Notice to Members
Notice No. 240
06/22/2004
Reminder: Participating Principals Eligible for ClearPortsm Clearing Services
     In May of 2002, the New York Mercantile Exchange (the “Exchange”) was issued an Order by the CFTC providing for the ability to bring certain transactions or contracts attractive to Over-the-Counter Participants into the Clearing House on its NYMEX Division. The scope of the Order was limited to “Clearing Only,” meaning these contracts were not traded on an execution facility provided by NYMEX. These contracts, commonly referred to as the “ClearPortsm Cleared Contracts,” were brought into the Clearing House by means of an EFS (“Exchange of Futures for Swap”) for any financially-settled contract or via an EFP (“Exchange of Futures for Physical”) for any physically-delivered contract. Since the original CFTC Order, NYMEX has revised its rules to allow for trading of these contracts (ClearPortsm Trading) and listed additional contracts.

    The Commodity Exchange Act (CEA), Section 2g describes excluded swap transactions as “any agreement, contract, or transaction in a commodity other than an agricultural commodity if the agreement, contract, or transaction is –

    The Commodity Exchange Act (CEA), Section 2g describes excluded swap transactions as “any agreement, contract, or transaction in a commodity other than an agricultural commodity if the agreement, contract, or transaction is –

(1)       entered into only between persons that are eligible contract participants at the time they enter         into the agreement, contract, or transaction;

(2)      subject to individual negotiation by the parties; and

(3)      not executed or traded on a trading facility.”

      All participants who engage in ClearPortsm Clearing services which utilize an EFS transaction must be “Eligible Contract Participants” or “ECPs” as defined in Section 1a(12) of the CEA. The section can be viewed at http://www4.law.cornell.edu/uscode/7/1a.html. Floor members, meeting the requirements of NYMEX Rule 6.21G, may also pursuant to exemptive relief granted by the CFTC, under certain conditions and with a specific FCM guarantee, trade certain OTC products that are then brought to the Exchange for clearing. (For more information, see NYMEX Notice to Members No. 04-136, April 1, 2004). Lastly, for all ClearPortsm Clearing Contracts which utilize an EFP transaction, while an ECP standard is not applicable, the transaction must otherwise comply with NYMEX Rule 6.21.

Questions regarding eligibility for ClearPortsm Clearing services should be directed to Anthony Densieski, Director, Market Surveillance Investigations, at (212) 299-2881.
Should you have any questions or require any further information, please contact exchangeinfo@nymex.com