12/08/2005
The new Rule can be summarized very simply as follows:
- The basic determination as to the number of actual traders (as compared with space measurements) who can stand on the first three steps will be calculated solely on a health and safety analysis and this determination will be made by Exchange Staff in consultation with the Facilities Committee. This calculation will be made for every ring even if it is not widely perceived that there is a space issue on the top step of a particular ring.
- Thereafter, the determination as to which Floor Members may stand on a particular step in a trading ring also will be made by Exchange Staff. This determination will focus solely on consideration of facilitation of business and trading activity on the Exchange and thus will use volume as the exclusive and objective criterion.
- More specifically, eligibility to stand on the top step will focus solely on the total customer volume executed by (or to be executed by) a Floor Member and eligibility to stand on other steps will focus on total overall volume executed by (or to be executed by) the Floor Member. The volume data used for purposes of eligibility shall be a three (3) month rolling average which will be re-calculated monthly.
- Because the only measurement for the top step is customer business, this means that Floor Members who trade solely for their own accounts will not be eligible for the top step.
- There is also a provision for enforcement of the Rule by the Floor Committee. While it is anticipated that enforcement of this Rule largely will be undertaken by Exchange Staff serving on the Floor Committee, during the interim period in the Crude ring until Exchange Staff begin serving on the Floor Committee sometime in January next year, regular Floor Committee members will enforce this Rule in that ring.
NEW NYMEX RULE 8.21A
("Maintenance of Health and Safety in Exchange Trading Rings")
A) No Floor Member may stand on the top step, second step (or as necessary lower steps) of a NYMEX Division trading ring unless such Floor Member is presently authorized to occupy such step of the applicable trading ring by NYMEX staff. For each trading ring, NYMEX staff, in consultation with the Facilities Committee, and as may be phased in on a ring-by-ring basis in the sole discretion of the Exchange, shall initially determine the maximum number of actual Floor Members who can reasonably and safely occupy the top step, second step and as necessary any other step of that ring.
B) (1) Based upon such safety calculations, Exchange staff then will determine those Floor Members who may stand on the applicable rings based solely upon the following criteria (reviewing, on a monthly basis, trading volume (including TAS transactions but not including any non-competitive transactions such as EFP, EFS or IXA) data for the immediately preceding three-month period or such other period as may be set by Exchange staff):
(a) for the top step, total customer volume executed by a Floor Member except that no Member Firm and no billing entity may have more than three affiliated Floor Members on either of the two sides of a ring;In relation to the top step, for any ring where the Exchange has implemented the provisions of this rule, no Floor Member thus will be authorized to stand on the top step if such Member’s trading is limited to trading solely for his own proprietary account.
(b) for the second step, total trading volume executed by a Floor Member;
(c) as necessary, for lower steps in the applicable ring, total trading volume executed by a Floor Member.
(2) While the calculation for top step volume will be made on the basis of customer volume executed by individual brokers, the Exchange will permit reasonable substitutions for a broker by a Member Firm or billing entity with whom the broker is affiliated, provided that either the broker or the Member Firm or billing entity has for purposes of this rule given notice to the Exchange of such affiliation.
(3) Floor Members shall have the right to request a further review or reconsideration by Exchange staff of any determination affecting them or their Member Firm or billing entity, and any such requests must be submitted in the form and manner as provided by the Exchange, provided, however, that the filing of any such request for reconsideration will not excuse or justify any noncompliance with this rule.
C) No Floor Member may stand on a step after being notified by the Floor Committee that the Floor Member is not authorized to stand on that step.
D) The Floor Committee may impose summarily on any Floor Member in violation of this rule a Warning Letter and/or a fine of not less than $1,000 dollars but not more than $2,500 for each violation of this Rule, and violation of this Rule 8.21A for each new trading session shall constitute a separate violation, provided that, in the event of repeated violations by a Floor Member, the Floor Committee may determine to refer such Floor Member to the Business Conduct Committee for further action. Any fines issued pursuant to this Rule may be appealed in the same manner and under the same procedures set forth in Rule 8.21.