Effective trade date Wednesday, January 2, 2013, and pending all relevant CFTC regulatory review periods, the New York Mercantile Exchange, Inc. (NYMEX or Exchange) will amend the floating price rule and trading unit rule for the Freight Route TD3 (Baltic) Futures contact chapter (Commodity code: TL, Rule Chapter: 684) and the Freight Route TD3 (Baltic) Average Price Option contract chapter (Commodity code: TDT, Rule Chapter: 949), respectively.
The rule amendments are intended to update the descriptive information relating to the underlying freight route TD3 so that it conforms to the description provided by the Baltic Exchange that will come into effect on January 2, 2013. It should be noted that the amendments do not change the nature of the contracts, which are linked to the Baltic Exchange’s assessment for the TD3 tanker freight route. The rule amendments are presented below in black-line format below.
(bold/underline indicates addition; strikethrough indicates deletion)
684.02. FLOATING PRICE
The Floating Price for each contract month is equal to the arithmetic average of the rates for each business day that the TD3 Tanker Route (for 265,000
260,000 metric tons for Middle East Gulf to Japan) is published by the Baltic Exchange over the contract month. If for any reason the Baltic Exchange cannot provide any rate required for establishing the Floating Price, then the Forward Freight Agreement Brokers Association (FFABA) may be instructed by either party to form a panel to establish any rate which will be binding on both parties.
949.02 TRADING UNIT
The Freight Route TD3 (Baltic) Average Price Option is an option on the rates for the TD3 freight route published by the Baltic Exchange. The contract size is 1,000 metric tons.
The underlying reference price shall be equal to the arithmetic average of the rates for the TD3 freight route (265,000
260,000 metric tons Middle East Gulf to Japan) published by the Baltic Exchange and multiplied by the prevailing Worldscale rate published by Worldscale Association, for each business day that such rate is published during the contract month.
On expiry or exercise, the Freight Route TD3 (Baltic) Average Price Put option shall be cash settled to the greater value of zero and the strike price minus the underlying reference price, multiplied by 1,000. On expiry or exercise, the Freight Route TD3 (Baltic) Average Price Call option shall be cash settled to the greater value of zero and the underlying reference price minus the strike price, multiplied by 1,000.
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Justin Bozzino Justin.Bozzino@cmegroup.com +44 203 379 372