On January 6, the CME Group Exchanges (CME Group) issued an amended Advisory Notice on wash trades, which removes language prohibiting block trades between accounts with the same beneficial ownership. As reported in the December 19, 2014 edition of the Corporate and Financial Weekly Digest, CME Group had revised portions of the frequently asked questions section of its wash trades Advisory Notice. Among other things, the December 17, 2014 Advisory Notice expressly prohibited block trades between accounts with identical (same) ownership. This restriction has now been removed from the amended Advisory Notice.
Consistent with CME Group guidance prior to the issuance of the December 17, 2014 Advisory Notice, the answer to Question 9 in the newly amended Advisory Notice only addresses block trades between commonly owned accounts. Under the amended Advisory Notice, CME Group will permit block trades between accounts with “common beneficial ownership,” which include accounts with the same ownership, provided that (1) the block trade is executed at a fair and reasonable price; (2) each party to the transaction has a legal and independent bona fide business purpose for engaging in the trade; and (3) each party’s decision to enter into the transaction is made by an independent decision-maker. Other revisions reported in the December 19, 2014 edition of the Corporate and Financial Weekly Digest remain unchanged.
The amended Advisory Notice makes other minor revisions to Questions 8 (freshening of positions) and 11 (self-match prevention). The January 6 wash trade Advisory Notice is available here.