6.3 Block Trade Facility
6.3.1 Availability of facility
a. Block Trades may take place in respect of contracts designated by the Exchange from time to time as Contracts that may be traded as Block Trades pursuant to the Rules.
b. Block Trades may be organized and registered via the Cleartrade Block Trade Facility during the trading hours of Exchange and on such Trading Days as the Exchange may from time to time prescribe.
c. Any Broking Member and Block Trade Broking Member is permitted to arrange Block Trades subject only, to the individual arranging the Block Trade on behalf of clients which are Clearing Members or Authorized Members, having clear and irrefutable evidence of a mandate to do so, given by an authorized person representing the client.
d. Where a Broking Member or Block Trade Broking Member enters a Block Trade on behalf of a client who is not a Clearing Member or Authorized Member of the Exchange, it must comply with all applicable laws, including in relation to suitability and appropriateness.
e. Broking Members and Block Trade Broking Members must, prior to entering into a Block Trade with a client(s) who is not a Member of the Exchange for the first time, notify such client(s) in writing with details of the facility and its written terms of business.
6.3.2 Minimum Volume Thresholds
a. The minimum number of lots in respect of each Block Trade Contract that can be traded as a Block Trade (minimum volume thresholds) shall be determined from time to time by the Exchange and notified to the Members.
b. Members are, subject to Rule 6 above, permitted to enter into Block Trades which involve the trading of two or more different Contracts or Block Trades that involve the trading of two or more different contract months and/or strike prices of the same Contract.
c. Where a Block Trade involves the trading of two or more Contracts, the minimum volume threshold of each Contract comprising the Block Trade will apply to the lot size of the relevant leg of the Block Trade.
d. Where a Block Trade involves the trading of two or more contract months and/or strike prices of the same Contract, the minimum volume threshold will apply to each side of the Block Trade.
e. An order for a Block Trade for two or more contract months and/or strike prices of the same Contract may be matched with Block Trade orders for individual contract months provided that each such order meets or exceeds the minimum volume threshold for that Contract.
f. The Exchange may determine from time to time a lower minimum volume threshold for Block Trades involving complex strategies. For the purposes of this Rule, two or more contract months and/or strike prices comprising a non-standard strategy which cannot be entered into the Cleartrade Platform as a single contingent order shall be termed a complex strategy. The Exchange shall notify Members from time to time of those strategies which are recognized by the Exchange as complex strategies.
g. The Compliance Officer may at his absolute discretion permit other non-standard strategies to be registered as complex strategies. The decision of the Compliance Officer as to whether a nonstandard strategy qualifies as a complex strategy shall be final and binding.
6.3.3 Aggregation of lots
a. Members may aggregate separate orders provided each such separate order meets or exceeds the minimum volume threshold for the relevant Contract.
b. Likewise Members may not combine separate orders in respect of different Contracts to generate an inter contract spread trade unless each such separate order meets or exceeds the minimum volume threshold for the relevant Contract.
c. When arranging a Block Trade and, in particular, when aggregating orders on the matching side to facilitate arrangement of a Block Trade in accordance with the Rules, Broking Members and Block Trade Broking Members must ensure that they act with due skill, care and diligence; and the interests of the client(s) are not prejudiced.
Members shall ensure, when arranging or organizing Block Trades, that the price of any Block Trade being quoted represents the fair market value for that trade. On each occasion of quoting a Block Trade price, the Member must, at the time, make it clear to the potential counterparty(ies), whether a Member or a client who is not a Member of the Exchange, that the price being quoted is a Block Trade price and not the prevailing market price displayed on the Cleartrade Platform.
When determining a Block Trade price, a Member should, in particular, take into account the prevailing price and volume currently available in the Market, the liquidity of the Market and general market conditions, but shall not be obliged to obtain prices from other Members, unless this would be appropriate in the circumstances.
Prices of Block Trades will be included in the determination or calculation of any Exchange index or settlement price and will be displayed on the consolidated trade register, or consolidated tape, unless specifically entered as a private and confidential (PnC) transaction.
6.3.5 Submission of details of Block Trades
Once a Block Trade has been organized the Members must submit the Block Trade details to the Exchange in accordance with the Trading Procedures.
Once a Block Trade has been organised the members must submit the Block Trade details to the Exchange as close to real-time as possible and must submit the Block Trade details to the Exchange at least within 15 minutes from the time the Block Trade has been organized. In order to enforce this rule, a Member’s failure to comply with any provision may result in the imposition of a summary penalty regardless if Block Trades are performed either electronically or via voice brokerage. Typically a letter of warning may be issued for the first infraction. Subsequent infractions shall result in automatic fines starting at $500.00. Fines issued pursuant to this section are final and not be appealed. Additionally, Block Trades should not be performed on behalf of customers who have the same beneficial interest in both sides of a transaction. All reported Block Trades will be published on the Cleartrade Platform on a real-time basis post registration.
The Exchange has the absolute discretion not to record or accept a Block Trade or not to present details of the Block Trade to the Relevant Clearing House, which decision shall be final.