08/23/2000
GENERAL OPERATIONAL PROCEDURES
All Clearing Members and Qualified Floor Traders that carried an options position as of the close of business day prior to the expiration day, or engaged in trading activity on Expiration Day in the expiring options contract will be required to have a knowledgeable, duly authorized on-line trade entry (OLTE) system trained representative available until released by the Exchange staff. All adjustments and/or corrections, must be accompanied by relevant supporting documentation prior to being incorporated into expiration processing, in essence making the expiration processing an extension of the afternoon trade resolution procedures.
Exchange Clearing and Trade Processing personnel will be available to assist with the processing of notices of Exercise and Abandonment, position transfers, trade corrections and other questions or problems you may have.
Failure by any Clearing Member or qualified Floor Trader to comply with procedures as outlined herein may result in severe disciplinary action by the Exchange and potential financial liability to customers or members for failure to exercise diligence in the processing of information.
TRADING FLOOR OPERATIONAL PROCEDURES
Trading in the September 2000 Copper and Aluminum Options Contracts will cease at 2:00 P.M. and 2:10 P.M. respectively on August 28, 2000. All Brokers and Traders must inform their Clearing Members of their intentions to exercise or abandon such Options by 4:00 P.M.
On Monday, August 28, 2000, all Brokers and Clearing Members must have a duly authorized, On-Line Trade Entry (OLTE) system trained representative available until such time as the Exchange deems necessary.
NOTE: After 4:30 P.M. all expiring option trade data must be inputted on special OLTE terminals located in the Trade Processing Room. Any other means of submission will be rejected by the Exchange. Members will be able to submit all other trade data until 5:00 P.M.
After the Unmatched Trade Reports and the Preliminary Spot Month Matched Trade Reports are displayed, Clearing Member representatives will be able to pick up their Preliminary Clearing reports at the Clearing Department.
A final review of all submissions will be made. The Supervisor of the Trade Processing Room will detain only those Clearing Members and/or Broker representatives involved. All final corrections will be made at this time and upon determination of the Supervisor that all option processing is complete, all representatives will be released.
Exchange Reports based on Monday’s submissions and processing will be available on Tuesday morning August 29, 2000.
In the event that you have any questions regarding the foregoing trading floor procedures please contact Michael Campanelli at 299-2072 or David Sherman at 299-2061.
CLEARING DEPARTMENT OPERATIONAL PROCEDURES
1. OPEN POSITION CONFIRMATION (OPC) - The OPC should reflect as accurately as possible all futures and options gross positions as of close-of business on the business day prior to expiration. Review the estimated current gross positions as shown and make appropriate adjustments. The OPC must be submitted not later than 9:00 A.M.
2. OPTIONS EXERCISE/ABANDONMENT REQUESTS FORM (E/A) - An expiring option with a strike price in-the-money by one tick or more will be subject to automatic exercise unless an Option Abandonment Request form is submitted advising that a Clearing Member (CM) elects to abandon some or all of its position in that strike price (i.e., for the option series). All other options series in the expiring month will be subject to automatic abandonment unless an Option Exercise Request form is submitted. When submitting an E/A form, please note the following:
- (a) An E/A form must be submitted not later than 5:00 PM.
- (b) Do not submit an Exercise form for positions in strike prices which are subject to automatic Exercise nor submit an Abandonment form for positions in strike prices which are subject to automatic abandonment.
- (c) If a CM wishes to submit an E/A form to abandon a position in a strike price subject to automatic exercise or wishes to exercise a position in a strike price which is out of the money, it is necessary to notify Clearing by telephone of such anticipated action. The CM must have an officer available to confirm such intention.
- (d) CM's may secure from Clearing a time-stamped receipt of the CM copy to assure submission of the CM's E/A form.
4. HOUSE/CUSTOMER POSITION TRANSFER REQUEST FORM (H/C) - H/C forms may be used only to transfer previously cleared contracts between a CM's house and customer accounts. Problem trades (those which have not cleared prior to expiration day) must be corrected using COMEX?s on-line trade entry system under the direct supervision of the Trade Audits Department of COMEX (Trade Audits). The H/C form must be submitted not later than 3:30 PM.
5. EX-PIT POSITION TRANSFER REQUEST FORM (?Ex-Pit?) - Ex Pit forms may be used only to transfer previously cleared contracts between CMs. Problem trades (those which have not cleared prior to expiration day) must be corrected on the on-line trade entry system under the direct supervision of Trade Audits. The Ex-Pit form must be submitted not later than 3:30 PM.
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A) At approximately 4:15 PM, two PRELIMINARY reports of the expiration process will be available for distribution at the NYMEX Clearing Department:
- 1. OPTION EXPIRATION REPORT AND CONFIRMATION - The purpose of this report is to project the CM's present position going into the expiration based upon the transactions which have already been submitted to Clearing. CMs should review and modify their adjusted gross positions as of close-of-business on the business day prior to expiration. Further adjustments may be submitted not later than 5:00 PM. The projected ending gross positions will reflect transactions accepted or rejected for clearance on expiration night, inclusive of Ex-Pit, H/C and OPRR transactions which have been submitted to Clearing prior to 3:30 PM, and trade information submitted to COMEX prior to 3:45 PM. Normally, this report will also reflect manually submitted Exercise and Abandonment instructions, the projected number of exercises and maximum potential assignments for each strike price, the type of exercise (manual or automatic), whether the strike is In, At or Out of the money, and the exercise value associated therewith based on settlement prices established by COMEX on the day of expiration.
- 2. TRANSACTION LISTING - This listing will include in detail all expiring option trades submitted to COMEX prior to 3:45 PM on expiration day, and all H/C, ExPit, OPRR and E/A transactions submitted to Clearing Prior to 3:30 PM.
- Please note: Trade information reflected on the option expiration report and transaction listing are trades submitted only. To inquire whether trades have matched, each CM must review the trade reports provided by Comex's On-Line Trade Entry (OLTE) system.
C) At 5:45 PM, Preliminary In The Money Abandonment and Out Of The Money Exercise information will be announced on Fast Facts.
D) At Approximately 7:30 PM, a Final Notice of Exercise/Assignments will be available in each CM,s lockbox located at the NYMEX Clearing Department. Each CM which has exercised or been assigned one or more options will receive a separate statement showing exercises and/or assignments for each option series. Please check this statement carefully. Although long options positions in-the-money by one tick or more will be automatically exercised, not all short option positions will be assigned if there are any options manually abandoned at such strike prices. Please note that there also may be some at or out-of-the money options being exercised.
E) At approximately 9:00 PM, the final set of clearing sheets will be available in each CM,s lockbox located at the NYMEX Clearing Department.
It is strongly recommended that each CM have a representative(s) that is properly trained to handle the option expiration process available beginning at 4:15 PM and who will receive the CM,s reports at the specific times. It is solely the responsibility of the CM to review these reports and to notify the Clearing staff immediately of any discrepancies.
To obtain the exact time of the availability for each report, clearing members should call (212) 513-7405, access code 702. The announcement time will occur 2 hours prior to availability.
OPTION EXPIRATION PROCESSING CLEARING MEMBER PROCEDURE SUMMARY
Time: 3:30 PM
Activity: Expits, H/C transfers, Option Position Reduction and Exercise/Abandon notices
Event: Submission to Clearing cutoff time
Notes: Final cutoff for Expits and H/C tranfers
Time: 3:45 PM
Activity: Call Fast Facts to obtain availability time of Preliminary Option Expiration Reports
Event: Fast Facts notice of Availability
Time: 4:15 PM
Activity: Preliminary option expiration reports available to clearing members at NYMEX Clearing Department
Time: 5:00 PM
Activity: Options Position Reduction, Exercise/Abandon notices and Gross Position Adjustments
Event: Submission to Clearing Cutoff Time
Notes: Final cutoff for Option Position Reduction, Exercise/Abandon notices and Gross Position Adjustments
Time: 5:05 PM
Activity: Call Fast Facts to obtain availability time of Final Preliminary Option expiration Reports
Event: Fast Facts notice of Availability
Time: 5:30 PM
Activity: Final Preliminary option expiration reports available to clearing members at NYMEX Clearing Department
Time: 5:45 PM
Activity: Call Fast Facts to obtain Preliminary In the Money Abandonment and Out of the Money Exercise Information
Event: Fast Facts notice of information
Notes: New Event
Time: 6:00 PM
Activity: Corrections to previously Submitted Adjustments or Notices
Event: Correction period cutoff time (30 minutes after final preliminary report is distributed)
Notes: Final cutoff for corrections
Time: 7:00 PM
Activity: Call Fast Facts to obtain availability of final expiring option position and Exercise/Assignment report
Event: Fast Facts notice of Availability
Time: 7:30 PM
Activity: Final expirating options position and Exercise/Assignment report available in clearing member's lockbox at NYMEX Clearing Department
Time: 8:30 PM
Activity: Call Fast Facts to obtain availability of final clearing reports
Event: Fast Facts notice of Availability
Time: 9:00 PM
Activity: Final clearing reports available in clearing member's lockbox at NYMEX Clearing Department
If you have any questions concerning these procedures, please contact exchangeinfo@nymex.com