Trading in off-Exchange, over-the-counter (“OTC”) products is generally limited by statute to firms and persons that qualify for the statutory category of an “Eligible Contract Participant” (“ECP”). Individuals basically can qualify as an ECP only if they have total assets exceeding $10 million.

However, about a year ago, the Exchange successfully obtained CFTC regulatory relief that allows Exchange Floor Members, under certain conditions and with a specific FCM guarantee, to trade certain OTC products that are then brought to the Exchange for clearing (e.g., via EFS transactions). This special program is set forth in NYMEX Rule 6.21(G), “Participation by NYMEX Floor Members in Special Program for Over-the-Counter Trading with FCM Guarantee,” which can be found on the Exchange website. (As a note, compliance with the requirements of the Rule 6.21(G) special program are unnecessary for those Exchange Floor Members who can meet the financial assets test to qualify as ECPs in their own right.)

Reminder

This Notice to Members is intended to serve as a periodic reminder to Exchange Floor Members and to their applicable Primary Clearing Members (“PCM”) on the requirements of the special Rule 6.21(G) program.

Accordingly, please be advised that prior to the commencement of trading under the Rule 6.21(G) program, all applicable NYMEX Floor members must first:

(1) obtain a financial guarantee from their PCM (see attached document)

and

(2) formally notify the Compliance Department of the intention to trade eligible OTC products pursuant to this special program,

The Compliance Department will deem the receipt of the attached Financial Guarantee as the appropriate notification that a Floor Member intends to trade OTC products under this special program.

The Financial Guarantee should be submitted to the attention of:

Artie McCoy
Vice President of Financial Surveillance and Risk Management
14thFloor
212-299-2928

If you have any questions please contact either Artie McCoy at 212-299-2928 or Joe Sanguedolce at 212-299-2855.

New York Mercantile Exchange
FCM Financial Guarantee –
Special Program for Trading in OTC Contracts
By NYMEX Floor Members

(Name of Clearing Member), a clearing member of the New York Mercantile Exchange, Inc. (“NYMEX” or “Exchange”), hereby agrees to unconditionally guarantee to the Exchange and all of its Members the full and prompt payment of all obligations of (Name of Floor Member) which arise out of any transactions of business on the Exchange pertaining to transactions in certain over-the–counter (“OTC”) contracts submitted to NYMEX for clearing under the special program provided pursuant to NYMEX Rule 6.21(G). During the term of this Guarantee (Name of Clearing Member) must at all times remain a registered Futures Commission Merchant and further must clear all of the transactions executed pursuant to the special program provided by Rule 6.219G) transacted by (Name of Floor Member).

This Guarantee, prepared in accordance with NYMEX Rule 6.21(G) (“Participation by NYMEX Floor Members in Special Program for Over-the-Counter Trading with FCM Guarantee”), shall continue in effect until it is revoked in writing by either party and such written revocation is submitted and accepted by the Exchange’s Vice President of Financial Surveillance and Risk Management.

Agreed to by:

____________________________
(Print Name of Clearing Member)

____________________________
(Signature and title of Senior Officer of Clearing Member)

____________________________
(Date)

____________________________
(Print Name of Floor Member)

____________________________
(Signature of Floor Member)

____________________________
(Date)