Chapter 04 · Section 4.1

Traders Rules

Which of the following rules apply to the kind of trades floor brokers and floor traders in the commodity/futures system (e.g. on CME) may perform?

b) Floor brokers may trade with any counterpart, whereas floor traders may only buy from and sell to other floor traders and floor brokers, but not customers.
No. (b) is not correct. A floor trader usually trades for his own account. He can also be counterpart to a customer transaction, but this may not be his own customer. Otherwise there would not be a competitive trading process.
c) Floor brokers may act on behalf of others whereas floor traders may only trade for their own accounts.
d) Members may act both as floor brokers or floor traders. However, when acting a broker, a member may not buy from, or sell to his/her own customer but must announce the customers bid/ask to the trading crowd.