08/05/2005
Rule 4.01 was amended to conform minor differences regarding the requirements, across both NYMEX and COMEX Divisions, for customers to post with their Clearing Members similar instruments when meeting margin requirements. General housekeeping amendments were made as well.
The amendments to Rule 4.03 eliminate the ability of Clearing Members to make unsecured loans to their customers for the purpose of meeting margin requirements on COMEX products. Instead, the rule will require that such loans must be secured as is currently allowed for NYMEX products.
Upon amendment, customers will be able to meet margin requirements on either Division by posting with their Clearing Members the following:
- U.S. Dollars
- Foreign Currency (freely convertible to Dollars)
- U.S. Treasuries (max. 10 year maturity with value at 95% of face)
- Equity Securities (NYSE, AMEX, NASDAQ; min. $10 value/share)
- Letters of Credit
- Warehouse Receipts (Exchange product valued at 75%)
(Bold italics indicate additions; bold
Rule 4.01, Customer's Margins
[Paragraphs (A) through (D) remain unchanged.]
(E)(1) A Member Firm may accept deposits from its customers in one or more of the following forms as margin to cover open NYMEX and COMEX Division positions:
(a) United States Currency; or any currency freely convertible to United States currency; provided that if foreign currency is deposited, its value shall be calculated so that at the current rate of exchange the U.S. dollar equivalent of the foreign currency satisfies the customer's margin obligation.
(b) Securities issued by the Department of the Treasury of the United States maturing within ten (10) years of the date of the deposit and guaranteed as to principal and interest by the United States Government. Such securities shall be valued at ninety five percent (95%) of par value.
(c) Fully paid equity securities which are listed for trading on the New York Stock Exchange, Inc.,
(d)
(e)
(2) A Member Firm may accept deposits from its customers in one or more of the following forms as margin to cover open COMEX Division positions:
(a) United States currency, checks payable in United States currency, or currency freely convertible to United States currency; provided that if foreign currency is deposited, its value shall be calculated so that at the current rate of exchange the U.S. dollar equivalent of the foreign currency satisfies the customer's margin obligations;
(b) the net liquidating value in a customer's account over the initial margin requirements for the positions carried for such account;
(c) securities issued or guaranteed by the United States, provided that such securities shall be valued at the lower of the par or market value thereof;
(d) securities which are listed for trading on the New York Stock Exchange, Inc. or the American Stock Exchange, Inc., or which are traded in the over-the-counter market approved for margin by the Board of Governors of the Federal Reserve Board provided that such securities; (i) are free from liens and encumbrances; (ii) represent no more than 5% of the issued and outstanding shares of any one issuer; and (iii) are valued at 75% of the market value thereof;
(e) deliverable warehouse receipts for commodities for commodities traded on the Exchange provided that such receipts will be valued as margin at no more than 75% of the value of the commodity;
(f) physical commodities (but not forward contracts therefor) if the carrying member is in possession and control of negotiable documents covering such commodities, provided, however, that the value of such commodities shall be based upon the contract market price for the grade of such commodity or if the commodity is not of a grade deliverable on a contract market, then at the price for the grade of such commodity on the spot market;
(g) a letter of credit in favor of a clearing member carrying an account or in the case of any letter or credit to be used on a pass-through basis with the Clearing House a letter of credit in favor of the Exchange. All letters of credit shall be issued in such form as may be prescribed by the Exchange and by a depository which has been approved by the Exchange for issuance and confirmation of letters of credit drawn in favor of the Clearing Members or in favor of the Exchange, as applicable.
(3)
[Paragraphs (F) through (I) remain unchanged.]
Rule 4.03, Unsecured Loans
Clearing Members shall not be permitted to make loans to any customers for the purpose of financing margins