03/27/2002
As background, Exchange rules require an Electronic Trader (ET) to be guaranteed by a Primary Clearing Member (PCM). Exchange rules also allow the ET to open an account (for trading on NYMEX ACCESS7) with a Clearing Member other than the PCM (Non-PCM) but only if the ET obtains prior written consent from its PCM.
The rules package implement the following changes:
1. A Non-PCM must accept and clear and may not reject or "DK" any trade or trade reallocation for an account traded on NYMEX ACCESS7 that is carried by the Non-PCM if the trade does not exceed that Non-PCM's RAV limit for the account.
2. An ET must obtain the consent of its PCM for any changes to the ET's roster of Authorized Terminal Users.
3. An ET must also obtain the consent of its PCM for any electronic trading privileges sought by the ET (beyond the number of privileges in effect at the time the PCM guarantee was executed).
4. Finally, all changes regarding Authorized Terminal Users or electronic trading privileges can only be submitted to the Exchange by the PCM rather than being submitted directly by the ET.
The rule amendments are provided below. In addition, the Exchange is making a minor technical amendment to the NYMEX ACCESS7 PRIMARY CLEARING MEMBER GUARANTEE form. This change shall not affect the validity of PCM guarantees that are currently in effect. In addition, Rule 9.11A has been amended to clarify that it applies to trades executed via open outcry.
NOTIFICATION OF AMENDMENTS TO NYMEX RULES 9.11A, 11.04 AND 11.07 AND NOTIFICATION OF NEW NYMEX RULE 11.04B AND AMENDMENTS TO THE NYMEX ACCESS7 PRIMARY CLEARING MEMBER GUARANTEE
(Underlining indicates additions; strike-outs indicate deletions.)
Rule 9.11A Give-Up Trades - Trades Executed by Open Outcry
Give-Up Trades Executed by Open Outcry
In the absence of a give-up agreement whose terms and conditions govern the responsibilities/obligations of executing brokers, customers and Clearing Members, the following rules shall define the respective responsibilities/obligations of those parties to an order. The "executing broker", as used in this rule, is the registered billing entity, Member Firm or Floor Broker to whom the order is transmitted.
(The remainder of the rule remains the same.)
Rule 11.04A. PRIMARY CLEARING MEMBER GUARANTEES FOR NYMEX ACCESS®
(A) Each Electronic Trader must be guaranteed to trade on NYMEX ACCESS® by a Primary Clearing Member ("PCM") and must deliver documentation of such guarantee to the Exchange. To guarantee an Electronic Trader, the PCM must execute such guarantees and other documents as required by the Exchange. No Electronic Trader may be guaranteed by two (2) PCMs at the same time.
(B) In order to guarantee an Electronic Trader, the PCM shall:
(1) agree to accept and clear all trades executed as a result of orders entered through use of the Passwords as defined in Rule 11.04 that are not accepted for clearance by another Clearing Member or that do not clear provided, however that such PCM shall not be required to accept any trade that is submitted to it for clearance after the close of that business day's session of Regular Trading Hours, provided that the PCM's obligation to accept a trade for an account carried by another Clearing Member shall be further limited by the provisions of Rule 11.04B, and, provided further, that acceptance of a trade by such PCM, as provided in this Section (B), shall not relieve any Member, Member Firm, Electronic Trader or Authorized Terminal User involved in the solicitation, handling, execution, or clearing of such trade of the duty to act in good faith and with reasonable care and diligence;
(2) agree to accept financial responsibility for all trades determined through the Exchange adjudication or arbitration process to have been executed as a result of orders entered through use of the Passwords;
(3) execute such guarantees and other documents as the Exchange shall require in connection with the PCM's guarantee of an Electronic Trader and shall file said documents with the Office of the Secretary; and
(4) comply with the financial requirements for guarantors as set forth in Rule 2.30 and in Rule 9.21.
(C) No individual or entity that is guaranteed by a PCM for trades executed during a Regular Trading Hours trading session may be guaranteed by a different PCM for trades executed during a NYMEX ACCESS® trading session
. 11.04B OBLIGATIONS OF NON-PRIMARY CLEARING MEMBERS FOR TRADING ON NYMEX ACCESS®
(Note: As provided by NYMEX Rule 11.07 (Duties of Electronic Traders), an Electronic Trader must obtain prior written consent from its Primary Clearing Member before the Electronic Trader may open an account with another Clearing Member for trading on NYMEX ACCESS®. As provided by NYMEX Rule 11.23 (Trade Limit Monitoring System), a Clearing Member must input a Total Risk Value, as defined by Rule 11.23, for any account carried by the Clearing Member that could be traded on NYMEX ACCESS®. )
Non-PCM Clearing Member. For purposes of this rule, the term "Non-PCM Clearing Member" shall refer to a Clearing Member who has opened an account for an Electronic Trader for trading on NYMEX ACCESS7 where this Clearing Member is not the Primary Clearing Member for such Electronic Trader for trading on NYMEX ACCESS®.
For an account traded on NYMEX ACCESS® that is carried by a Non-PCM Clearing Member, such Clearing Member must accept and clear any trade or trade reallocation for such account that does not exceed the Total Risk Value set by the Non-PCM Clearing Member that is applicable to the entry of orders and to trade reallocations for such account.
Rule 11.07 PRIMARY CLEARING MEMBER PERMISSION FOR ELECTRONIC TRADER ACCOUNTS WITH OTHER CLEARING MEMBERS AND ADDITIONAL AUTHORIZED TERMINAL USERS AND ELECTRONIC TRADING PRIVILEGES
(A) Accounts for Trading on NYMEX ACCESS® Carried at Other Clearing Members. No guaranteed Electronic Trader who is unconditionally guaranteed by a Primary Clearing Member for trading in Exchange futures and options contracts on NYMEX ACCESS® may open and/or otherwise maintain a commodity account with any other Clearing Member in which Exchange futures and options contracts will be traded on NYMEX ACCESS® without the prior written consent of such Electronic Trader's guarantor Primary Clearing Member.
(B) Additional Authorized Terminal Users and Electronic Trading Privileges. (1) An Electronic Trader must obtain the consent of its Primary Clearing Member for any electronic trading privileges sought by the Electronic Trader beyond the number of electronic trading privileges in effect at the time of the execution of the NYMEX ACCESS® Primary Clearing Member Guarantee. (2) An Electronic Trader also must obtain the consent of its Primary Clearing Member for any changes to the Electronic Trader's roster of Authorized Terminal Users. (3) Any change proposed by the Electronic Trader pursuant to Subsections (1) or (2) of this Section (B) may not be submitted directly to the Exchange by the Electronic Trader but instead must be submitted to the Exchange by the Primary Clearing Member on behalf of the Electronic Trader in the manner provided by the Exchange.
NYMEX ACCESS® PRIMARY CLEARING MEMBER GUARANTEE (This form must be completed once for any entity or individual designated by the Exchange as an Electronic Trader.)
Electronic Trader to Whom Guarantee Relates:
________________________________ ________________________________ Name of the Electronic Trader (firm or individual name if an individual.) Business Telephone Number
________________________________ Street Address City State Zip Code
_____________ ________________________________ Date Signature of Electronic Trader (If a Firm, Signature must be by an Official of the Electronic Trader with Authority to Bind the Company.
Guaranteeing Primary Clearing Member:
________________________________ Name of Primary Clearing Member
________________________________ Street Address City State Zip Code
_______________________________ Telephone Number Fax number
PRIMARY CLEARING MEMBER GUARANTY
The undersigned, a Primary Clearing Member of the (check one or both as applicable) _________ New York Mercantile Exchange, Inc. ______ COMEX Division of NYMEX or COMEX Clearing Association, Inc., does hereby represent that, in accordance with the provisions of Exchange Rule 11.04A, as may be amended from time to time, it will clear all trades executed on (check one or both as applicable) ______ the NYMEX Division ______ the COMEX Division as a result of orders entered through use of the user identification and password for the above-listed Electronic Trader and/or the user identification and password of any individual authorized by the Electronic Trader to enter orders into the NYMEX ACCESS® system (collectively, the "Passwords") that are not accepted for clearance by another Clearing Member or that do not clear, except as otherwise provided by Exchange Rules Rule 11.04A. The undersigned further guarantees that it will be fully responsible for all such trades and that it ratifies and approves all acts occurring through use of the Passwords as though all such trades were those of the undersigned.
Date ______
________________________________ Signature of Official at Primary Clearing Member with Authority to Bind the Company
________________________________ Title or Position of Employment of the Official Signing on Behalf of the Primary Clearing Member