The Chicago Mercantile Exchange ("CME") Group amended regulatory guidance concerning the requirements applicable to "Exchange for Related Positions" ("EFRP") transactions. An "EFRP" transaction is a privately negotiated off-exchange execution of an exchange futures or options contract and the simultaneous execution of an equivalent quantity of the cash product, by-product, related product, or OTC derivative instrument corresponding to the asset underlying the exchange contract. In such a transaction, the critical element is that the futures component will be completed in conjunction with an actual purchase and sale in the related cash market or a transaction in the swaps market.
The new guidance issued by the CME outlines technical changes to existing requirements along with a number of clarifications resulting from several changes made to the text of CME Rule 538 ("Exchange for Related Positions").
Effective October 4, 2016, the Advisory Notice will supersede CME Group Market Regulation Advisory Notice RA1311-5RR which has been in force since June 27, 2014.
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