03/27/2002
Additionally, an amendment to Rule 6.21A clarifies that a provision in Rule 6.21A(D)(2) applicable to Brent EFS transactions is limited in duration. Specifically, this provision is available only for a six-month period following implementation of the pilot program, which went into effect with the launch of the Exchange's Brent contract on September 5, 2001.
NOTIFICATION OF AMENDMMENTS TO NYMEX RULE 6.21
(Underlining indicates additions; strike-outs indicate deletions.)
Rule 6.21. EXCHANGE OF FUTURES FOR, OR IN CONNECTION WITH, PRODUCT
(A) An exchange of futures for, or in connection with, product (EFP) consists of two discrete, but related, transactions; a cash transaction and a futures transaction. At the time such transaction is effected, the buyer and seller of the futures must be the seller and the buyer of a quantity of the physical product covered by this Section (or any derivative, by-product or related product). The quantity of physical product must be approximately equivalent to the quantity covered by the futures contracts.
(B) Except as otherwise specifically provided in the By-Laws or Rules, an EFP must be reported during the hours of futures trading.
(C) A report of such EFP transaction shall be submitted to the Exchange by each Clearing Member representing the buyer and seller. Such report shall identify the EFP as made under this Rule and shall contain the following information: a statement that the EFP has resulted or will result in a change of ownership, the kind and quantity of the futures, the price at which the futures transaction is to be cleared, the names of the Clearing Members and customers and such other information as the Exchange may require. Such report (form) shall be submitted to the Compliance Department by 12:00 noon, no later than two (2) Exchange business days after the
day of posting the EFP on the Floor of the Exchange. (D)(1) Each buyer and seller must satisfy the Exchange, at its request, that the transaction is a legitimate EFP transaction. Upon the request of the Exchange, all documentary evidence relating to the EFP, including, without limitation, evidence as to change of ownership of the cash commodity or a commitment therefor shall be obtained by the Clearing Members from the buyer or seller and made available by the Clearing Members for examination by the Exchange. Additionally, if the buyer or seller is a Member/Member Firm, the Exchange may obtain the information directly from such person(s).
(2) For all NYMEX Division contracts, no EFP that is linked to or contingent upon entry into a second, offsetting cash trade may be transacted during Regular Trading Hours at any time that NYMEX offers trading in its contracts, unless trading in a market is halted, such as during a physical emergency.
(3) Failure by a buyer or seller, or its Clearing Member, to satisfy the Exchange that an EFP transaction is bona fide, shall subject such buyer or seller if a Member/Member Firm, or the Clearing Member to disciplinary action. Such disciplinary action, depending on the gravity of the offense, may be deemed to be a major offense of the Exchange's rules. Further, if the buyer or seller is not a Member/Member Firm, the Exchange may conduct a hearing before the Business Conduct Committee to limit, condition or deny access to the market.
(E) Each EFP transaction shall be posted, immediately when relevant cash terms are determined, but in no event later than the earlier of the next business day or the end of the permissible posting period for EFPs following the expiration of the underlying futures contracts, by the Floor Members and cleared through the Exchange in accordance with normal procedures and by the Clearing Members involved.
(F) All omnibus accounts and foreign brokers shall submit a signed EFP reporting agreement in the form prescribed by the Exchange to the Exchange's Compliance Department. Such Agreement shall provide that any omnibus account or foreign broker identified by a Clearing Member (or another omnibus account or foreign broker) as the buyer or seller of an EFP pursuant to Rule 6.21(C), shall supply the name of its customer and such other information as the Exchange may require. Such information shall be submitted to the Exchange's Compliance Department by 12:00 noon no later than two (2) Exchange business days after the day of posting the EFP on the floor of the Exchange. Failure by an omnibus account or foreign broker to submit either the agreement or the particular EFP information to the Exchange may result in a hearing by the Business Conduct Committee to limit, condition or deny access of such omnibus account or foreign broker to the market.
NOTIFICATION OF AMENDMENDMENTS TO NYMEX RULE 6.21A (Underlining indicates additions; strike-outs indicate deletions.)
Rule 6.21A. EXCHANGE OF FUTURES FOR, OR IN CONNECTION WITH, SWAP TRANSACTIONS (Pilot Program)
(A) (1) An exchange of futures for, or in connection with, a swap (EFS) consists of two discrete, but related, transactions; a swap transaction and a futures transaction. At the time such transaction is effected, the buyer and seller of the futures must be, respectively, the seller and the buyer of the swap. The swap component shall involve the commodity underlying the futures contract (or a derivative, by-product or related product of such commodity). The quantity covered by the swap must be approximately equivalent to the quantity covered by the futures contracts. The swap component of an EFS transaction must comply with the applicable CFTC swap regulatory requirements. The initial term of the pilot program shall be three years from the effective date of this Rule 6.21A.
(2) Eligible Contracts and Transactions. EFS transactions may be effected only for transactions in the Exchange's Brent crude oil futures contract or in the Henry Hub Natural Gas futures contract (for a period of six months following implementation of the pilot program for Natural Gas EFS transactions).
(B)(1) The report of an EFS transaction shall be given on the Floor of the Exchange during the hours of futures trading.
(2) EFS transactions involving the Brent contract are permitted until the close of trading on the last trading day in the expiring contract month.
(3) EFS transactions involving the Natural Gas contract are permitted until two hours after trading terminates on the last day of trading in the expiring contract month.
(C) A report of such EFS transaction shall be submitted to the Exchange by each Clearing Member representing the buyer and/or seller. Such report shall identify the EFS as made under this Rule and shall contain the following information: a statement that the swap component of the EFS complied with the applicable CFTC swap regulatory requirements at the time the EFS was entered into between the buyer and seller, a statement that the EFS has resulted or will result in a change of payments or other such change, the kind and quantity of the futures, the price at which the futures transaction is to be cleared, the names of the Clearing Members and customers and such other information as the Exchange may require. Such report (form) shall be submitted to the Compliance Department by 12:00 noon, no later than two (2) Exchange business days after the day of posting the EFS on the Floor of the Exchange.
(D)(1) Each buyer and seller must satisfy the Exchange, at its request, that the transaction is a legitimate EFS transaction. Upon the request of the Exchange, all documentary evidence relating to the EFS, including a master swap agreement and any supplements thereto, shall be obtained by the Clearing Members from the buyer or seller and made available by the Clearing Members for examination by the Exchange. Additionally, if the buyer or seller is a Member/Member Firm, the Exchange may obtain the information directly from such person(s).
(2) No EFS that is linked to or contingent upon entry into a second, offsetting swap transaction may be transacted at any time; provided however, Ffor the Brent contract, for a six-month period following implementation, no EFS that is linked to or contingent upon entry into a second, offsetting swap transaction may be transacted during Regular Trading Hours at any time that NYMEX offers trading in its contracts, unless trading in a market is halted, such as during a physical emergency. For the Natural Gas contract, no EFS that is linked to or contingent upon entry into a second, offsetting swap transaction may be transacted at any time.
(3) Failure by a buyer or seller, or its Clearing Member to satisfy the Exchange that an EFS transaction is bona fide shall subject such buyer or seller, if a Member/Member Firm, or the Clearing Member to disciplinary action. Such disciplinary action, depending on the gravity of the offense, may be deemed to be a major offense of the Exchange's rules. Further, if the buyer or seller is not a Member/Member Firm, the Exchange may conduct a hearing before the Business Conduct Committee to limit, condition or deny access to the market.
(E) Each EFS transaction shall be posted, immediately when relevant cash terms are determined, but in no event later than the earlier of the next business day or the end of the permissible posting period for EFPs following the expiration of the underlying futures contracts, by the Floor Members and cleared through the Exchange in accordance with normal procedures and by the Clearing Members involved.
(F) All omnibus accounts and foreign brokers shall submit a signed EFS reporting agreement in the form prescribed by the Exchange to the Exchange=s Compliance Department. Such Agreement shall provide that any omnibus account or foreign broker identified by a Clearing Member (or another omnibus account or foreign broker) as the buyer or seller of an EFS pursuant to Rule 6.21A(C), shall supply the name of its customer and such other information as the Exchange may require. Such information shall be submitted to the Exchange=s Compliance Department by 12:00 noon no later than two (2) Exchange business days after the day of posting the EFS on the Floor of the Exchange. Failure by an omnibus account or foreign broker to submit either the agreement or the particular EFS information to the Exchange may result in a hearing by the Business Conduct Committee to limit, condition or deny access of such omnibus account or foreign broker to the market.