On August 28, the Chicago Mercantile Exchange, Chicago Board of Trade, New York Mercantile Exchange and Commodity Exchange, Inc. (Exchanges) notified the Commodity Futures Trading Commission that they have adopted a new Rule 575 to prohibit certain disruptive trading practices. Among other things, Rule 575 prohibits activity identified by the CFTC as “spoofing” (bidding or offering with intent to cancel before execution), “quote stuffing practices” (submitting or canceling bids or offers to overload the quotation system or delay another person’s trade execution) and the disorderly execution of transactions during the closing period. The Exchanges also filed with the CFTC Market Regulation Advisory Notice RA 1405-5. The Advisory Notice provides additional guidance with respect to practices that violate Rule 575. The Notice includes a question-and-answer section as well as a non-exhaustive list of practices considered by the Exchanges to be violative of Rule 575.
Absent action by the CFTC, Rule 575 and the Advisory Notice will become effective September 15.
The CME Group filing with the CFTC is available here.