CME Market Advisory on Block Trading - some changes in Block Trade rules are coming October 1 that have significant impacts

The CME issued an extensive market advisory here that covers the CME/CBOT/NYMEX/COMEX markets. The advisory is 13 pages and the cover note does hit the highlights. Just to make it clear - this is a change to a prior advisory in May and includes all the information in that notice PLUS several new items. These are:
1. If a CME product is block traded in a strategy with a non-CME product (e..g, I trade a block on CME WTI and a block on ICE Brent as a paired set of blocks), the CME leg of the block will be considered as an "outright" on the CME leg and the "fair and reasonable" pricing test for the block will only consider the CME product price. So if the spread would create a CME price that is outside the fair and reasonable range, the block is improper.
2. Pre-hedging advisory content is changed significantly. The points DCM feels are major are:

• " initial disclosures in account opening agreements or other similar communications may be deemed insufficient in the event that the block trade negotiation itself is indicative of the party assuming agency duties to the counterparty."
• "Working an order" or instances where the basis for the block pricing is the pre-hedging value plus an adder "is viewed by Market Regulation as "agency duties are owed to the counterparty. In such scenarios, pre-hedging is prohibited."
• It is fairly easy to remove any agency responsibility - CME indicates a text footer or email disclosure for that trade or a simple statement on a recorded line are all sufficient.
• That said, the CME position appears to indicate there is an affirmative duty to assure no agency relationship exists for each trade.

3. CME added a note in the block trade timing to include a specific reference to spread trades in the highlighted note at the end of Section 7 of the notice. The change reads:

• "In that regard, spread block trades are deemed consummated at the time the parties agree to the differential or combination price, not the time the leg prices are determined."
• Note, this could start your fifteen minute clock running while you negotiate the legs. It also means you cannot say done on a spread and then say, let's agree to the leg prices later and we will post it - that is not allowable.

Some of these changes may have a significant impact on how your trades do bilateral blocks (if you allow them) - you should be aware and should inform them of the need to be careful in communication and timing.