Regulatory Release 2012-25


Re:  Block Trades
Effective Date: September 25, 2012 

Pursuant to OneChicago Rule 417(a), the Exchange permits eligible contract participants to transact block trades for a minimum number of 25 contracts per transaction. Block trades can also be traded competitively. Block trades can be transacted between 8:00 and 4:00 pm on each Business day the exchange is open.  All block trades must be reported without delay within 5 minutes of being executed.  All trades must be reported by 4:00 p.m.

All block trades must be traded or reported through the OneChicago OCX.BETS® platform.

Block trades can be competitively executed on the OCX.BETS system by placing anonymous bids or offers.  Competitively executed block trades are considered executed and reported when traded.

Alternatively, block trades can be privately negotiated and reported as bilateral transactions using the OCX.BETS system.  All bilateral trades are required to be entered into OCX.BETS without delay within 5 minutes of being executed.  For the avoidance of doubt, the party entering the bilateral trade is required to enter the trade into OCX.BETS within 5 minutes of execution and the other party is required to accept the trade within 5 minutes of it being entered in OCX.BETS.

It is the responsibility of the buying and selling firms to effect any subsequent allocations or necessary updates to non-critical matching fields utilizing their chosen post-trade processing system.

To protect market integrity during the negotiation and reporting period, any party with knowledge of the pending block trade is prohibited from entering offsetting orders in the specific, or any related, OneChicago product for the benefit of the account or accounts related to a party to the block trade until the block trade has been reported to and disseminated by the OneChicago price distribution mechanism.  However, as discussed in Regulatory notice 2011-8, trade participants can pre-hedge.  Please see that notice for additional details.  Additionally, no party with knowledge of the pending block trade report is allowed to exercise discretion by withholding (or placing) orders for any account that would have (or would not have) been placed but for the knowledge of the pending block trade until the block trade has been reported to and disseminated by the OneChicago price distribution mechanism.  Parties subject to the jurisdiction of a member or an affiliate of the Intermarket Surveillance Group (“ISG”) are further prohibited from submitting related offsetting orders on OneChicago if they utilize block trade reporting facilities of any other ISG participant exchange until such trades have been disseminated to the marketplace via the standard public reporting mechanism for that exchange.

OneChicago considers busting block trades to be a serious matter and may deny a bust request based on the factors surrounding the request, including but not limited to the market impact of the original report, the amount of variation between the block trade price and the market price at the time of the report and the length of time transpiring since the block trade was reported to the public.  Fees may be levied for busting a block trade.

Any attempt to circumvent this policy or misrepresent a transaction as a block trade will be forwarded to the appropriate party for investigation.

Any questions can be directed to OneChicago compliance at 312.424.8530 or marketsurveillance@onechicago.com.