Regulatory Notice 4.1.11 — Negotiated Large Trades

Past version: Effective from 19 Sep 2016 to 13 Nov 2016

Issue Date Cross Reference Enquiries
Amended on
1 August 20071 August 2007,
26 September 200726 September 2007,
23 January 200823 January 2008,
31 March 200931 March 2009,
6 April 20096 April 2009,
24 June 200924 June 2009,
7 December 20097 December 2009,
11 January 201011 January 2010
and 17 June 201017 June 2010.
Rule 4.1.11 Please contact:

Product Management for policy issues:
Telephone No. : 6236-8450

Please contact Clearing House for operational issues: 6538-5319
Facsimile No: 6533-6163
Email address :

1. Introduction

1.1 This Regulatory Notice sets out the minimum volume thresholds, notification requirements and procedures that Persons effecting Negotiated Large Trades or "NLTs" are required to observe.

2. Minimum Volume Thresholds

2.1 The minimum volume thresholds for NLTs are set out in Appendix A.

Refer to Appendix A of Regulatory Notice 4.1.11.
2.2 A trade consisting of multiple legs within the same Underlying is deemed to be in accordance with the minimum volume threshold if at least one (1) of the legs meets the minimum volume threshold applicable to that leg (see examples below).
2.3 Trades which are not in accordance with the minimum volume threshold will not be accepted for registration as NLTs and will be rejected.

Example: Minimum volume threshold for NK Futures = 100 lots
  Minimum volume threshold for NK Options = 25 lots

(a) The following trade will be in accordance with the minimum volume threshold as one (1) of the legs (NK Options Jan 06 Call 14000) meets the NK Options minimum volume threshold of 25 lots:

Contract Qty Price
NK Futures Mar 06 19 lots @ 14200
NK Options Jan 06 Call 14000 13 lots @ 300
NK Options Jan 06 Call 14000 12 lots @ 301
NK Options Feb 06 Put 13750 2 lots @ 610

(b) The following trade will also be in accordance with the minimum volume threshold as one (1) of the legs (NK Futures Mar 06) meets the NK Futures minimum volume threshold of 100 lots:

Contract Qty Price
NK Futures Mar 06 100 lots @ 14200
NK Options Jan 06 Call 14000 11 lots @ 300
NK Options Jan 06 Call 14000 12 lots @ 301
NK Options Feb 06 Put 13750 2 lots @ 610

3. General Policy

3.1 Trading Hours
3.1.1 All NLTs executed during or before the Contract "T" trading hours shall be "T Trades" while NLTs executed after the Contract "T" trading hours shall be "T+1 Trades".
3.2 Registration of NLTs
3.2.1 All NLTs shall be registered in accordance with the Clearing Rules.
3.2.2 [Deleted]
3.2.3 [Deleted]
3.3 NLT Execution
3.3.1 For the purpose of Rule 3.4.9, Members may submit NLT orders from two (2) separate Customers under the same Omnibus Account, provided that the Members' record keeping and audit trails are able to demonstrate the separate beneficial ownership.
3.3.2 A Member shall ensure that its Customers are aware of and have given their approval for the execution of the Customers' orders via the NLT facility. Where a Member receives a Customer's order that is not a NLT order but meets the requirements of the NLT facility, such Member may execute the Customer's order via the NLT facility provided that such Member has obtained the prior approval from the Customer, either specifically for the transaction or as a general blanket approval (and such blanket approval has not been terminated by the Customer). If a Customer's approval is obtained verbally, the Member shall ensure that a tape recording of the conversation where the Customer's approval was obtained is retained for record keeping purposes. A Member shall also inform its Customers if the Member may be or is a counterparty to the Customer's NLT and obtain the Customer's prior written approval.
3.3.3 Members may obtain a general blanket approval from their Customers provided the conditions below are met. Members shall disclose to their Customers all NLTs executed pursuant to the general blanket approval. The conditions for obtaining a general blanket approval from the Customer are as follows:
(a) Members shall inform the Customer that the general blanket approval is subject to compliance with the rules, laws and regulations in the Customer's country of domicile;
(b) the general blanket approval shall be in writing and shall provide details on the nature and scope of the general blanket approval given;
(c) Members shall highlight to the Customer the risks and liabilities that the Customer may be exposed to in giving such general blanket approval. In particular, the Member shall highlight that in some instances, NLT orders may not be executed at the best possible price and that the timeliness of order execution may be compromised. The Customer must also be informed that the Customer is obligated to accept all NLTs executed pursuant to the general blanket approval; and
(d) the Customer shall acknowledge that it has read, understood, and received a copy of the signed general blanket approval.
3.3.4 In order to ensure that Customers' interests are not compromised, the Members shall, unless their Customers specifically request for a trade to be done through the NLT facility, place all Customers orders on QUEST for execution. After the Customers' orders have been placed on QUEST for execution, Members' employees may then seek their Customers' approval to accept the order as an NLT. However, Members may only withdraw an order from QUEST for subsequent execution as a NLT if the price for the NLT is at least equal to or better than the prevailing bid/offer quoted in QUEST at the time the order is withdrawn, unless otherwise instructed by Customers.
3.3.5 Members shall not combine individual Customers' orders in order to meet the NLT minimum volume threshold requirements. Members shall not combine separate Customers' orders of different Contracts to create an inter-commodity spread or strategy transaction. However, individual orders greater than or equal to the minimum volume threshold may be combined by Members to match a larger NLT counter bid/offer, subject to the condition that the NLTs should, upon execution, be individually reported.
3.3.6 Various price combinations within the same NLT, or within the same leg of an NLT in the case of spreads or combinations, may be used to set an 'average' price, provided that the trade is for the same entity and that each respective price must meet the minimum tick for NLTs as set out in Appendix B.

Refer to Appendix B of Regulatory Notice 4.1.11.
3.3.7 [Deleted]
3.3.8 The Exchange shall have the sole and absolute discretion to cancel or adjust the price of any NLT, even after the registration of the NLT.
3.4 Publicising of NLT

The Exchange shall publish information relating to the details of NLTs.
3.5 NLT Fees

The standard clearing fees applicable to the relevant Contracts shall be imposed on all NLTs. In addition, a special facility fee charge shall also be imposed on all NLTs.
3.6 [Deleted]
3.6.1 [Deleted]
3.6.2 [Deleted]
3.7 [Deleted]
3.7.1 [Deleted]
3.7.2 [Deleted]
3.7.3 [Deleted]
3.7.4 [Deleted]
3.7.5 [Deleted]

Amended on 2 May 20112 May 2011, 6 November 20126 November 2012, 25 February 201325 February 2013 and 19 September 201619 September 2016.