01/13/2003
The rule amendments for NYMEX Rule 6.44, Registration for Billing of Floor and NYMEX ACCESS®, include allowing any Member, properly registered to trade on behalf of customers to bill brokerage in his own name. Member Firms and brokerage businesses must register as a billing entity if they intend to bill brokerage in any name other than the name of the broker executing the trade. This registration is a prerequisite to ATOM billing.
The rule amendments clarify that brokerage billed in other than an individual member's name must be billed to the legal name of the billing entity and that the Exchange must be given documentation verifying the right of the billing entity to use the name. This may be partnership papers, articles of incorporation or DBA documentation.
The rule amendments also clarify that the majority interest in a billing entity must be held by either a NYMEX Class A member with floor trading privileges or a floor trader leasing a NYMEX seat. The rule also carves out an exception for COMEX Members, allowing them to be the majority holders of billing entities which trade only NYMEX products (such as platinum), where the COMEX Member is entitled to execute orders.
Any questions regarding this Notice can be directed to Nancy Minett, Vice President, Compliance, at (212) 299-2940, or David Schneiderman, Director, Trade Practice Surveillance, at 299-2857.
* * * * * *
NYMEX Rule 6.44 — Registration for Billing of Floor and NYMEX ACCESS®
(Bold indicates additions; Strikethrough indicates deletions)
A. Any Member may bill floor brokerage in his own name for customer orders which he personally executes provided he is properly registered to execute customer orders as a floor broker. Any Member Firm operating a brokerage business on the Exchange Floor may bill floor brokerage in the name of the member firm.
B. Any Billing Entity
1.
2.
3.
C. Billing Entities that are sole proprietorships, corporations or partnerships, as described in (B)(1), (2) and (3) above, may bill brokerage through ATOM either in the legal name of the sole proprietorship, corporation or partnership or in the name of any member with floor trading privileges who owns an interest in the billing entity. Billing Entities electing to bill brokerage through ATOM using a legal name must file documentation with the Exchange Compliance Department demonstrating that the entity is properly registered to use that name as a sole proprietorship, corporation or partnership. Billing entities are prohibited from billing brokerage through ATOM in any other name including a non-member owner of the Billing Entity or a non-owner of the Billing Entity.
D. It will be a major offense for any Member to receive payment for brokerage services rendered, unless duly registered with the Exchange as described herein. All brokerage must be billed through ATOM, as described in Rule 9.40 – Required Use of ATOM by Clearing Members and Floor Brokers.
E. It will be a major offense for any Member, Electronic Trader or Member Firm to pay non-registered entities for brokerage services rendered. It is the obligation of all Members, Member Firms and Electronic Traders to confirm that the brokerage businesses it utilizes are so registered with the Exchange.
F. For the purposes of this rule, the terms "Member" shall include Class A shareholders of the Exchange with floor or ACCESS® trading privileges on the Exchange and persons with floor trading privileges leasing trading rights from Class A members of the Exchange. "Member", "Member Firm" and "Floor Member" shall include COMEX Members who have NYMEX Division trading privileges, provided that the floor brokerage billed is limited to the NYMEX Division markets for which they have trading privileges to execute customer orders.
G. Members who are owners, shareholders or general partners of entities under which floor brokerage will be billed shall be responsible for the acts of the employees and agents of those entities.