05/12/2004
In contrast to the current product slate for NYMEX ClearPort(sm) Clearing services (where OTC transactions are exchanged for listed NYMEX futures and options and where related customer funds are held in customer segregated accounts), these new OTC options will be cleared by the Exchange as OTC derivatives rather than as futures, and all margin funds for such transactions will be required by the Exchange to be held in customer non-segregated accounts.
In other words, any trading activity cleared on behalf of a clearing firm's customer in these new OTC options will be processed by NYMEX within a new account category known as "customer non-segregated" and will be recorded separate and distinct from the customer segregated account utilized for existing Exchange products.
Prior to the commencement of clearing these new products on behalf of customers, applicable clearing members must first:
(1) open a new account with their settlement bank titled "customer non-segregated" in order to process the expected variation margin flows
and
(2) complete the attached banking resolution and return it to the Exchange.
Please note that "house" (proprietary and affiliate) activity cleared for these new products will be combined with all other (regulated) house activity and will not require a separate bank account.
The completed banking resolution should be submitted to the attention of:
Artie McCoy
Vice President of Financial Surveillance and Risk Management
14th Floor
212-299-2928