06/11/2002
- EFM Transactions. The execution of an EFM transaction will consist of a purchase (sale) of a NYMEX e-miNY futures contract and the sale (purchase) of the corresponding full or "Big" NYMEX futures contract in the appropriate ratio of 5:2 e-miNY futures contract to a full-size NYMEX futures contract.
- Purpose. The purpose of the EFM transaction is to provide an ex-pit offset facility for persons who have an arbitrage position between one of the NYMEX e-miNY and a NYMEX Big contract.
- Analogy to EFP/EFS Transactions. These transactions will be transacted in a fashion similar in nature to that of an EFP or EFS in that they are pre-negotiated, non-competitive transactions. The party who sells the e-miNY component will, for operational purposes, be referred to as the seller of the EFM.
- EFM Transaction Price. The trade will not have either the e-miNY or Big legs priced on trade entry but instead ultimately will have the Big settlement price (as determined that trading day) assigned to both legs of the EFM transaction.
- Fees. NYMEX will not charge ANY fees for these transactions to any party.
- EFM Transaction Deadline. The deadline for posting EFM transactions is the close of trading on the third business day preceding the last day of trading in the applicable e-miNY contract. (For example, if the expiration day for an e-miNY futures contract would be Friday, August 20, then the last day to post EFM transactions would be the close of trading on Tuesday, August 17.)
Example of EFM Transaction
An EFM would be transacted as follows:
- Trader AAA has an open arbitrage position of Long 50 Crude Oil e-miNY's and Short 20 Crude Oil Bigs.
- Trader BBB has an open arbitrage position of Short 50 Crude Oil e-miNY's and Long 20 Crude Oil Bigs.
- Rather than going into both the e-miNY market AND the Big market and executing competitive liquidating transactions, which effectively look like an inter-market spread, AAA and BBB negotiate to post and EFM.
- Both AAA and BBB may have openly expressed interest in the trading pit in seeking an EFM counterparty or their clearing members may have directed them to one another.
- An EFM is posted at NYMEX with AAA recognized as the seller of the EFM. AAA simultaneously sold 50 Crude Oil e-miNY's and purchased 20 Crude Oil Bigs from BBB.
- AAA would submit his/her pit card to the TRADE CORRECTIONS AREA ONLY. EFM's should NOT be submitted directly into either the Crude Oil or Natural Gas pits. The EFM should be the only trade on the specific trading card for AAA since he/she is the seller. See the attached illustration of trading cards for additional guidance on specific trading card requirements.
- BBB who is buying the e-miNY's will record the EFM as illustrated in the attachment. BBB is not restricted from having other transactions on the specific trading card.
NOTIFICATION OF NEW NYMEX RULE 6.21E
(Entire rule is new)
Rule 6.21E. EXCHANGE OF NYMEX e-miNY FUTURES FOR, OR IN CONNECTION WITH, NYMEX FUTURES TRANSACTIONS
(A) General Requirements. An exchange of futures for, or in connection with, mini futures (EFM) consists of two discrete, but related transactions; a purchase (sale) transaction in a NYMEX e-miNY and a sale (purchase) transaction in the related NYMEX futures contract. At the time such transaction is effected, the buyer (seller) of the NYMEX e-miNY shall be the seller (buyer) of the related NYMEX futures contract in the ratio designated by the Board of Directors.
(B) Final Deadline for Transactions. An EFM involving an expiring e-miNY futures contract month is permitted at any time up to and must be reported to the Exchange by the close of trading on the third business day preceding the last day of trading in the applicable e-miNY futures contract.
C) Contract Month and Quantity. An EFM transaction may only be effected for the same contract month in both of the applicable NYMEX futures contracts. The quantity of contracts to be exchanged in the EFM transaction must be consistent with the size ratio then in effect between the applicable e-miNY NYMEX futures contract listed for trading on Globex and the regular size NYMEX contract listed for trading at NYMEX.
D) Transaction Price. An EFM transaction may only be transacted at the settlement price for the regular size NYMEX futures contract for the trading session in which the EFM transaction was reported to the Exchange.
E) Floor Reporting Requirements and Deadlines. A report of each EFM transaction must be given and notice thereof must be posted on the Floor of the Exchange. The report of an EFM transaction must be given on the Floor prior to the end of the trading session on the day that the agreement was made, or if such agreement was made after the close of trading, then during the trading session on the next business day.
F) Clearing. EFM transactions shall be cleared through the Exchange in accordance with normal procedures, shall be clearly identified and marked in the manner provided by the Exchange, and shall be recorded by the Exchange and by the Clearing Members involved.
