06/07/2001
Modification of "Clear-out Period"
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 the 80% timely submission standard 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. You may sign up for these classes at the Corrections Windows on the 3rd and 5th floors, or by contacting Lois S. Shapiro, Associate Compliance Counsel, at (212) 299-2853. The June 14, 2001 class will be held in the Seminar Room on the 10th floor at 3:45 p.m. Plan to stay until 6:00 p.m. Credit will not be given to anyone who does not attend the entire class.
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 improve pit card submission statistics Exchange-wide by reducing the number of individual members falling below the 80% standard for timely pit card submission and to facilitate their return to a "warning letter" level.
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Members who have received a warning letter or a fine for pit card violations may:
- Attend an audit trail class, to be offered on June 14, July 10, and August 15, 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 percentage. Members will be required to analyze their own trading style in light of the material presented and pinpoint areas in which they need to improve. Members will also be required to outline a plan for raising their pit card performance rates. Each plan will be discussed with the group and members will receive feedback from Floor Committee 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 subse-quent months in which their timely submission rates fall between 70% and 79%. 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. 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 the warning letter stage 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 the above 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 on an individual basis. Further, staff will supply daily or weekly statistics to any member by e-mail or telephone upon request.
- Members are eligible for only one class per year. A member must take a class to take advantage of 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 statistics. 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.