CME MEMBERS REJECT PETITION TO BAN DUAL TRADING
Members of the Chicago Mercantile
Exchange (CME) rejected a membership petition to ban dual
trading in Standard and Poor's 500 stock index futures and
options on futures, the exchange said.
    Members voted 1,272 to 525 against a proposal to prohibit
members from filling customer orders and trading for their own
account, known as dual trading, in the S and P contracts.
    Instead of an outright ban on dual trading, the CME board
adopted new rules, which include limitations on dual trading in
stock index products, that will now be sent to the Commodity
Futures Trading Commission for approval.
    The new rules will limit the use of the top step in the S
and P 500 futures and options pits, where the most active
contract is traded, to brokers filling customer orders only.
They may not transact business for their own account.
    The CME last week hired a new compliance officer and
increased the staff of the market surveillance department to
enhance security and regulation of the exchange.
    The rule changes also require brokers in S and P futures
and options to manually record to the nearest minute the time
of all personal trades in stock index products.
    Finally, the board voted to impose strict limits on trading
within broker groups applicable to the entire exchange and
redefined broker groups to more completely cover all forms of
associations. A percentage limitation on the personal trading
of a broker group member with other members of the group, and a
percentage limitation on filling orders between members of the
same broker group, will be set.
    John Sandner, CME board chairman, said in a statement the
original petition would have adversely affected liquidity,
discriminated against every broker and deprived all customers
of their right to choose a broker who is a dual trader.
 REUTER
