CME Group Customer Forum Q2 2014

Transcription

1 CME Group Customer Forum Q 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

2 E-Trading & Technology Topics 1. Market Data Platform 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 2 2

3 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 3

4 MDP 3.0: Next Generation Platform FIX Binary Based on simple primitive encoding 20% increase overall in bandwidth Very low latency Optimized for direct data access Direct access by security id <PacketSeq Trades <48= > <48= > Quotes <48= > <48= > Direct access by message type <PacketSeq Trades Volume Quotes Stats Implied Quotes 4

5 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: Q 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 5

6 E-Trading & Technology Topics 1. Market Data Platform 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 6 6

7 New ilink Architecture: Market Segment Gateways 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 2 nd 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 7

8 Achieving FIFO at the Market Segment Gateway 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 8

9 New ilink Architecture: Market Segment Gateways Gateway Comparison 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) Fault Tolerance Unique across all CGWs Connect and trade through either primary or backup gateway Duplicated across all MSGWs Differentiated by IP and TargetSubID Trade through primary gateway only 9

10 Market Segment Gateways 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 orders: Arrive within μs Gap between orders ~ ns Slightly less than 10G line rate All messages for a specific contract received within ~ 3 ms FIFO ordering has been maintained 10

11 Market Segment Session Model 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 11

12 Current: Convenience Gateways and Session Model Unique SessionID across all ilink gateways Customer Sessions Session AB1 is unique across all ilink Gateways ilink Gateway-1 ilink Gateway-2 ilink Gateway-3 ilink Gateway-m SessionID:Port AB1:9000 AB2:9001 AB3:9002 AB4:9003 SessionID:Port BC1:9000 BC2:9001 BC3:9002 BC4:9003 SessionID:Port CD1:9000 CD2:9001 CD3:9002 CD4:9003 SessionID:Port DE1:9000 DE2:9001 DE3:9002 DE4:9003 IP: IP: IP: IP: AB1 has a single sequence stream comprised of messages to/from all Market Segments/Trading Engines Trading Engine-1 Trading Engine-2 Trading Engine-n CME GROUP CONFIDENTIAL 12

13 New: Market Segment Gateways and Session Model Shared SessionID Among All MSGWs ilink Sessions Session EF1 will not be unique across MSGWs ilink Convenience Gateway-1 SessionID:Port AB1:9000 AB2:9001 ilink Convenience Gateway-2 SessionID:Port BC1:9000 BC2:9001 ilink Sessions IP IP A MSGW session will have different IPs and the same port across MSGWs MSGW-01 MSGW-02 MSGW-2 MSGW-n MSGW sequence stream will be determined by session & Market Segment Indicator Sequenced by FIX sequence number, SessionID <and> TargetSubID SessionID:Port EF1:9000 EF2:9001 EF3:9002 IP: SessionID:Port EF1:9000 EF2:9001 EF3:9002 IP: IP: SessionID:Port EF1:9000 EF2:9001 EF3:9002 IP: IP: Trading Engine 1 Trading Engine 2 Trading Engine n 13

14 Market Segment Session Model Phase 2 - Market Segment Gateway Access to All Markets 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 14

15 Market Segment Gateways Phase 2 - Market Segment Gateway Access to All Markets 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 Please review webinars. Look for more information in the Globex Notices 15

16 E-Trading & Technology Topics 1. Market Data Platform 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 16 16

17 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 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: Q

18 Mass Order Status 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,

19 Mass Order Status Message Sequence Single inbound request and multiple outbound responses 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) ilink Client System 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=N) CME Globex Execution Report Order Status (35=8, 39=0 or 1,150=I, 912=N) Execution Report Order Status (35=8, 39=0 or 1,150=I, 912=Y) 912-LastRptRequested new tag, indicates this message completes the response 19

20 Mass Order Cancel 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) 20

21 Mass Order Cancel Message Sequence Bundled outbound message Order Mass Action Report (35=BZ) 21

22 User-Defined Spreads for Futures 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/Q 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 22

23 Self-Match Prevention Phase 2 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 23

24 Scenario FIFO Market without Self-Match Event Bid Aggressing order 1302 Cancel Aggressing or Resting instruction Ask 1301 Foreign 1301 Foreign 1301 Foreign 1301 Foreign 1302 Foreign Self, Cancel Resting Instruction 1302 Foreign Aggressing order executes against all resting orders at Remaining quantity

25 Scenario FIFO Market without Self-Match Event Bid Aggressing order Remaining Qty 1302 Cancel Aggressing or Resting instruction Ask 1301 Foreign 1301 Foreign 1301 Foreign 1301 Foreign 1302 Foreign Self, Cancel Resting Instruction Foreign 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

26 Scenario FIFO Market with Cancel Aggressing Bid Aggressing order 1302 Cancel Aggressing instruction Ask 1301 Foreign 1301 Foreign 1301 Foreign 1301 Foreign 1302 Foreign Self, Cancel Resting Instruction 1302 Foreign Aggressing order executes against all resting orders at Remaining quantity

27 Scenario FIFO Market with Cancel Aggressing Bid Aggressing order Remaining Qty 1302 Cancel Aggressing instruction Order Cancel Remaining Qty 430 Cancelled due to Self-Match Ask 1301 Foreign 1301 Foreign 1301 Foreign 1301 Foreign 1302 Foreign Self, Cancel Resting Instruction Foreign 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

28 Scenario FIFO Market with Cancel Resting Bid Aggressing order 1302 Cancel Resting instruction Ask 1301 Foreign 1301 Foreign 1301 Foreign 1301 Foreign 1302 Foreign Self, Cancel Aggressing Instruction 1302 Foreign Aggressing order executes against all resting orders at Remaining quantity

29 Scenario FIFO Market with Cancel Resting Bid Aggressing order Remaining Qty 1302 Cancel Resting instruction Ask 1301 Foreign 1301 Foreign 1301 Foreign 1301 Foreign 1302 Foreign Self, Cancel Aggressing Instruction Foreign Aggressing order executes against resting orders at 1302 until it hits the Self order for

30 Scenario FIFO Market with Cancel Resting Bid Aggressing order Remaining Qty 1302 Cancel Resting instruction Ask 1301 Foreign 1301 Foreign 1301 Foreign 1301 Foreign 1302 Foreign Self, Cancel Aggressing Instruction 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:

31 Scenario Pro-Rata Market with Cancel Aggressing Bid Aggressing order 1302 Cancel Aggressing instruction Ask 1301 Foreign 1301 Foreign 1301 Foreign 1301 Foreign 1302 Foreign Self, Cancel Resting Instruction 1302 Foreign Aggressing order executes against all resting orders at Remaining quantity

32 Scenario Pro-Rata Market with Cancel Aggressing Bid Aggressing order Remaining Qty 1302 Cancel Aggressing instruction Order Cancel Remaining Qty 440 Cancelled due to Self-Match Ask 1301 Foreign 1301 Foreign 1301 Foreign 1301 Foreign 1302 Foreign Self, Cancel Resting Instruction Foreign 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 1 st price level stand

33 Scenario Pro-Rata Market with Cancel Resting Bid Aggressing order 1302 Cancel Resting instruction Ask 1301 Foreign 1301 Foreign 1301 Foreign 1301 Foreign 1302 Foreign Self, Cancel Aggressing Instruction 1302 Foreign Aggressing order executes against all resting orders at Remaining quantity

34 Scenario Pro-Rata Market with Cancel Resting Bid Aggressing order Remaining Qty 1302 Cancel Resting instruction Ask 1301 Foreign 1301 Foreign 1301 Foreign 1301 Foreign 1302 Foreign Self, Cancel Resting Instruction Foreign A potential self-match at price level 1302 is recognized and the Self-Match event is triggered 34

35 Scenario Pro-Rata Market with Cancel Resting Bid Aggressing order Remaining Qty 1302 Cancel Resting instruction Ask 1301 Foreign 1301 Foreign 1301 Foreign 1301 Foreign 1302 Foreign Self, Cancel Resting Instruction Foreign 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:

36 Self-Match Prevention Phase 2 Next Phase of Functionality Targeting Q 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) 36

37 E-Trading & Technology Topics 1. Market Data Platform 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 37 37

38 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 3 rd, 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 Q 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 For more information, contact Sarjit Kaur, sarjit@bursamalaysia.com, ph: 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 sureshmaniammookiah@bursamalaysia.com, ph: or Andrew Tan Kah Loong tankahloong@bursamalaysia.com, ph:

39 Bursa Malaysia Derivatives Initiative Launching BMD Palm Olein Futures in Q2, 2014: Introduction of BMD RBD Palm Olein Futures (FPOL) Underlying Settlement Method Contract Size Price Quotation Minimum Price Flucuation Contract Month Trading Hours Last Trading Day RMD Palm Olein Physical Delivery via e-negotiatied Storage Receipts (e-nsrs). Ex-tank as per FCPO 25 MT US$ per MT US$0.50 / MT Spot month and the next 5 succeeding months, and thereafter, alternate months up to 24 months ahead. M-F Kuala Lumpur Business Day hours; hours Contract expires at noon on the 15th day of the delivery month, or if the 15th is a nonmarket 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 nonmarket day, the preceding Business Day. 39

40 Historical Record Achieved in 2013 Total Volume : 10,742,098 FCPO Volume : 8,014,914 60,000 50,000 FKLI FCPO Others Exchange Total All Products Monthly ADV from Sep 10 until 25 Mar 14 Historical High OI of 258,001 on 26 July 2013 Historical High of 71,678 FCPO Daily Volume on 12 March 2014 Historical High of 93,313 Total Daily Volume on 25 March ,000 30,000 20,000 10,000 0 Sep-10 Oct-10 Nov-10 Dec-10 Jan-11 Feb-11 Mar-11 Apr-11 May-11 Jun-11 Jul-11 Aug-11 Sep-11 Oct-11 Nov-11 Dec-11 Jan-12 Feb-12 Mar-12 Apr-12 May-12 Jun-12 Jul-12 Aug-12 Sep-12 Oct-12 Nov-12 Dec-12 Jan-13 Feb-13 Mar-13 Apr-13 May-13 Jun-13 Jul-13 Aug-13 Sep-13 Oct-13 Nov-13 Dec-13 Jan-14 Feb-14 Mar-14

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 Q 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 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 41

42 E-Trading & Technology Topics 1. Market Data Platform 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 42 42

43 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 (facdesk@cmegroup.com) or phone ( ) 3. 3 rd -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. < Counterparty Risk in OTC World > < Clearing by CCP > OTC Trader RAV Clearing Member IDB/ Affirm Service OTC Trades ClearPort Credit Controls Cleared Trades CME Clearing (CCP) OTC Dealer RAV Clearing Member 43

44 CME ClearPort Registration Process 1. Set up a clearing account with clearing firms found at 2. Register for ClearPort at 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. 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. 44

45 CME Direct: delivering value across the trading life cycle Delivered securely across the internet, CME Direct allows traders and brokers side-by-side trading of listed and OTC markets 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 45

46 CME Globex Trading on CME Direct 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 realtime Block data Learn more at cmegroup.com/direct 46

47 Streamlined CME Direct On-boarding Process ClearPort Registration 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 Clearing Firm Admin Trading Firm Admin 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 Trading Firm Admin configures each new trader Sets product permission and trading rights Administered within CME Direct admin screen Trading Firms dialogue with their Clearing Firms regarding risk levels, eligible traders Deployment CME Direct deployed to new trader Internet delivered client Trader training Login distributed Trade! 51

48 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. Trader & Broker s Risk & Back-office System Cleared Trades CME STP API Cleared Trades CME Clearing (CCP) Products NYMEX COMEX CBOT DME CME Europe 48

49 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. OTC Trader OTC Broker Orders OTC Trades CME Direct OTC Trades ClearPort CME Clearing (CCP) Cleared Trades Trader & Broker s Risk & Back-office System Cleared Trades CME STP API 49

50 E-Trading & Technology Topics 1. Market Data Platform 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 50 50

51 What is a Firm ID? 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. 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 GAMAsia@cmegroup.com 51

52 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. 52

53 Example: Usage of Executing Firm in GC2 & MEP Using a shared Executing Firm (EF) ID Customer A Globex Credit Control Customer B EF ID : 10 Mil (Shared) CME Globex Customer C Using a dedicated Executing Firm ID Customer A EF ID : AAA Globex Credit Control AAA : 3 Mil Customer B EF ID : BBB BBB : 4 Mil CME Globex Customer C EF ID : CCC 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 53

54 Risk Management Tools/Functions Provided by CME 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. 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 Cancel On Disconnect RMI COD 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. cancels all resting orders in the event of a hard disconnect 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 Clearing Firm Executing Firm Clearing Firm Executing Firm Clearing Firm Executing Firm Individual Trader Please visit or contact your Global Account Manager for more info 54

55 Risk Management Tools/Function Provided by CME Con d 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. 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 Clearing Firm Executing Firm DSF Access Manager (tab in GC2) Mass Order Cancel DSF GUI to help mitigate delivery risk for DSF products Clearing Firm MOC Function to allow cancel ilink orders for a product group/instrument level Launching May 4 Clearing Firm Executing Firm Self Match Prevention SMP Function to prevent self order matching within a single FirmID Clearing Firm Executing Firm Please visit or contact your Global Account Manager for more info 55

56 E-Trading & Technology Topics 1. Market Data Platform 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 56 56

57 Highlights of CME Co-Location Services Offering 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

58 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 58

59 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 59

60 Intermediary Partner Program Broadens our customers ability to access our market place 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. 60

61 E-Trading & Technology Topics 1. Market Data Platform 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 61 61

62 Quiz & Q&A 62

63 Disclaimer 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 63