RULE 8 OPTIONS: EXCHANGE TRADED AND NEGOTIATED

RULE 8 OPTIONS: EXCHANGE TRADED AND NEGOTIATED 8A.01 Definitions In this Rule: Part 8A Definitions and General Applicability a. Exchange Traded Option meansan option listed by WCE which is traded in accordance with rules of open outcry on the trading pits of the exchange. b. Class means, in the case of either Exchange Traded Options or Negotiated Options, all options of the same Type covering the same Underlying Interest. c. Type means, the classification of an option as either a put or a cal. d. Series meansall options of the same Type, covering the same Underlying Interest and having the same Exercise Price and Expiration Date. e. Negotiated Options means an option which is traded bi-lateraly of exchange, negotiated between a buyerand a seller, which meets all other parameters of the WCE Rules. 8A.02 Application of Rules 8A.03 Unit of Trade Except where specifically excluded in this Rules, or where the application thereof is clearly not appropriate, the Rules pertaining to trading in futures apply to Exchange Traded Options and Negotiated Options. The Unit of Trade for Exchange Traded Options and Negotiated Options shall be one option exercisable for one contract of the Underlying Futures Contract. 8A.04 Board Lots - Job Lots The definitions and practices of board lots and job lots applicable to trading in the futures contracts shall apply to trading in both Exchange Traded Options and Negotiated Options. 8B.01 Quotations Part 8B- Exchange Traded Options The Exchange shall post quotations for trades, and for both bids and offers on board lots of Exchange Traded Options. 01/04 Page 1 of 10

8B.02 Authorization of Trading Trading in Exchange Traded Options is authorized for the following Underlying Futures Contracts: a. Canola; b. Domestic Feed Wheat; c. Flaxseed; and d. Western Barley 8B.03 Strike Price Multiples Exchange Traded Option Series shall be traded at the following strike price multiples: a. Domestic Feed Wheat - Five dollars ($5.00)/tonne; b. Western Barley - Five dollars ($5.00)/tonne) c. Oilseeds - Ten dollars ($10.00)/tonne. 8B.04 Authorization of Series If requested and if facilities permit, trading may commence for authorized Exchange Trade Options upon the opening of the market on the day following the first trade of a board lot in the Underlying Futures Contract. In such event, the Exchange will provide facilities for the trading of the Exchange Traded Options by selecting seven (7) strike prices, as follows; a. the strike price closest to the previous day's futures settlement price. In the event that the previous day's futures settlement price is equidistant between two (2) strike price multiples, the higher strike price shall be selected; and b. the next three (3) strike prices higher and the next three (3) strike prices lower. 8B.05 Expansion and Removal of Series a. In the event that the settlement prices for the Underlying Futures Contracts increase or decrease, additional striking prices will be provided so that there will be striking prices at least two and one half (2 1/2) multiples above and below the latest futures settlement price. b. Trading in an additional series shall become effective with the opening of the first trading session following the need for such addition. c. Additional Series may be authorized at the discretion of the Exchange. d. Series without open interest may be removed at the discretion of the Exchange. 8B.06 Series During Month of Expiry No new Series shall be added during the calendar month in which its Class of options is due to expire. 01/04 Page 2 of 10

8B.07 Trading Hours Trading in Exchange Traded Options shall be permitted between 9:30 a.m. to 1:20 p.m. Central Time. 8B.08 Fluctuation Units a. Between 9:30 a.m. and 1:15 p.m. bids up and offers down from the preceding quotation may be made in units of up to fifty cents ($0.50) per tonne. b. Between 1:15 p.m. and 1:20 p.m. bids up and offers down from the preceding quotation shall be made in units of ten cents ($0.10) per tonne. 8B.09 Daily Limits on Premium Price Movement Daily limits on premium prices shall be the same as the daily limits for the Underlying Futures Contracts. 8B.10 Settlement Price a. The Black and Scholes formula, with adjustments subject to such modifications as may be deemed advisable by the Exchange, shall be used to calculate settlement premiums. b. The settlement price is the price that determines margins and the daily limit on the price movement of the succeeding trading day(s). c. The settlement price shall be calculated for each series by the Exchange immediately following the close, and recorded, displayed, and reported to the Clearinghouse. d. The Exchange shall be responsible for the procedures for calculation of absolute values of days to expiry, interest rates and volatilities specific to the approved formula. e. The options Pit Chairman may adjust the settlement price(s) for options if he/she deems necessary due to market conditions. In calculating such adjustments the Pit Chairman may consider, but is not limited to, the following; (1) trade activity during the session; (2) trades concluded and/or bids and offers posted near and during the close; (3) trade activity in other strikes and spreads to deferred contract months; (4) technical relationships between options of various strikes, put/call parity, or the change in value of the underlying futures contract. f. In the case of any appeal of an adjusted Exchange Traded Options settlement price, the Floor Committee shall make final determination of the settlement price. 01/04 Page 3 of 10

g. Any Trader may appeal an adjusted Exchange Traded Options settlement price to the Floor Committee: 8B.11 Premium Payments (1) The Trader shall verbally make known all reasons for the appeal. (2) Appeals must be made immediately after the announcement of the adjusted options settlement price. The total premium shall be paid in full by the Buyer to the Seller through the Clearinghouse on the day of the transaction. 8B.12 Advance Notice of Expiry Two (2) clear days before expiry day all Participants registered in the category of Futures Commission Merchants shall request instructions from each customer holding a long position regarding the exercise of the Exchange Traded Option. 8B.13 Cabinet Trades 8B.14 Expiry Day a. The premium for cabinet trades shall be discovered through competitive open outcry in multiples of one cent ($0.01) per tonne, up to a maximum of nine cents ($0.09) per tonne. b. Cabinet trades may only be executed for the purpose of offsetting existing options positions. a. The contractual rights and obligations relative to an Exchange Traded Option shall expire at 3:30 p.m. on the third (3rd) Friday in the month immediately preceding the delivery month of the Underlying Futures Contract. b. In the event that such third (3rd) Friday is not a trading day, the expiry day shall be the trading day first preceding. 8B.15 Last Day of Trading Trading in Exchange Traded Options shall cease on the expiry day at such time as the Exchange may prescribe. 8B.16 Right of Exercise Exchange Traded Options may be exercised by the Holder on any trading day up to and including the expiry day of the Exchange traded Options in accordance with Clearinghouse Rules. The Clearinghouse will assign appropriate positions in the Underlying Futures Contract to the Holder and to the Writer respectively at the Exercise Price in accordance with Clearinghouse Rules. 8B.17 Automatic Exercise Unless prior written notice has been received from the Clearing Participant, the Clearinghouse shall, after the close of trading of the Underlying Futures Contract on the last day of trading, automatically exercise each Exchange Traded Option for which the exercise price is In-The-Money by an amount at least: 01/04 Page 4 of 10

a. Where the Underlying Futures Contracts is a Grain - Five dollars ($5.00)/tonne; or b. Where the Underlying Futures Contracts is an Oilseed - Five dollars ($5.00)/tonne 8B.18 Method of Exercise 8B.19 Margins a. Exchange Traded Options may be exercised on any trading day by the Holder in accordance with Clearinghouse Rules. b. For each Exchange Traded Option being exercised, the Clearinghouse shall assign the appropriate Underlying Futures Contract as follows: (1) In the case of a Call Option the Writer shall be assigned a short position and the Holder shall be assigned a long position of one unit of the Underlying Futures Contract at the exercise price of that Series; or (2) In the case of a Put Option the Writer shall be assigned a long position and the Holder shall be assigned a short position of one unit of the Underlying Futures Contract at the exercise price of that Series. a. Minimum margin requirements for Exchange Traded Option Writers shall be determined daily by use of the Standard Portfolio Analysis of Risk (SPAN) procedure as modified by approval of the Exchange.. b. No Futures Commission Merchant may accept or carry an account for a customer who is short Exchange Traded Options, without maintaining at least the minimum required margins. c. All Futures Commission Merchants may require more than the minimum margins from a customer. d. Exchange Traded Option Holders, having paid the total premium, are not required to maintain margins. 8B.20 Risk Disclosure Statement Before opening an account permitting a new customer to trade Exchange Traded Options or Negotiated Options, or accepting the first Exchange Traded Option or Negotiated Option order from an existing customer, Trading Participants registered in the category of Canadian Futures Commission Merchant shall provide such customer with a copy of the relevant Risk Disclosure Statement. 8C.01 Method of Trade PART 8C NEGOTIATED OPTIONS The method of trade shall be off-exchange bilateral trade negotiated between a buyer and a seller in compliance with the provisions of the WCE Rules. 01/04 Page 5 of 10

8C.02 Acceptance of Trade Both parties to a Negotiated Options trade are required to complete the prescribed form and submit same to the Exchange. The Exchange reserves the right, in its sole discretion, to reject any Negotiated Option transaction submitted to it. The trade will not be deemed accepted until such time as it has been properly submitted to the Clearinghouse by the Exchange and cleared by the Clearinghouse. 8C.03 Submission Deadline Negotiated Options must be submitted to the Exchange no later than 2:00 p.m. CT on the form prescribed by the Exchange and signed by the authorized signatories for both parties. In the event that the form is received by the Exchange after 2:00 p.m. CT, it will be processed on the following business day. 8C.04 Dissemination of Trade Details The Exchange shall disseminate the following information on Negotiated Options; volume, open interest and trade summaries. The parties to Negotiated Options will not be identified. 8C.05 No Posting of Quotations The Exchange will not post quotations for Negotiated Options. 8C.06 Authorization of Trading a. Trading in Negotiated Options is authorized for the following Underlying Futures Contracts: (1) Canola; (2) Domestic Feed Wheat; (3) Flaxseed; and (4) Western Barley b. Trading in Negotiated Options is permitted to commence on the business day following the first trade of a board lot in the Underlying Futures Contract. c. Negotiated Options may not be traded with the same terms as a current listed Exchange traded Option. In the event that an Exchange Traded Option is listed which contains the same terms and provisions as a Negotiated Option the Negotiated Option shall be converted to an Exchange Traded Option by the Exchange and thereafter the rules relevant to Exchange Traded Options shall apply. 01/04 Page 6 of 10

8C.07 Rights of Exercise All Negotiated Options shall be exercisable at any time from the day after confirmation of trade until its Expiration Date. The Holder may exercise a Negotiated Option on any trading day up to and including the expiry day of such option in accordance with Clearinghouse Rules 8C.08 Strike Price Parameters a. Negotiated Option strike prices shall be stated in whole dollar amounts. b. Negotiated Option strike prices shall be stated in the currency of the Underlying Futures Contract. 8C.09 Advance Notice of Expiry 8C.10 Expiry Date 8C.11 Premiums Two (2) clear days before expiry day all Participants registered in the category of Futures Commission Merchants shall request instructions from each customer holding a long position regarding the exercise of the Exchange Traded Option. a. The expiry date of any new Negotiated Option Series may be any Exchange trade day that is: (1) up to one year less a day from the current trade date; and (2) not later than three (3) Business Days prior to the First Delivery Day of the underlying futures contract; and (3) at least one trade day after the day the transaction has been accepted by the Exchange. b. The contractual rights and obligations relative to a Negotiated Option shall expire at 3:30 p.m. CT on the day of expiry. c. If, at any time prior to the close of trading two business days prior to the day which would have been the expiry date in respect of a Contract, it becomes known to the Exchange that the market will not be open for business on that day, then the business day preceding the expiry date shall become the expiry date in respect of that Contract and the Exchange shall post a notice to that effect in the market. If, at any time following the close of trading two business days prior to the day which would have been the expiry date in respect of a Contract, it becomes known to the Exchange that the market will not be open for business on that day, then the first business day succeeding the expiry date shall become the expiry date in respect of that Contract and the Exchange shall post a notice to that effect in the market. a. Negotiated Option Premiums shall be stated in dollar amounts rounded to nearest $0.10. b. Negotiated Option Premiums shall be stated in the currency of the underlying futures contract. 01/04 Page 7 of 10

c. When both sides of the trade are closing transactions, the Negotiated Option premium may range from $0.01 to $0.09 in $0.01 increments per option contract. d. The total premium shall be paid in full by the Buyer to the Seller through the Clearing House on the day of the transaction. 8C.12 Settlement Price 8C.13 Exercise a. The Black and Scholes formula, with adjustments subject to such modifications as may be deemed advisable by the Exchange shall be used to calculate settlement premiums. In calculating the settlement premiums, the Exchange shall determine: (1) volatility using the daily continuation historical volatility of the underlying commodity futures. The Exchange will calculate the current 20 business day, 60 business day, 120 business day and 240 business day historical volatilities and use the higher of these. (2) interest rate using the current Canadian 3-month Treasury Bill as posted by the Bank of Canada. (3) value of the underlying futures contract using the current settlement price of the underlying futures contract. b. The Exchange may adjust the settlement price(s) for options as it deems necessary due to market conditions. In calculating such adjustments the Exchange may consider, but is not limited to, the following: (1) trades registered during the current or recent business day; (2) trades registered in other Negotiated options series during the current or previous business days; (3) technical relationships between options of various strikes, put/call parity, or the change in value of the underlying futures contract; c. The settlement price is the price that determines margins. d. The settlement price shall be calculated for open series by the Exchange following the deadline for submissions, and recorded, posted, and reported to the Clearinghouse. e. The Exchange shall be responsible for the procedures for the calculation of absolute values of days to expiry, interest rates, and volatilities specific to the approved formula. Upon exercise of a Negotiated Option, the Clearinghouse will assign appropriate positions in the Underlying Futures Contract to the Holder and to the Writer respectively at the Exercise Price in accordance with Clearinghouse Rules. 01/04 Page 8 of 10

8C.14 Automatic Exercise a. Unless prior written notice has been received from the Clearing Participant, the Clearinghouse shall, after the close of trading of the Underlying futures contract on the last day of trading, automatically exercise each Negotiated Option for which the Exercise Price is In-The- Money by an amount at least; 8C.15 Method of Exercise 8C.16 Margins (1) where the Underlying Futures Contract is a Grain - Five dollars ($5.00)/tonne (2) where the Underlying Futures Contract is an Oilseed - Five dollars ($5.00)/tonne a. For each Negotiated Option exercised, the Clearinghouse shall assign the appropriate Underlying Futures Contract(s) as follows: (1) In the case of a Call Option the Writer shall be assigned a short position and the Holder shall be assigned a long position of one unit of the Underlying Futures Contract at the Exercise Price of that Series; or (2) In the case of a Put Option the Writer shall be assigned a long position and the Holder shall be assigned a short position of one unit of the Underlying Futures Contract at the Exercise Price of that Series. a. Minimum margin requirements for Writers of Negotiated Options shall be determined daily by use of the Standard Portfolio Analysis of Risk (SPAN) procedure as modified by approval of the Exchange. b. No Futures Commission Merchant may accept or carry an account for a customer who is short Negotiated Options, without maintaining at least the minimum required margins. c. All Futures Commission Merchants may require more than the minimum margins from a customer. d. Option Holders, having paid the total premium, are not required to maintain margins. 8C.17 Delta Neutral Trades Negotiated Options may be traded on a delta neutral spread against the Underlying Futures Contract. The futures leg must be reported at the same time and on the same form as the Negotiated Option trade. In this case, the price of the Negotiated Options leg of the trade should represent fair market value and the price of the futures leg should be consistent with the then prevailing market prices. 01/04 Page 9 of 10

8C.18 Risk Disclosure Statement Before opening an options account for a new customer, or accepting the first options order, including Negotiated Options, from an existing customer, Trading Participants registered in the category of Canadian Futures Commission Merchant shall provide such customer with a copy of a Risk Disclosure Statement. 01/04 Page 10 of 10