For Release: August 7, 2003
CFTC Recognizes New Exchange
Washington D.C. -- On August 6, 2003, the Commodity Futures Trading Commission (CFTC) granted contract market designation to CBOE Futures Exchange, LLC (CFE). This is the CFTC’s sixth exchange designation since implementation of the Commodity Futures Modernization Act of 2000 (CFMA).
CFE is owned and operated by the Chicago Board Options Exchange, Incorporated (CBOE). According to the CFE’s application for designation, CFE’s Department of Market Regulation, consisting generally of CBOE/CFE joint employees, will carry out most self-regulatory functions, including market and financial surveillance and trade practice investigations. Dispute resolution will be carried out pursuant to CBOE rules. The Options Clearing Corporation (OCC), a derivatives clearing organization, will provide clearing and settlement services for the new exchange. Under CFE rules, all transactions executed on CFE must be entered into or guaranteed by an OCC clearing member that is a trading privilege holder on CFE. CFE clearing members must meet OCC’s minimum capital requirements. CFE will use the CBOE match engine, known as CBOEdirect, as the platform for the electronic trading facility.
The CFE's trading system will match orders based anonymously either on a price-time priority or a pro-rata trade-matching algorithm, each similar to those employed by other automated trading systems at various existing futures exchanges. Under the CFE rules, all trading must be conducted through trading privilege holders and their authorized employees. In its submission, CFE states that initially it intends to trade products based on broad-based indexes and may later trade security futures products.
Copies of the CFTC’s approval letter and other supporting material prepared by CFTC staff may be obtained by contacting the Commission’s Office of the Secretariat, Three Lafayette Centre, 1155 21st Street, N.W., Washington, D.C. 20581, (202) 418-5100.