Notice to Members
Notice No. 567 10/31/2006
Increase Maximum of Letters of Credit - Amendment to Exchange Rule 9.24(E), Original Margin Depositories and Originators of Letters of Credit
Currently, NYMEX Rule 9.24(E) limits the dollar value of letters of credit issued by "approved" banks on behalf of our Clearing Members to the lesser of 10% of such bank's capital or $500 million. The Board of Directors, at its meeting on October 30, 2006, reviewed and approved an amendment to Rule 9.24(E) to increase the maximum dollar value of Letters of Credit to $1 billion, but retain the percentage basis at 10%. This increase will be effective Wednesday, November 1, 2006. * * * * (Additions are bold/italicized; deletions in bold/strikethrough) Rule 9.24 – Original Margin Depositories and Originators of Letters of Credit (E) No approved original margin depository or issuer of a letter of credit may commit, with respect to Exchange contracts, more than the lesser of ten percent (10%) of its capital and surplus or $500 million $1 billion, provided, however, that an issuer may issue letters of credit up to $600 million $1.1 billion, if such issuer establishes, to the satisfaction of the Exchange, an account at another financial institution and deposits in such account, for the benefit of the Exchange, collateral in the form of U.S. Government obligations of maturities of less than ten (10) years valued at 95% of par value, for the excess over $500 million $1 billion. Such collateral shall be deemed to secure any and all obligations of such issuer under letters of credit issued by the issuer in favor of the Exchange. The Board of Directors, upon the application of an issuer of letters of credit, may grant a waiver of the $600 million $1.1 billion ceiling, upon such terms and conditions as it deems appropriate.
Should you have any questions or require any further information, please contact exchangeinfo@nymex.com