The Exchange proposes to amend Rule 7.05, "Licensed Warehouses and Vaults." The proposed amendment requires that each licensed vault designated by the Exchange for the storage of either gold, silver, platinum or palladium shall maintain a minimum tangible net worth of $100 million and that each licensed vault shall maintain insurance coverage for all gold, silver, platinum and palladium for which a Warrant has been issued; provided, however, the amount of such insurance shall not be less than $100 million.
The proposed amendment to Exchange Rule 7.05, "Licensed Warehouses and Vaults" affects a "Special Matter" under the terms of the COMEX By-Laws. Accordingly, COMEX Division Members have ten (10) days to submit a petition signed by owners of at least 155 COMEX Division Memberships requesting a vote of the COMEX Division Members to disapprove the amendments, pursuant to the procedures set forth under COMEX By-Law 205(D). If a petition is not received, or if the amendment is not disapproved, it will be submitted to the Commodity Futures Trading Commission (CFTC).
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Bold Italics indicate additions. Bold Strikethroughs indicate deletions
Chapter 7 Metal Rules NYMEX and COMEX
7.05 Licensed Warehouses and Vaults
(a) Warehouses and vaults may be licensed and/or designated for the storage of metals upon the recommendation of the Metals Advisory Committee and with the approval of the Board. References to the Committee on Warehousing and/or the Committee on Warehousing for Metals in these rules shall mean the Metals Advisory Committee.
(b) Each licensed vault designated by the Exchange for the storage of either gold, silver, platinum or palladium shall maintain a minimum tangible net worth of $100 million.
(b) (c) No warehouse or vault shall be licensed and/or designated for the storage of metal unless it has in force and effect all-risk insurance against loss of the metal in such amount, issued by such insurance companies, and upon such terms and conditions as are satisfactory to the Exchange. All policies evidencing such insurance shall provide for delivery to the Exchange of at least ninety (90) days prior written notice to the Exchange of any change in the terms of or premiums for the policy and of any proposed cancellation of the policy. The continued maintenance of such insurance shall be a condition to retention of the license and/or designation of each warehouse and vault and upon at least an annual basis the warehouse or vault shall provide proof of insurance to the Exchange;. provided, however, that any vault licensed and/or designated for the storage of gold or silver shall not be required to procure all-risk insurance unless the depository's net capital is less than $250,000,000. Each vault licensed or designated for the storage of either gold, silver, platinum or palladium shall maintain insurance coverage for the full value of such gold, silver, platinum and palladium for which a warrant has been issued; provided, however, the amount of insurance shall not be less than $100 million.
(c) (d) Warehouses and vaults licensed and/or designated shall give such bonds to the Exchange as may be required and shall pay to the Exchange such annual fee as the Exchange may fix in its discretion.
(d) (e) A license granted to or a designation of a warehouse and vault may be cancelled at any time by a written notice of intention to cancel served upon said warehouse and vault at least thirty days before the date therein specified as the date of cancellation, whereupon the pro-rata amount of the fee paid, if any, shall be refunded. Notice of such cancellation shall be posted upon the bulletin board and mailed to members of the Exchange.
(e) (f) Each licensed or designated warehouse or vault shall on demand furnish to the Exchange daily a list of all metals tenderable against Exchange contracts delivered to and removed from the warehouse.
(f) (g) Each licensed or designated warehouse and vault shall cause an independent auditor to conduct an annual inventory of all stocks held and prepare a report certifying that the records of the warehouse or vault accurately reflect the stock held by the depository. Each report shall be filed with the Exchange within thirty days of the date reflected by the inventory.
(g) (h) Licensed warehouses and vaults shall make such reports, keep such records, and permit such visitation as the Commission may prescribe. Such books and records shall be kept for a period of five years from the date thereof or for a longer period if the Commission shall so direct, and such books, records and warehouses shall be open at all times to inspection by any representative of the Commission or the United States Department of Justice.
RESOLUTION
.10 Financial Statements of Licensed Warehouses. Copies of audited statements should be filed with the Exchange as they become available. If, at any time, there is a 20% reduction in the net worth of the warehouse subsequent to the filing of an audited statement, prompt advice should be given to the Exchange.
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