09/09/2005
In anticipation of the launch, NYMEX had issued Notice No. 05-345, informing Members and market participants of operational procedures relating to the migration of the listing for trading of Brent Crude Oil Futures (commodity symbol SC) and Northwest Europe Gas Oil Futures (commodity symbol GR) Contracts (the "Affected Contracts") from the NYMEX trading facility in Dublin to NYMEX Europe Limited. NYMEX will now implement the following procedures.
As of the launch date, September 12, 2005, all open positions in the Affected Contracts will no longer be listed or traded on the NYMEX trading facility in Dublin and will be listed and traded only on and subject to the rules of NYMEX Europe Limited. However, all such Affected Contracts will continue to be cleared by NYMEX, Inc. in its capacity as the clearing organization contracted by NYMEX Europe Limited for this service, and NEL will be responsible to the FSA for the applicable requirements as a Registered Investment Exchange ("RIE"). In addition, the clearing rules of NYMEX, Inc. will continue to govern the clearing and settlement of all Affected Contracts following the migration of trading.
Pursuant to the authority set forth in NYMEX's Bylaws and Rules, NYMEX intends to delist the Affected Contracts from trading on the NYMEX trading facility in Dublin and provide for the migration of the trading of the Affected Contracts on NEL. This change in listed contracts will apply to all open positions in the Affected Contracts. All product specifications and other terms and conditions rules then in effect for the Affected Contracts will remain the same.
All open interest will automatically be transferred in accordance with the following procedure. As of the close of trading of the Dublin facility on Friday, September 9, 2005, all open positions in Brent Crude Oil Futures and Northwest Europe Gas Oil Futures (the "Affected Contracts") carried by NYMEX, Inc. Clearing Members will be automatically closed out and new positions in the Affected Contracts on NEL opened on the same side of the market and at the same quantity as the original positions of those Clearing Members in the Affected Contracts. NYMEX, Inc. in its capacity as clearing house for the Dublin trading floor and NEL, will direct each of its Clearing Members carrying open interest in Affected Contracts to execute a "back office" bookkeeping entry for each Affected Contract. NYMEX, Inc. (in its capacity as clearing house) and the Clearing Member(s) will, therefore, each effect entries to reflect: 1) close out the open Dublin positions; and 2) open the equivalent positions as of the close of trading on the Dublin facility's final trading day.
At the option of the customer, these back office bookkeeping entries could occur either at the original trade price of the customer’s NYMEX position or at the closing settlement price on the day of the transfer. Unless notified by a Clearing Member to the contrary, all Affected Contracts will be offset and re-established by NYMEX, Inc. at the settlement price(s) established on Friday, September 9, 2005, the last trading day in Dublin. Clearing Members carrying open positions in the Affected Contracts will need to check with each customer as to which pricing convention is preferred and must notify NYMEX, Inc.'s Clearing Department of any customer positions to be closed out and re-established at the original trade price by no later than 3:00 PM (NY time) on the final trading day in Dublin. On the next business day, Monday, September 12, 2005, NYMEX, Inc. will record bookkeeping entries in the form of position transfers both "to" and "from" NYMEX, Inc. for all gross open positions on its books based upon the PCS received by Clearing Members on the final trading day in Dublin. The bookkeeping entries will be recorded "AS OF" September 9, 2005, and will be contained in the final trade data distributed by NYMEX, Inc. on the next business day, September 12. All such entries will additionally be denoted as having been conducted opposite a special Clearing Member designation, denoting the Exchange as a counterparty. Further, in the event that any other specific request for "AS OF" trades are made noting that the actual trade took place in Dublin prior to the last Dublin trading day's close, the Clearing House will also create a similar bookkeeping entry at the settlement price on the last trading day in Dublin unless advised otherwise that day by the Clearing Member(s).
As noted, the material economic terms of each contract will not change. However, Members and their customers should be aware of the following differences in the Affected Contracts following the migration of trading to NYMEX Europe Limited:
- On and after September 12, 2005, the trading of the Affected Contracts will take place only on NYMEX Europe Limited, which is an FSA-regulated RIE, and, unlike the NYMEX trading facility in Dublin, will not be a CFTC regulated designated contract market.
- The rules governing the trading (but not the clearance or settlement) of such contracts will be those of NYMEX Europe Limited, not those of NYMEX, Inc., and the trading of such contracts will be subject to English law, not U.S. law. (The settlement and clearance of the Affected Contracts will continue to be governed by NYMEX, Inc. clearing rules and U.S. law. All Affected Contracts of customers and margin funds supporting such positions would continue to be held in customer segregated accounts and subject to CFTC customer segregated account requirements. NYMEX, Inc. was issued an Order by the CFTC on September 6, 2005 permitting it and Futures Commission Merchants ("FCMs") to hold customer funds in accounts segregated pursuant to Section 4d of the Commodity Exchange Act and Commission Regulation 1.20 related to the clearing of all futures and options contracts traded at NEL.)
- It is possible that for some Members and customers the tax treatment of the Affected Contracts may be affected by the migration of trading to NYMEX Europe Limited depending upon each Member's or customer's particular circumstances. Accordingly, each Member and their customers should take the advice of their tax advisors as to the potential effect of the migration of the trading of the Affected Contracts.
Members are required to notify all customers with positions in the Affected Contracts regarding the information contained in this Notice and to identify the pricing convention preferred by customers seeking to re-establish their positions on the NEL market.
Forward Looking and Cautionary Statements
NYMEX Holdings has attempted, wherever possible, to make statements in good faith, as of the date of this release, by using words such as anticipates, believes, expects, and words and terms of similar substance in connection with any discussion of its present and future operations within the industry. Any forward-looking statements made by, or on behalf of, NYMEX Holdings and NYMEX Europe involve a number of risks, trends, uncertainties, and other factors which may cause actual results to differ materially, including receipt of the necessary Commodity Futures Trading Commission and Financial Services Authority approval; timely performance and cooperative effort of exchange partners; and changes in financial or business conditions at NYMEX.