Dec 29, 2025 CME Filing and Examiner Guidance Highlight Tick Size Compliance Issues in NYMEX Oil Contracts HTT and WTT markets under scrutiny as CME prepares rule changes and tightens expectations around box trade pricing A recent CME Group filing submitted to the Commodity Futures Trading Commission (CFTC) on November 19, 2025 proposes amendments to contract size and minimum price increments across several NYMEX oil products, including HTT and WTT. The submission—CFTC Filing No. 25-393—would effectively halve the current minimum tick size for these markets once approved. Because the filing was submitted during the federal government shutdown, it is currently listed as postponed, leaving the minimum tick structure unchanged until the CFTC completes its review. Turnkey Insight: Direct Dialogue with CME Examiners During recent regulatory outreach discussions with CME examiners, in which Turnkey Trading Partners participated, exchange staff outlined their evolving expectations regarding: negotiation language, block trade execution structure, and the forthcoming reduction in minimum tick size. These conversations provided firsthand clarity on how CME intends to enforce minimum price increment rules in HTT and WTT markets. Turnkey’s direct engagement in these discussions ensures that we are: among the first to receive evolving regulatory interpretations, aware of supervisory priorities before formal notices are issued, and able to advise clients proactively rather than reactively. This insider perspective is already shaping CME surveillance, Market Regulation Advisory Notice (MRAN) updates, and enforcement focus going into 2026. CME Examiner Guidance: Off-Tick Negotiation Under Scrutiny According to CME staff, a recurring issue has emerged in HTT and WTT markets: negotiations and communications were frequently occurring at a “half-tick” level, below the minimum price increment. CME emphasized that even if final execution prices are reported on-tick by splitting the trade, the negotiation and communication itself must occur at valid increments. Guidance referenced existing MRAN language addressing block trades and minimum price requirements. The core message: a block trade cannot be executed or negotiated below the minimum increment. To achieve a midpoint price such as 12.5, CME expects communications reflecting: half the quantity at 12 half the quantity at 13 not a direct reference to 12.5. Why Box Trades Are the Flashpoint CME examiners noted that this issue arises primarily in box structures, where: multiple legs carry different tick sizes pricing is negotiated on a net package basis market makers optimize total economics rather than individual leg pricing This creates a structural problem: many negotiated net prices cannot be expressed on-tick across all legs simultaneously. When market makers request a small improvement—e.g., $0.005—brokers may find it: mathematically impossible to distribute that value on-tick while keeping the net economic outcome intact As a result, market makers frequently push for: “just quote it at the half tick” to preserve the negotiated box price. CME views this as non-compliant, even when execution is later split. CME’s Position Going Forward Examiners indicated that: negotiation language must reflect valid minimum increments trades must be communicated as independent executions quantities must meet minimum block thresholds surveillance will focus on both communications and execution Importantly, CME noted that forthcoming updates to MRAN language are expected to: shift some responsibility onto liquidity providers to avoid bidding or offering at non-tradable increments in the first place. This represents a notable change from prior language, which placed most of the burden on brokers. Connection to the November Filing CME acknowledged that HTT and WTT markets have been amenable to trading below the minimum increment with frequency, leading CME business lines to support a formal reduction in tick size to align rules with actual market behavior. The November filing seeks to: reduce minimum price increments (effectively halving them) standardize price grids reduce the mathematical conflicts that drive off-tick box pricing However, until CFTC approval: the existing tick structure remains enforceable off-tick negotiation is prohibited surveillance focus will remain elevated Practical Impact of Halving the Tick Size While the proposed reduction in minimum tick size is intended to align rulebook increments with actual trading behavior, the change carries both benefits and challenges for brokers and liquidity providers. On the positive side, a smaller tick increment would: make midpoint pricing (e.g., 12.5) a valid, on-tick quote eliminate many of the mathematical conflicts that currently drive off-tick box pricing reduce the need for brokers to choose between economic accuracy and rule compliance lessen examiner scrutiny tied to negotiation language From a compliance perspective, the change would significantly reduce regulatory exposure by allowing pricing conventions that the market is already using to occur within the rule framework. However, a smaller tick size also introduces commercial and operational consequences, including: tighter spreads increased competitive pressure during negotiation reduced pricing cushion for brokers more granular price movements expected by market makers In voice-brokered markets, this may result in: more back-and-forth to reach agreement greater pressure to improve quotes thinner economics on certain structures In short: halving the tick size is likely to reduce compliance friction and off-tick violations, but may simultaneously make pricing negotiations more competitive and operationally demanding for brokers. Implications for Brokers and FCMs The recent examiner guidance reinforces that compliance responsibility ultimately sits with the broker or execution desk, meaning firms may face: increased scrutiny of voice brokerage communications inquiries regarding negotiation language surveillance flags tied to box trade pricing review of supervisory controls Even if market makers request off-tick pricing, brokers are expected to ensure compliant communication. What This Means for Compliance Programs From a compliance standpoint, the takeaway is clear, supervisory personnel should be communicating to brokers and execution staff that CME is now actively scrutinizing negotiation language tied to minimum tick rules. CME highlighted that: surveillance now reviews communications, not only final reported prices referencing non-tradable increments may be treated as a violation Compliance programs should: brief brokerage and execution staff update supervisory procedures and training materials incorporate tick-compliance considerations into communications review document supervisory outreach Turnkey’s direct involvement in examiner discussions allows us to alert firms to this shift before it appears in formal enforcement actions or widely circulated MRAN updates, supporting a proactive supervisory posture. Outlook The convergence of: a pending rule change to halve minimum tick sizes elevated examiner scrutiny of off-tick negotiation future MRAN updates shifting responsibility toward market makers structural pricing challenges in box trades direct examiner guidance received through Turnkey participation signals a coordinated push to improve consistency, auditability, and rule adherence in NYMEX oil pricing. Where to Monitor Updates CFTC Filing No. 25-393 “Amendments to Contract Size and Minimum Price Increments” https://www.cmegroup.com/content/dam/cmegroup/market-regulation/rule-filings/2025/9/25-393.pdf