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Features
Trading CME Live Cattle and CME Lean Hog options on CME Globex includes of five basic
features:
1:
Indicative Quotes
2:
Streaming Quotes and
Transactable Responses
3:
Action Rows
4:
'Point & Click'
Trading
5:
Straight Through Processing
(STP)
1: Indicative Quotes
The system's trader front end displays real-time indicative quotes from Market
Makers. Via various front end systems including CME EOS Trader, traders can view competitive,
indicative bids and offers for a wide variety of outrights and options spread combinations and
calendar months. Market Makers' pricing models automatically update their indicative options quotes
real-time in response to changes in underlying futures prices and other market conditions.
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2: Transactable Responses and Streaming Quotes
To communicate interest in seeing a transactable quote, traders may send an
electronic Request for Quote (RFQ). Once the RFQ is sent, Traders can expect to see in the exchange
order book a transactable, two-sided quote that is as good or better than the Market Maker
quote.
The Trader's RFQ message alerts Market Makers to customer interest in a particular outright or
spread combination. Market Makers are then obligated by the exchange to respond to RFQs within a
specified time frame, with minimum quantities and maximum bid-ask spreads. Markets Makers simply
confirm or improve the indicative quote and route a transactable quote to the exchange central
order book.
In addition, many Market Makers stream live quotes allowing traders to trade in live markets
without an RFQ.
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3: Action Rows
Every time an RFQ is sent or a contract trades on the system, the order book for
that contract appears in real-time on the bottom half of every Traders screen ("Action Rows"). As
in pit-based markets, the Action Row feature calls the markets' attention to the specific outright
or spread contract being actively quoted or traded. From the Action Rows, users can easily hit the
bid, lift the offer or enter a limit order into the book.
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4: 'Point & Click' Trading
Once a transactable quote is in the exchange order book, either from an RFQ or
streaming quote, traders simply 'point & click' to complete a trade. Trader's orders are
instantly matched and confirmed by the exchange. Confirmed trades, partial fills and working orders
are all displayed real-time on the Trader front end. All market participants are alerted to any
options trade on the platform by an audio cue on their front end. In addition, each trade results
in the appearance of an "Action Row" on all users' front end displays. This Action Row displays the
real-time order book for the contract or combination that has just traded.
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5: Straight Through Processing (STP)
Matched trades are instantly recognized by the exchange and fed automatically to the trader's
clearing firm and back office systems. As with other activity on CME Globex system, trades matched
on the platform will appear in the trader's clearing statements the following day.
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