09/09/2005
In this connection, NEL is in the process of obtaining no-action relief from the Commodity Futures Trading Commission which would make NYMEX ACCESS available in the US to: (1) members who wish to access NYMEX ACCESS in the US to trade NEL contracts for their proprietary accounts; (2) members who are registered with the Commission as futures commission merchants ("FCMs") and who wish to access NYMEX ACCESS in the US to submit and transmit orders from US customers; and (3) members who are registered with the Commission as FCMs or who are exempt from such registration pursuant to CFTC Regulation ยง 30.10 who wish to accept orders through automated order routing systems from US customers for submission to NYMEX ACCESS. NEL has not yet received this relief. This memorandum is intended to provide certain hypothetical scenarios which may possibly facilitate order transmission from US customers as follows under the current rules (until such relief is received):
A. US Customer has an account on the books of a UK broker (must be a CFTC Rule 30.10 exempt foreign broker):
The US customer may telephone, fax, e-mail or electronically route (but not via an automated order routing system) his/her NEL NYMEX ACCESS order to the UK Rule 30.10 exempt broker (provided the order is entered into NYMEX ACCESS through human intervention at the UK broker).
B. US Customer has an account at a US FCM and the US FCM maintains a customer omnibus account at a UK broker (need not be a 30.10 exempt foreign broker):
- The US customer (e.g., NYMEX floor trader) can call, fax, e-mail, or electronically route his/her NEL NYMEX ACCESS order to the US FCM. The US FCM may not directly electronically transmit the customer's NEL order into NYMEX ACCESS. It may call, fax, e-mail or electronically route the order to the UK broker provided the order is entered into NYMEX ACCESS through human intervention at the UK broker; OR
- The US customer, if it qualifies as an eligible swap participant (as defined under CFTC Rule 35.1(b)) may transmit his/her order directly to the UK broker by phone, fax, email or electronically for the customer omnibus account of the US FCM carried by the UK broker (or via a tri-party give-up relationship), provided the US FCM and UK broker satisfy the requirements of CFTC Rule 30.12 (and the order is entered into NYMEX ACCESS through human intervention at the UK broker). Generally, Rule 30.12 is available only to FCMs who have met certain capital requirements, who have provided their customers who are eligible swap participants with the risk disclosure required under 30.12, and who have implemented certain authorization, control and risk procedures with the foreign broker.