• Launch of MGEX-KCBT Wheat Intercommodity Spread Options

      • To
      • Members, Member Firms and Market Users
      • From
      • Research and Product Development
      • #
      • SER-6716
      • Notice Date
      • 26 June 2013
      • Effective Date
      • 01 July 2013
    • Please note that SER-6716 has been replaced by SER-6716R published on June 28, 2013.
       
      MGEX-KCBT Wheat Intercommodity spread options are scheduled to begin trading on Monday, July 1, 2013 pending CFTC review.  These options will be available for trading on the CME Globex electronic trading platform and on the Chicago trading floor. These contracts will be listed by and subject to the rules and regulations of the Kansas City Board of Trade.
       
      Trading hours on CME Globex will be Sunday through Friday 7:00 p.m. to 7:45 a.m. with a pause from 7:45 a.m. to 8:30 a.m. and from 8:30 am to 1:15 p.m. Chicago time. Trading hours on the trading floor will be Monday through Friday 8:30 a.m. to 1:15 p.m. Chicago time.
       
      The following option expirations will be available for trade:
       

      Option Month
      MGEX Leg
      KCBT Leg
      Expires
      July
      July
      July
      June
      September
      September
      July
      June
      December
      December
      December
      November

       
      Initially, options on the December 2013, July 2014 and the September 2014 spreads will be listed.
       
      MGEX-KCBT Wheat Intercommodity spread options are European Style options that will be cash settled at expiration. A long MGEX-KCBT spread represents a long MGEX position and a short KCBT position. A short MGEX-KCBT spread represents a short MGEX position and long KCBT position.
       
      Attached are the contract salient features, trading hours, terms and conditions and fee schedule.
       
      Questions may be directed to Susan Sutherland, Senior Director, Commodity Products, at 312-930-2325 or Susan.Sutherland@cmegroup.com; John D. Hill, Economist, Commodity Research and Product Development at 312-930-1852 or John.Hill@cmegroup.com; or Dave Lehman, Managing Director, Commodity Research and Product Development at 312-930-1875 or David.Lehman@cmegroup.com.


      MGEX-KCBT WHEAT SPREAD OPTIONS
      CONTRACT SPECIFICATIONS
       
      Contract Size: One MGEX-KCBT wheat spread option reflects one MGEX wheat futures contract of a specified month, and one KCBT wheat futures contract of a specified month.
       
      Tick Size: 1/8 of one cent per bushel ($6.25 per contract).
       
      Price Basis: The specified MGEX wheat futures price in cents per bushel minus the specified KCBT wheat futures price in cents per bushel.
       
      Strike Price Interval: Strike prices will be listed in increments of five cents per bushel. The minimumstrike price range will include the strike price closest to the current MGEX-KCBT futures spread price, plus the next ten consecutive higher and the next ten consecutive lower strike prices.
       
      Contract Months: July (July MGEX – July KCBT); September (Sep MGEX – July KCBT); and December (Dec MGEX – Dec KCBT)
       
      Daily Price Limit: The sum of the trading limits for MGEX wheat futures and KCBT wheat futures. There shall be no price limits on the last trading day.
       
      Last Trading Day: The last Friday which precedes by at least two business days, the last business day of the month preceding the earliest expiring leg in the spread underlying the MGEX-KCBT Wheat Intercommodity spread option.
       
      Exercise: Financially settled
       
      Position Limits: Subject to the same position limits prescribed for KCBT Wheat futures contracts, except that spot month limits are not applicable since MGEX-KCBT Wheat Intercommodity Spread Options expire prior to their corresponding futures contract delivery month.
       
      Ticker Symbols CME Globex: MKW
       
      Open Outcry and Clearing: MKW
       
      Exchange Rules: This contract is listed with and subject to the rules and regulations of the KCBT
       
      Trading Hours (Chicago time)
       
      Open Outcry (Trading floor): 8:30 a.m. – 1:15 p.m., Monday – Friday
       
      CME Globex (electronic platform): 7:00 p.m. – 7:45 a.m., Sunday to Friday, and 8:30 a.m. – 1:15 p.m., with a break in electronic trading from 7:45 a.m. to 8:30 a.m.
       


       
      Chapter 26
      MGEX-KCBT Wheat Intercommodity Spread Options
       
      2600.00 SCOPE OF CHAPTER
      This chapter is limited in application to put and call options on MGEX-KCBT Wheat Intercommodity spreads. In addition to the rules of this chapter, transactions in MGEX-KCBT wheat spread options shall be subject to the general rules of the Exchange insofar as applicable.
       
      2601.00 OPTIONS CHARACTERISTICS
       
      2601.01 Contract Months
      Trading in MGEX-KCBT Wheat Intercommodity spread options may be scheduled in such months as determined by the Exchange.
       
      2601.02 Trading Unit
      One MGEX-KCBT Wheat Intercommodity spread option reflects one (1) MGEX Wheat futures contract of a specified contract month on the Minneapolis Grain Exchange, Inc, and one (1) opposing KCBT Wheat futures contract of a specified contract month on the Board of Trade of Kansas City, Missouri, Inc.
       
      The MGEX-KCBT Wheat Intercommodity spread is calculated in cents/bushel as:
      MGEX Wheat futures price in cents/bu – KCBT Wheat futures price in cents/bu.
       
      2601.03 Minimum Fluctuations
      The premium for MGEX-KCBT Wheat Intercommodity spread options shall be in multiples of one-eighth (1/8) of one cent per bushel, or six dollars and twenty five cents ($6.250) per contract.
       
      However, a position may be initiated or liquidated in MGEX-KCBT Wheat Intercommodity spread options at premiums ranging from $1.00 to $6.00, in $1.00 increments per option contract.
       
      2601.04 Trading Hours
      The hours for trading of MGEX-KCBT Wheat Intercommodity spread options contracts shall be determined by the Exchange. MGEX-KCBT Wheat Intercommodity spread options shall be opened and closed for all months and strike prices simultaneously.
       
      2601.05 Exercise Prices
      Trading shall be conducted for put and call options with strike prices in integral multiples of five cents per bushel per MGEX-KCBT Wheat Intercommodity spread option. At the commencement of trading for such option contracts, the following strike prices shall be listed: one with a strike price closest to the difference between the previous day’s corresponding MGEX-KCBT Wheat settlement prices (the at-the-money strike); the next ten consecutive higher and the next ten consecutive lower strike prices from the at-the-money strike.   If the difference between the previous day’s settlement prices is midway between two strike prices, the closest price shall be the larger of the two. New strike prices will be added through time to assure ten strikes above and below the at-the-money strike.   When a new strike price is added for an option contract month, the same strike price will be added to all option contract months for which that strike price is not already listed.
       
      All strikes will be listed prior to the opening of trading on the following business day. Upon demand and at the discretion of the Exchange, new out-of-current-range strike prices at regularly defined intervals may be added for trading on as soon as possible basis.
       
      The Exchange may modify the procedures for the introduction of strikes as it deems appropriate in order to respond to market conditions.
       
      2601.06 Position Limits, Exemptions, Position Accountability and Reportable Levels
      MGEX-KCBT Wheat Intercommodity Spread Options shall be subject to the same position limits prescribed for wheat futures contracts as set forth in Rule 2008.00, except that spot month limits are not applicable since MGEX-KCBT Wheat Intercommodity Spread Options expire prior to their corresponding futures contract delivery month.
       
      2601.07 Termination of Trading
      Subject to the provisions of rule 2601.04 no trades in MGEX-KCBT Wheat Intercommodity spread options expiring in the current month shall be made after the close of trading of the open outcry trading session on the last Friday which precedes by at least two business days, the last business day of the month preceding the earliest expiring leg in the spread underlying the MGEX-KCBT Wheat Intercommodity spread option. If such Friday is not a business day, the last day of trading shall be the business day prior to such Friday.
       
      For example, the July MGEX-KCBT Wheat Intercommodity spread option (July MGEX Wheat minus July KCBT Wheat) will expire on the last Friday which precedes by at least two business days the last business day of June; the September MGEX-KCBT Intercommodity spread option (September MGEX Wheat minus July KCBT Wheat) will expire on the last Friday which precedes by at least two business days the last business day of June; the December-December MGEX-KCBT Wheat Intercommodity spread option (December MGEX Wheat minus December KCBT Wheat) will expire on the last Friday which precedes by at least two business days the last business day of November.
       
      2601.08 Contract Modification
      Specifications shall be fixed as of the first day of trading of a contract except that all options must conform to government regulations in force at the time of exercise. If the U.S. government, an agency, or duly constituted body thereof issues an order, ruling, directive, or law inconsistent with these rules, such order, ruling, directive, or law shall be construed to become part of the rules and all open and new options contracts shall be subject to such government orders.
       
      2602.00 EXERCISE
      MGEX-KCBT Wheat Intercommodity spread options will be cash settled on expiration day.
      MGEX-KCBT Wheat Intercommodity spread options cannot be exercised at any time during the life of the option.
       
      2603.00. OPTION PREMIUM FLUCTUATION LIMITS
      Trading is prohibited during any day except for the last day of trading in a MGEX-KCBT Wheat Intercommodity spread option at a premium of more than the sum of the trading limits for the KCBT Wheat futures contract and the MGEX Wheat futures contract, above and below the previous day's settlement premium for that option as determined by the Clearing House.
       
      2604.00 PAYMENT OF OPTION PREMIUM
      The option premium must be paid in full by each clearing member to the Clearing House and by each option customer to his futures commission merchant at the time that the option is purchased, or within a reasonable time after the option is purchased.


       
      CBOT Fee Template
       

      Level
      CBOT Account Owner 2
      Execution Type
      Platform
      Exchange Fee
      Individual Member
      1
      Individual Members
      Member Trading
      Own Account
      Open Auction
      $0.00¹
      Electronic
      $0.28
      Individual Delegates
      Delegate Trading Own Account
      Open Auction
      $0.00¹
      Electronic
      $0.58
      Equity Members (Individual Equity members, Clearing Firms and Equity Firms)
      2
      Equity Members 1
      Member or Delegate
      Open Auction
      $0.00¹
      Electronic
      $0.28
      Equity Members 1
      Non Member
      Electronic
      $0.90
      (Exception) Rule 106.S. Family of Funds Equity Member Firms
      Member, Delegate or Non Member
      Open Auction
      $0.00¹
      Electronic
      $0.90

      1 - Clearing Closely Held Corporate Members & Sole Proprietors, Rule 106.J. Equity Closely Held Corporate Members & Rule 106.I. Affiliate Equity Member Firms, Individual Equity Members (other member/delegate executing), Clearing FCMs, Rule 106.J. Equity FCMs, Clearing Corporate Members, Rule 106.J. Equity Corporate Members & Rule 106.I. Affiliate Equity Member Firm (Affiliate of Clearing FCM, Clearing Corporate Member or Rule 106.J Equity FCM or Equity Corporate Member), Rule 106.I. Affiliate Membership Umbrella - Qualified Affiliate - Unlimited Number of Affiliates
       
       
      (Execution Not a Factor in Membership Types Below)

      Level
      CBOT Account Owner 2
      Platform
      Exchange Fee
      Trading Members (Individual Non-Equity Members and Non-Equity Member Firms)
      3
      Individual Non-Equity Members (other member/delegate executing); Rule 106.H. Corporate Trading Firms; Rule 106.H. Trading FCMs; & Rule 106.I. Affiliate Trading Member Firms
      Open Auction
      $0.00¹
      Electronic
      $1.50
      Individual Delegates (Other Member or Delegate executing the trade) & Rule 106.I. Affiliate Trading Member Firms
      Open Auction
      $0.00¹
      Electronic
      $1.80
      Rule 106.S. Family of Funds Equity Member Firms
      Open Auction
      $0.00¹
      Electronic
      $1.50
      Electronic Corporate Member Firms
      4
      Electronic Corporate Members
      Electronic
      $1.80

       
       
       
       
       
       

      Incentive Programs
      5
      International Incentive Program (IIP)
      Electronic
      $1.50
      Non-Members
      5
      Non-Members
       
      Open Auction
      $3.50
      Electronic
      $3.50

       
      1– Exchange Fee waiver for CBOT for the MGEX-KCBT Spread Options from July 1, 2013 – November 30, 2013.
      2– Product--Seat Division Eligibility
      MGEX-KCBT Spread Options – Account Owners must hold or lease a CBOT FULL, AM or COM seat to be eligible for these reduced rates.
       
       
      CME Fee Template

      Level
      CME Account Owners ²
      Execution Type
      Platform
      Exchange Fee
      Equity Members (Member Firms and Individuals)
      1
      Individual Members
      Member Trading
      Own Account
      Open Auction
      $0.00¹
      Electronic
      $0.28
      Individual Delegates
      (Rule 106.D Lessees / Rule 106.F Employees)
      Delegate Trading Own Account
      Open Auction
      $0.00¹
      Electronic
      $0.58
      2
      Clearing Member Firms,/ Rule 106.J Equity Member Firms/Rule 106.I Members/106.S Family of Hedge Funds
       
      Member or Delegate
      Open Auction
      $0.00¹
      Electronic
      $0.28
      Non Member
      Electronic
      $0.90
      Member, Delegate or Non Member
      Open Auction
      $0.00¹
      Electronic
      $0.90

       
      1 – Exchange Fee waiver for CME members for the MGEX-KCBT Spread Options from July 1, 2013 – November 30, 2013.
      2 – Product--Seat Division Eligibility
      MGEX-KCBT Spread Options – Account Owners must hold or lease a CME, IMM, or IOM seat to be eligible for these reduced rates.
       
       
       
       
       
       
       
       
       
       
       
      CME & CBOT Member Firms and Individuals –
      Clearing, Ex-Pit Surcharge and Non Trade Processing Fees     

      Other CBOT Processing Fees
      Rate
      Clearing Fee
      $0.06 ¹
      Position Adjustment/Position Transfers
      $0.00
      Ex-Pit Surcharge (EFP)
      $0.00
      Ex-Pit Surcharge (EFR)
      $0.50
      Ex-Pit Surcharge (Block)
      $0.00
      Exchange Fees for Non Trades  
       $0.05 Member, $0.20 Delegate, $0.50 Non-Member
      Exchange Fees for Expired Options
      $0.05
      Facilitation Desk
      $0.00
      Brokerage Fees
      $0.00²
      1.        Clearing Fee included Pit Trades, Pit Spreads, Pit Give Ups, Electronic Trades, Electronic Spreads, Electronic Give Ups Exercise, Assignment and Delivery transaction types. Pit Trades, Pit Spreads and Pit Give Ups will be waived from July 1, 2013 to November 30, 2013.
       
      2.        Brokerage Fees to be waived at this time for CBOT and CME Members.
      Current Fee Programs
      Inclusion/Exclusion
      Ag Back Month Program
      Exclusion
      Ag Volume Discount Program
      Exclusion
      Market Maker/Targeted Program
      Exclusion
      Fee Cap
      Exclusion
      IVIP
      Exclusion
      NTIP
      Inclusion

       
      KCBT Fee Template

      KCBT Account Type
      Platform
      Exchange Fee
      Individual Member
      Open Auction
      $0.00
      Electronic
      $0.30
      Other Member
      Open Auction
      $0.00
      Electronic
      $1.00
      Non-Member
      Open Auction
      $1.10
      Electronic
      $3.40
      KCBT Account Type
      Platform
      Clearing Fee
      Member
      Open Auction
      $0.00
      Electronic
      $0.00
      Non-Member
      Open Auction
      $0.20
      Electronic
      $0.20
      Surcharges
      Trade Types
      Open Auction
      Exchange For Risk
      All Trades
      $0.50

       

       

CME Group is the world’s leading derivatives marketplace. The company is comprised of four Designated Contract Markets (DCMs). 
Further information on each exchange's rules and product listings can be found by clicking on the links to CME, CBOT, NYMEX and COMEX.

© 2024 CME Group Inc. All rights reserved.