04/19/2001
An unmarked version of these rule changes can be found on the Exchange's website. A hard copy "black-line" version of the rule changes, which shows changes from the current rules, can be obtained by calling the Exchange's Legal Department.
The rule changes include the following areas: trading; position limits, accountability and reporting; arbitration, Clearing Member obligations and a summary disciplinary procedure for denial of access.
Trading Rules
A number of changes are being made to existing rules to reflect the roll-out of enymex(sm), such as expanding such rules to cover both NYMEX ACCESS® and enymex(sm). For example, the NYMEX ACCESS® error trade rule has been retitled and revised to cover error trades occurring on either system.
EFP and EFS. Similarly, Rule 6.21B and 6.21C are the Exchange's rules that respectively govern EFP and EFS transactions for futures contracts traded only on NYMEX ACCESS®, i.e., electricity futures contracts. These rules will now also govern enymex(sm) EFP and EFS transactions.
Settlement Procedures. New NYMEX Rule 6.52E ("enymex(sm) Settlement Price Procedures") was modeled upon the current settlement price rule for electricity contracts trading only on NYMEX ACCESS®. Thus, settlement prices generally would be determined manually by the Settlement Committee, or if the Settlement Committee was not available, by Exchange staff using the same criteria used by the applicable Settlement Committee. However, one difference is that the electricity settlement rule provides that no settlement price shall be established that would be lower than the best bid or higher than the best offer that: (a) was for at least twenty-five (25) contracts, and (b) had been posted with the Exchange and remained available for execution and unfilled for the final 30 minutes of trading. By comparison, new NYMEX Rule 6.52E contains more general language that would allow the Exchange to customize for each enymex(sm) contract the bids and offers that would be protected in the settlement process.
Position Limits, Accountability and Reporting. With regard to the four physical delivery enymex(sm) crude oil contracts, the amendments to NYMEX Rules 9.26 and 9.27 provide for position accountability in the back months and a spot month limit of 2,000 contracts for each of these four contracts. Also, the Exchange's current hedge exemption procedures will be made applicable to the enymex(sm) contracts. With regard to the cash-settled enymex(sm)contracts, the rule amendments provide for position accountability across all contract months. The amendments to Rule 9.34 establish a reporting level of 25 contracts for each enymex(sm) contract, the same reporting level currently used for many other Exchange contracts. However, NYMEX staff also has initiated discussions with CFTC staff regarding possible regulatory relief to exempt market participants from these reporting requirements to the CFTC for the cash-settled contracts.
Brokerage and Clearing Member Financial Responsibility. As to brokerage, new Rule 9.04A ("enymex(sm) Trading") permits brokerage to be done for enymex(sm) products. Section (C) of new Rule 9.04A clarifies that a Clearing Member will be financially responsible for trades done for each account it carries, even if there is a system malfunction.
Arbitration Rules
The Exchange's arbitration rules are being amended to reference Non-Member enymex(sm) Users and to provide that disputes between a Member and a Non-Member enymex(sm) User or between Non-Member enymex(sm) Users would be subject to Exchange arbitration on a permissive rather than on a mandatory basis.
Summary Disciplinary Procedures
The sole disciplinary sanction that would be applicable to a Non-Member enymex(sm) User would be denial of further direct access to the system. Consistent with this approach, new Exchange Rule 8.99A establishes a summary disciplinary procedure that would allow the Exchange to take action when necessary on an expedited basis.
Please note that Exchange Members who are enymex(sm) Users also will continue to be subject to Exchange rules.