead.

Trading Hours M-F Kuala Lumpur Business Day 0900 – 1200 hours; 1330 -1800 hours

Last Trading Day Contract expires at noon on the 15th day of the delivery month, or if the 15th is a non-market day, the preceding Business Day.

Tender Period 1st Business Day to the 20th Business Day of the delivery month, or if the 20th is a non-

market day, the preceding Business Day.

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Launching BMD Palm Olein Futures in Q2, 2014:

0

10,000

20,000

30,000

40,000

50,000

60,000

Sep

-10

Oct

-10

Nov

-10

Dec

-10

Jan-

11Fe

b-11

Mar

-11

Apr

-11

May

-11

Jun-

11Ju

l-11

Aug

-11

Sep

-11

Oct

-11

Nov

-11

Dec

-11

Jan-

12Fe

b-12

Mar

-12

Apr

-12

May

-12

Jun-

12Ju

l-12

Aug

-12

Sep

-12

Oct

-12

Nov

-12

Dec

-12

Jan-

13Fe

b-13

Mar

-13

Apr

-13

May

-13

Jun-

13Ju

l-13

Aug

-13

Sep

-13

Oct

-13

Nov

-13

Dec

-13

Jan-

14Fe

b-14

Mar

-14

All Products Monthly ADV from Sep 10 until 25 Mar 14 FKLI

FCPO

Others

Exchange Total

Historical High OI of 258,001 on 26 July 2013

Historical High of 71,678 FCPO Daily Volume on 12 March 2014

Historical Record Achieved in 2013 Total Volume : 10,742,098 FCPO Volume : 8,014,914

Historical High of 93,313 Total Daily Volume on 25 March 2014

© 2013 CME Group. All rights reserved. © 2013 CME Group. All rights reserved. 41

Other Global Partner Exchange News

Dubai Mercantile Exchange

• DME trading volume increased by a record 36% in 2013

• February 2014 saw a record ADV of 10,764, an 84% year-on-year increase

• CME Group Clearing approved two Singaporean Banks to issue Stand By Letters of Credit (SBLCs) for interested DME customers

BVMF • In Q3 2014 CME Group will support individual leg definitions for BVMF calendar spreads via MDP.

MexDer • On March 10, MexDer launched a new Bond Contract with the DC24 (December 2024), and has

plans to add a mini-IPC contract during the first half of 2014.

Minneapolis Grain Exchange • MGEX reported a 20% volume increase in 2013 • February monthly exchange volume of 204,343, was a 56% increase from February 2013, the highest

in over two years • MGEX’ highest volume day ever was February 6, and February 5 set a new daily open interest

record with 80,607

Presenter

Presentation Notes

-IPC is the MexDer equity index product, and the mini-IPC will complement the current, liquid full size electronically traded equity index product (scheduled to be launched the first half 2014) -DC24 is a new 10Yr futures contract that offers the most liquid underlying bond in the Mexican Fixed Income market.



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8. Quiz and Q&A


CME ClearPort

• What is CME ClearPort? - ClearPort provides a means for OTC market participants to submit off-exchange transactions into

CME Clearing via either the ClearPort API, or a web-based user interface.

• Trade Entry to ClearPort 1. Broker entry via CME Direct, ClearPort GUI or API: ClearPort API is an interface where the

client can develop its own application and submit deals into ClearPort themselves or via a broker.

2. ClearPort Facilitation Desk: Any assistance for trade input via our Fac Desk is via email ([email protected]) or phone (+65 6532 5010)

3. 3rd-party confirmation platform via ClearPort API: Example of this is via the TrayPort platform, where clients use the TrayPort platform to submit deals into ClearPort.

CME Clearing (CCP)

OTC Trader

OTC Dealer

IDB/ Affirm Service

Clearing Member

Clearing Member

ClearP

ort

RAV

RAV

< Counterparty Risk in OTC World > < Clearing by CCP >

OTC Trades

Cleared Trades

Credit Controls



CME ClearPort

• RAV Manager/CME Account Manager • Provides clearing firms with an automated tool to risk settings associated with submitting OTC

trades using ClearPort or transacted via CME Direct.

• Block Trades • A block trade is a privately negotiated futures, options or combination transaction that is

permitted to be executed apart from the public auction market. • May be reported to CME Clearing via ClearPort, so customers must be registered in ClearPort

as a broker to enter trades on your own, or as a trader if you are the designated party to a trade.

• Registration Process 1. Set up a clearing account with clearing firms found at http://www.cmegroup.com/clearingmembers. 2. Register for ClearPort at http://www.cmegroup.com/clearportregistration. 3. Obtain User ID and Password by contacting CME ClearPort Operations. This information is not

sent out until customers place a request directly. 4. Setup trading limits and OTC brokers:

• Contact your clearing firm and request that your clearing account be added to RAV (Risk Assessment Value) Manager.

• Provide your clearing firm with a list of products you wish to trade and the position limits needed. • Provide a list of OTC brokers you wish to be able to enter trades for clearing on your behalf.

http://www.cmegroup.com/clearingmembers

http://www.cmegroup.com/clearingmembers

http://www.cmegroup.com/clearportregistration


Delivered securely across the internet, CME Direct allows traders and brokers side-by-side trading of listed and OTC markets

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CME Direct: delivering value across the trading life cycle

PRE-TRADE TRADE POST-TRADE Messenger CME Direct CME STP

Blasting, RFQs, Options Access CME Globex and CME ClearPort markets

ConfirmHub and CT API

Any Customer (Trader, Broker, FCMs)

Any Region Any Product


CME Direct is a secure and sophisticated trading front-end for all CME, CBOT, NYMEX, COMEX, KCBT futures.

It is available globally and supported locally and offers:

• Depth of market view, highlighting own and firm live orders

• Support for all trade types and Time in Force orders • Limit, Market, Stop orders • Day, GTC, GTD, FAK, FOK

• Real-time streaming quotes, including market depth and real-time Block data

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CME Globex Trading on CME Direct

Learn more at cmegroup.com/direct


Streamlined CME Direct On-boarding Process •Trading Firms require Clearing Firm (FCM) to trade through CME Direct on CME Globex or clear through CME ClearPort

•Each new Trading Firm registers traders with CME Group •Trading Firms request directly or via their Clearing Firm, access to CME Direct •Web-based registration through http://cmegroup.com/clearport

ClearPort Registration

•Configure risk controls for the trading firm •Create account and associate risk parameters •Configure and enable Globex access for each account •Web-based administration within ClearPort RAV

Clearing Firm Admin

•Trading Firm Admin configures each new trader •Sets product permission and trading rights •Administered within CME Direct admin screen

Trading Firm Admin

•CME Direct deployed to new trader •Internet delivered client •Trader training •Login distributed

Deployment

Trade!

Trading Firms dialogue with their Clearing

Firms regarding risk levels,

eligible traders

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CME STP

• Straight Through Processing • OTC trades can be fed directly and automatically into customers risk systems, resulting in

increased operational efficiency and straight through processing (STP). • Real-time trade confirmations and viewing of positions across different exchange venues are

possible using secure and confidential data transmission, and thus streamlining post-trade flows.

• CME STP API • Works across the multiple trading venues: CME Globex, CME ClearPort and Trading Floors. • Can receive the feed of cleared trades for NYMEX-,COMEX- CBOT-, DME-, and CME Europe

listed products via FIXML 5.0 based API.

CME STP API

Cleared Trades CME Clearing

(CCP)

Trader & Broker’s Risk & Back-office

System

Cleared Trades

NYMEX COMEX CBOT

DME CME Europe

Products


Summary of OTC Services

• 3 Pillars to Support CME Group’s OTC Services • ClearPort, CME Direct, CME STP are interconnected organically to support CME Group’s OTC services.

CME STP API Cleared

Trades

CME Clearing (CCP)

Trader & Broker’s Risk & Back-office

System

Cleared Trades

CME Direct

ClearP

ort OTC Broker

OTC Trader OTC

Trades OTC Trades

Orders



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8. Quiz and Q&A


Firm ID, commonly referred to as the Executing Firm Number, is a unique identifier for either a clearing firm or an executing firm for CME’s electronic trading platform Globex. Firm ID is issued by CME Group upon request and approval of clearing firms.

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What is a Firm ID?

Using a Firm ID Clearing Firms can apply multiple Firm IDs to group: • trading activities to serve the needs of risk management and • customer business such as separate business units in different geographic locations, etc. Executing Firms can apply direct Firm ID via its Clearing Firms, subject to the approval of their respective Clearing Firms. All such requests can be made through your Global Account Manager, or email [email protected]


Key Benefits of Having Your Own Firm ID

• Clearing Firms (CF) may monitor activity at a more granular level in CME provided risk tools

• CFs can monitor and control risk based on the Executing Firm ID, especially important for the Direct Market Access setup.

• Proper management of Messaging Efficiency Program (MEP)

• By registering its EF with proper Firm ID, the monitoring of MEP violations will be cascaded to the corresponding Firm level, thus avoiding CF being penalized for MEP violations by their EF.

• Upon CF’s approval, Executing Firms (EF) will also be able to leverage CME

provided risk tools • EF can request relevant risk tools provided by CME via CF to be cascaded to

their Firm ID level to monitor & control its own risk.

• Better support from CME • With identified Firm ID and its associated market access info, CME can better

assist the registered EF directly in troubleshooting production issues, the messaging efficiency program, relevant product/market education.


Globex Credit Control

Globex Credit Control

Using a shared Executing Firm (EF) ID

Using a dedicated Executing Firm ID

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Example: Usage of Executing Firm in GC2 & MEP

Customer A

EF ID 111 CME Globex

Customer B

Customer C

111 : 10 Mil (Shared)

Customer A

CME Globex Customer B

Customer C

EF ID : AAA

EF ID : BBB

EF ID : CCC

AAA : 3 Mil

BBB : 4 Mil

CCC : 3 Mil

What if MEP thresholds are exceeded? Shared Executing Firm ID – The FCM has to manually trace the customer though system logs

Dedicated Executing Firm ID – FCM can identify customer from the Executing Firm ID


Risk Management Tools/Functions Provided by CME

Risk Mgmt Tools Acronyms Main Functions Customers

Globex Credit Controls

GC2

allows risk manager to set pre-execution credit control limits on futures and options.

Clearing Firm

Risk Management Interface

RMI provides a GUI and an API to block/prevent or unblock/allow orders and cross-requests from being entered or modified by Execution Firm accounts.

Clearing Firm

Cancel On Disconnect

COD cancels all resting orders in the event of a hard disconnect

Clearing Firm Executing Firm

Drop Copy DC provides bundled application messages on a separate iLink session


FirmSoft FirmSoft front-end application provided by CME Group that allows the client to view and cancel orders and quotes

Clearing Firm Executing Firm Individual Trader

At CME Group, we offer a suite of risk management tools, designed to protect CME Globex customers and clearing firms, utilizing the Firm IDs as part of the criteria in our systems.

Please visit http://www.cmegroup.com/globex/trading-cme-group-products/risk-management-services.html or contact your Global Account Manager for more info

http://www.cmegroup.com/globex/trading-cme-group-products/risk-management-services.html



Risk Management Tools/Function Provided by CME – Con’d

Risk Mgmt Tools Acronyms Main Functions Customers

Kill Switch (tab in GC2)

Kill Switch

Provides a Globex Orders Kill function for CF, EF and SenderCompID


DSF Access Manager (tab in GC2)

DSF GUI to help mitigate delivery risk for DSF products Clearing Firm

Mass Order Cancel

MOC Function to allow cancel iLink orders for a product group/instrument level – Launching May 4


Self Match Prevention

SMP Function to prevent self order matching within a single FirmID


At CME Group, we offer a suite of risk management tools, designed to protect CME Globex customers and clearing firms, utilizing the Firm IDs as part of the criteria in our systems.

Please visit http://www.cmegroup.com/globex/trading-cme-group-products/risk-management-services.html or contact your Global Account Manager for more info





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8. Quiz and Q&A


A robust co-location offering catering to a wide range of customers globally

Business launched January 2012

More than 100 customers accessing CME, CBOT, NYMEX, COMEX and KCBOT

Lowest latency connection to CME Globex through CME GLink

Open access model for Service Providers and Telecommunication firms

More than 25 Service Providers offering market data, news, managed services and more

Transparent and non-discriminatory pricing – all customers are treated equally

Contract terms – 3 month contract option with consistent contract terms for all customers

Connectivity offerings, such as LNet, and access to our HUBs available to customers

57

Highlights of CME Co-Location Services Offering


Co-Location Services Product Suite High density cabinets, multitude of connectivity options and superior customer service

HOSTING SERVICES CONNECTIVITY SERVICES SUPPORT SERVICES

• Licensed space • 52 unit cabinets, cage option, full

and half rack

• Power • 4.25kw, 8.5kw, 17kw options

• Data Center environmentals • 428,000 square foot facility

• Own and operate own power substation

• State of the art fire and protection services

• CME GLink • Local connectivity to CME Globex

• Cross connects • Services delivered efficiently and

equally throughout the facility

• Bulk Transport • Connectivity offering to connect 350

Cermak to Aurora

• Utility networks • GPS and Precision Time Services

• World class service 24/7

• Remote hands

• Shipping & receiving

• Customer support portal

• Customer amenities


Service Provider Partners Our “open access” model allows every market participant the opportunity to take space from a single server to a multi-cabinet footprint


Intermediary Partner Program

ABN AMRO Clearing Chicago LLC Advantage Futures LLC Crossland LLC Dorman Trading LLC ED&F Man Capital Investments Inc. Ironbeam Inc. Marex Spectron MBF Clearing Corp. Philip Futures Inc.

Broadens our customers’ ability to access our market place



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8. Quiz and Q&A


Quiz & Q&A


Disclaimer

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Futures trading is not suitable for all investors, and involves the risk of loss. Futures are a leveraged investment, and because only a percentage of a contract’s value is required to trade, it is possible to lose more than the amount of money deposited for a futures position. Therefore, traders should only use funds that they can afford to lose without affecting their lifestyles. And only a portion of those funds should be devoted to any one trade because they cannot expect to profit on every trade. All references to options refer to options on futures.

Swaps trading is not suitable for all investors, involves the risk of loss and should only be undertaken by investors who are ECPs within the meaning of section 1(a)12 of the Commodity Exchange Act. Swaps are a leveraged investment, and because only a percentage of a contract’s value is required to trade, it is possible to lose more than the amount of money deposited for a swaps position. Therefore, traders should only use funds that they can afford to lose without affecting their lifestyles. And only a portion of those funds should be devoted to any one trade because they cannot expect to profit on every trade.

Any research views expressed are those of the individual author and do not necessarily represent the views of the CME Group or its affiliates.

CME Group is a trademark of CME Group Inc. The Globe Logo, CME, Globex and Chicago Mercantile Exchange are trademarks of Chicago Mercantile Exchange Inc. CBOT and the Chicago Board of Trade are trademarks of the Board of Trade of the City of Chicago, Inc. NYMEX, New York Mercantile Exchange and ClearPort are registered trademarks of New York Mercantile Exchange, Inc. COMEX is a trademark of Commodity Exchange, Inc. KCBOT, KCBT and Kansas City Board of Trade are trademarks of The Board of Trade of Kansas City, Missouri, Inc. All other trademarks are the property of their respective owners.

The information within this presentation has been compiled by CME Group for general purposes only. CME Group assumes no responsibility for any errors or omissions. Additionally, all examples in this presentation are hypothetical situations, used for explanation purposes only, and should not be considered investment advice or the results of actual market experience.

All matters pertaining to rules and specifications herein are made subject to and are superseded by official Exchange rules. Current rules should be consulted in all cases concerning contract specifications.

Copyright © 2013 CME Group. All rights reserved.

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