ICE Futures U.S. filed proposed rule and guidance amendments with the Commodity Futures Trading Commission that would authorize persons engaging in pre-execution discussions to potentially cross options orders to prehedge such transactions in related markets as soon as a transaction is agreed and prior to the execution of such orders. Currently, no trader may hedge any proposed futures or options transaction agreed during pre-execution discussions until after execution. However, the new authority would not be available to an intermediary taking the opposite side of its own customer order. Options orders involving intermediaries and their customers would first have to be executed on IFUS’s electronic market before a hedging order could be entered. IFUS’s proposed pre-execution hedging authority would solely apply to options but not futures transactions. IFUS believes that its proposed rule and guidance amendments would, if adopted, help narrow spreads option traders would be willing to quote to counterparties during pre-execution communications.
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ICE Futures U.S. Proposes No Delay in Hedging Trades Related to Pre-Execution Negotiated Options Cross Trades
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