03/04/2002
Audit Trail Classes
Purpose-to improve NYMEX's overall audit trail by reducing the number of members falling below the 80% summary disciplinary action standard for pit card submission, thereby reducing the number of members receiving pit card fines.
Members may:
Attend an audit trail class on March 14, 2002, with future dates to be determined. The class will be an intensive discussion of pit card problems and pitfalls with emphasis on how the audit trail works and successful strategies for achieving a passing grade. Members will analyze their own trading style in light of the material presented and pinpoint areas where they need to improve. Members will outline a plan for raising their own pit card submission performance rate and receive feedback from Committee Members and Staff. Members are strongly encouraged to bring their clerks with them.
Upon completion of the class, members will be allowed to "do over" up to two out of the subsequent six months in which they receive a warning letter or fine for substandard trade time submission rates between 70% and 79%. Members will not receive a fine or warning letter for a "do over" month but the month will not count as a passing month. A member whose submission percentage falls below 70% will receive a fine or warning letter.
The benefit of attending will be that a month that would have counted as a failure will not count at all, as long as the member achieves at least a 70% submission rate. Members still need four problem-free months to clear out their record. For example, a member who has not received a fine for three months can benefit from "doing over" a fourth failing month; if he passes a total of four out of six months. The member can still use a second "do over" month as long as he meets all criteria. He will then return to the warning letter sanction level.
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 during a twelve-month period. A member must take a class before becoming eligible for the benefits described above. Additional classes may be offered at the discretion of the Compliance Review and Floor Committees.
Incorporation of Spread Trades into One-Minute Trade Time "Pit Card" Statistics for NYMEX Division
Currently, one-minute trade time "pit card" statistics do not include spread trades. 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 its one-minute trade submission statistics. The CFTC has made this recommendation in the past and the Exchange has committed to respond to it. The Comex Division already incorporates spread trade statistics into its one-minute trade submission statistics.
NYMEX Division Members should note that spread trades will be incorporated into one-minute valid trade submission percentages after a "phase in" period. Members must make sure that they report prices for both outright and spread transactions to ensure that the Price Change Register is accurate. If a price print for an outright or a spread trade is not reported, you will not be credited with a valid transaction, even if you throw the pit card for the trade into the pit in a timely manner.
The Exchange recently adopted a new procedure to improve spread trade submission percentages. Effective December 10, 2001, Members may submit the differential only when reporting intra-commodity spreads containing a spot month leg. The Exchange will assign the low of the opening range for the price of the spot month leg. It is not necessary to submit both the differential and prices for the individual legs. This procedure applies only to trades executed during RTH. Any member who prefers to submit other prices for the legs may continue to do so.
Pit card statistics for outright and spread trades are presently posted on the NYMEX floor on a weekly basis. Spread trade statistics are currently posted for information purposes only so that you can assess your pit card submission rate before they are incorporated into trade time submission percentages.