• Adoption of New Rule 132 ("Sale of Membership at Direction of Regulatory Authority")

      • To
      • Members, Member Firms and Market Users
      • From
      • Market Regulation Department
      • #
      • SER-6953
      • Notice Date
      • 10 December 2013
      • Effective Date
      • 23 December 2013
    • Pending all relevant regulatory review periods, effective on December 23, 2013, CME, CBOT, NYMEX and COMEX (collectively, the “Exchanges”) will each adopt new Rule 132 (“Sale of Membership at Direction of Regulatory Authority”). The new rule provides additional protection to the Exchanges in the event that a regulatory authority with jurisdiction over the owner of a membership directs the owner to relinquish the membership or where a membership is determined to have been obtained unlawfully based on the laws of a foreign jurisdiction.
       
      Rule 132 allows the Exchanges to force a sale of a membership where the owner does not voluntarily sell that membership when instructed to do so by a regulatory authority with jurisdiction over the owner, or where it is determined that the membership was purchased in contravention of applicable laws. The forced seat sale process would be the same as the process set forth in existing Rule 133 (“Sale of Membership when Member Defaults”). 
       
      The text of new Rule 132 appears below.
       
      132. SALE OF MEMBERSHIP AT DIRECTION OF REGULATORY AUTHORITY
      If the Exchange is apprised by a regulatory authority with jurisdiction over the owner of a membership that said membership was obtained unlawfully based on the laws of the jurisdiction in which the owner of a membership is located or where the regulatory authority directs that the owner of the membership relinquish ownership, the CEO may order the membership to be sold and the proceeds applied as provided in Rule 110. If, within 30 days of such CEO order of sale, the owner voluntarily sells the membership, the ordered sale of the membership shall be cancelled. If the membership is not sold by the owner within 30 days of the CEO order, then the membership involved shall be sold by the Exchange to the highest bid on file with the Department for such membership upon the opening of the seat sale market on the sixth business day after expiration of the 30-day period.
       
      If you have any questions concerning the new rule, please contact Robert Sniegowski, Senior Director, Rules & Regulatory Outreach, Market Regulation Department, at 312.341.5991.
       
       
      For media inquiries concerning this Special Executive Report, please contact CME Group Corporate Communications at 312.930.3434 or news@cmegroup.com.

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