05/22/2001
-Incorporation of Spreads into One Minute Trade Time Submission for NYMEX
The Board of Directors has approved modifications to the fine structure for one-minute trade time submission for both NYMEX and COMEX divisions. Presently members falling below 80% timely submission per month are issued escalating warning letters and fines unless and until they clear out their record by being in compliance for six consecutive months. After six months, the member returns to a "warning letter" level. Effective immediately, this "clear-out period" is reduced from six months to four months. One-minute trade timing statistics for the month ending April 30, 2001 will reflect this modification.
Implementation of One-Minute Trade-Time Classes
The Board also accepted the recommendation of the Compliance Review Committee and Floor Committee to adopt a training program for members facing one-minute trade time fines on the NYMEX division. The purpose of the program is to improve Exchange trade submission timing through member education by identifying individual issues, tailoring individual solutions and statistical follow-up. Training will be conducted on Thursday, June 14, Tuesday, July 10, and Wednesday, August 15, 2001 by a team comprised of Committee Members and Compliance Staff with the assistance of the Training and Education Committee. Details on class location and sign-up procedures will follow.
As incentive, any member attending any one class will be allowed to "do over" up to two subsequent months in which their trade time rates are between 70% and 79%. The member will still have to complete four violation free months before his record is "cleared out" but he may take up to six months to do so. Members may take one class per year.
Audit Trail Classes
· Purpose-to reduce number of members falling below the 80% standard for pit card submission and to facilitate the return of members to a "warning letter" level.
· Members who have received a warning letter or a fine for pit card violations may:
---Attend an audit trail class, to be offered in June, July and August of 2001, with future dates to be determined by the Floor Committee/Compliance Review Committee. The class will be an intensive discussion of pit card problems and pitfalls. Materials will focus on how the audit trail works and successful strategies for achieving a passing grade. Members attending class will be required to analyze their own trading style in light of the material presented and pinpoint areas which they need to improve. Members will also be required to outline a plan of attack to address raising their pit card performance rates. Each plan will be discussed with the group and members will receive feedback from Floor and Compliance Review Committee Members, and Compliance and Floor Department Staff. Members attending classes are strongly encouraged to bring their clerks with them!
---Upon completion of the class, members will be allowed to "do over" up to two subsequent months in which they received the warning or fine for substandard trade time rates between 70% and 79%, on their way to achieving four months clear. No fine or warning letter will be issued for a "do over" month but the month will not count as a passing month. A member who falls below 70% will receive a fine or warning letter.
---The benefit to the member will be that the month that would have counted as a failing month will not count at all, as long as the member achieved at least a 70% rate. Members still need four problem free months to return to a warning letter stage from a fine stage. A member who has been problem free for 3 months would benefit by "doing over" a fourth (and possibly a fifth) failing month, thus having the opportunity to return to a warning letter phase despite intervening failing months. A member who falls below 70% before achieving four problem free months will receive a fine or a warning letter, as appropriate. The member can still use a second "do over" month as long as he meets all criteria.
---Staff will follow up with members attending the classes. Members will receive a breakdown of their most recent audit trail fine. They will also be invited to discuss their percentages with staff one-on-one. Further, staff will supply daily or weekly statistics to any member by e-mail upon request.
---Members are eligible for only one class per year. A member must take a class before being given the benefits listed herein. Classes will be offered on June 14, July 10 and August 15, 2001, and the program will apply to the next full month of audit trail results. The Compliance Review Committee and the Floor Committee will evaluate the results of this program before deciding whether to extend this program into 2002.
Incorporation of Spreads into One-Minute Trade Time "Pit Card" Statistics for NYMEX Division
Present one-minute trade time "pit card" statistics do not include spread times. During the most recent NYMEX Rule Enforcement Review--the CFTC audit of the Exchange's Compliance programs and procedures--the CFTC recommended that the NYMEX Division incorporate spread trades into the one-minute time statistics. The CFTC has made this recommendation in the past and the Exchange has committed to respond to it. The COMEX Division one-minute trade time statistics already include spreads.
NYMEX Division Members should note that intra-commodity spread trades will be incorporated into pit card one-minute trade time accuracy rates after a "phase in" process of approximately 90 days. In order to avoid substandard percentages once spreads are incorporated, members must make sure that their spread prints are price reported in order to ensure that the Price Change Register for spreads is accurate. If a spread print is not reported, you will not be credited with timely submission of pit cards, even if you throw the trade into the pit in a timely manner.
Pit card statistics for outright trades are presently posted on the NYMEX floor on a weekly basis. Compliance Staff will continue to post statistics for outright trades and will additionally post the statistics for spread trades. These spread trade statistics are for information only so that you can assess your pit card submission rate in advance of incorporation of spreads in the one-minute trade time submission percentages. For information purposes, the seller of the spread is considered to be the party who sells the premium month. In the case where the spread trades flat, the seller is the party who sells the nearby month.