Notice to Members
Notice No. 396
09/13/2005
Amendments to SO2 and NOX Emissions Allowance Futures Contracts
Please be advised that the New York Mercantile Exchange, Inc., has made the following clarifications to the exchange's S02 and NOX futures contracts to enhance the clarity of contract language. They are effective immediately.
  • Removal of reference to "one ton" of emissions in contract definitions of allowance to avoid confusion with quantity defined under Contract Unit rule.

  • Editing of Product Placement Rule for clarity.

  • Editing of Delivery Procedures Rule to clarify that some delivery information is exchanged directly between the customer’s clearing members and not through the Notices of Intention through the Exchange's Clearing Department.

  • For NOX only, language is added to the contract to specify that only Ozone Season allowances are deliverable.
The specific amendments are provided below.

* * * * * * * * * *

Attached Rule Amendments


Additions italicized, deletions struck-through

I. To eliminate "one ton" in definitions
For NOX
783.01A. Definitions

(B) NOX Allowance refers to a tradable permit to emit one ton of NOX as specified further by EPA.
For SO2
782.01A. Definitions

(B) SO2 Allowance refers to a tradable permit to emit one ton of SO2 as specified further by EPA.

II. To simplify and clarify Product Placement Rule
For NOX
783. 08 Product Placement

(1) Certification:
For purposes of Rule 9.19, the Seller and Buyer shall fulfill its contractual obligation on a maturing contract unless, only if, by 12:00 pm noon on the day preceding the last trading day in the applicable delivery month, such Seller and Buyer have received NATS account certification from his customer, in the form prescribed by the Exchange stating that:
a) If a buyer, the Buyer's customer has an account with NATS, with access to CAMD Business System.
(b) If a seller, the Seller' Customer has an account with NATS, with access to CAMD Business System.
The receipt of such certification shall not relieve the Seller or Buyer, or their respective Customers of any obligations under any Rule other than Rule 9.19.

For SO2 782. 08 Product Placement

((1) Certification:
For purposes of Rule 9.19, the Seller and Buyer shall fulfill its contractual obligation on a maturing contract unless, only if, by 12:00 pm noon on the day preceding the last trading day in the applicable delivery month, such Seller and Buyer have received NATS account certification from his customer, in the form prescribed by the Exchange stating that:
(c) If a buyer, the Buyer's customer has an account with NATS, with access to CAMD Business System.
(d If a seller, the Seller' Customer has an account with NATS, with access to CAMD Business System.
The receipt of such certification shall not relieve the Seller or Buyer, or their respective Customers of any obligations under any Rule other than Rule 9.19.

III. To clarify which delivery information is exchanged directly between customers' clearing members
For NOX
783. 09 Delivery Procedures

(A) RESPONSIBLITIES OF CLEARING MEMBERS HAVING OPEN LONG POSITIONS
(1) NOTICE OF INTENTION TO ACCEPT

By 11:30 a.m. on the second business day prior to the last business day of an expiring delivery month, a Buyer having an open position shall file with the Exchange a properly completed and signed Notice of Intention to Accept. The Notice of Intention to Accept shall be in the form prescribed by the Exchange and shall include: the Name of the Buyer's Customer, Number of contracts to be accepted, and any additional information as may be required by the Exchange;

(2) INFORMATION PROVIDED BY BUYER TO SELLER By 4:00 p.m. on Notice Day, the Buyer shall provide the Seller with the following information: NATS Account Number; Vintage Year, Name, Phone Number and e-mail address of the Account Representative (AAR) or the authorized alternate for that NATS account, and
(B) RESPONSIBLITIES OF CLEARING MEMBERS HAVING OPEN SHORT POSITIONS
(1) NOTICE OF INTENTION TO DELIVER

By 11:30 a.m. on the second business day prior to the last business day of an expiring delivery month, a Seller having an open short position shall file with the Exchange a properly completed and signed Notice of Intention to Deliver. The Notice of Intention to Deliver shall be in such form prescribed by the Exchange and shall include: Name of the Seller's Customer, the Number of contracts to be delivered, and any additional information as may be required by the Exchange.

(2) INFORMATION PROVIDED BY SELLER TO BUYER By 4:00 p.m. on Notice Day, the Seller shall provide the Buyer with the following information: NATS Account Number, Vintage Year, Name, Phone Number and e-mail address of the Account Representative (AAR) or the authorized alternate for that NATS account.
For SO2

783. 09 Delivery Procedures

(A) RESPONSIBLITIES OF CLEARING MEMBERS HAVING OPEN LONG POSITIONS
(1) NOTICE OF INTENTION TO ACCEPT

By 11:30 a.m. on the second business day prior to the last business day of an expiring delivery month, a Buyer having an open position shall file with the Exchange a properly completed and signed Notice of Intention to Accept. The Notice of Intention to Accept shall be in the form prescribed by the Exchange and shall include: the Name of the Buyer’s Customer, Number of contracts to be accepted, and any additional information as may be required by the Exchange.

(2) INFORMATION PROVIDED BY BUYER TO SELLER

By 4:00 PM on Notice Day, the Buyer shall provide the Seller with the following information: ATS Account Number; Vintage Year, Name, Phone Number and e-mail address of the Account Representative (AAR) or the authorized alternate for that ATS account.
(B) RESPONSIBLITIES OF CLEARING MEMBERS HAVING OPEN SHORT POSITIONS
(1) NOTICE OF INTENTION TO DELIVER

By 11:30 a.m. on the second business day prior to the last business day of an expiring delivery month, a Seller having an open short position shall file with the Exchange a properly completed and signed Notice of Intention to Deliver. The Notice of Intention to Deliver shall be in such form prescribed by the Exchange and shall include: Name of the Seller's Customer, the Number of contracts to be delivered, and any additional information as may be required by the Exchange.

(2) INFORMATION PROVIDED BY SELLER TO BUYER By 4:00 p.m. on Notice Day, the Seller shall provide the Buyer with the following information: NATS Account Number, Vintage Year, Name, Phone Number and e-mail address of the Account Representative (AAR) or the authorized alternate for that NATS account.
IV. To distinguish between Ozone Season and Annual NOX emissions allowances.

783. 01 Scope

The provisions of these rules shall apply to all NOX ozone season emissions allowances bought or sold for future delivery on the Exchange with the Delivery at the U.S Environmental Protection Agency's (EPA) Allowance Tracking System.
Should you have any questions or require any further information, please contact exchangeinfo@nymex.com