08/17/2007
The new rule language is attached.
Procedures for Floor Submission:
All parties to a Block Trade who are eligible for participating as a principal in Block Trades as per COMEX Rule 104.36C may have a Floor Member or their representative submit the transaction. The specific procedures and recordation requirements are similar to those of the Exchange's EFP and EFS rules with the caveat that orders for and submissions of such transactions must indicate the trade with the acronym "BLK" as it is for a Block Trade.
Submission via the CPC Trade Entry Portal or through the NYMEX Facilitation Desk:
All Parties who are eligible for participating as a principal in Block Trades as per COMEX Rule 104.36C and wish to submit transactions via the CPC Trade Entry Portal or via the NFD MUST also be CPC registered. Information on CPC registration can be obtained via the following link: http://www.nymex.com/cp_start.aspx
All eligible registered principals or their registered brokers may submit block trades through the CPC Trade Entry Portal. Additionally, all eligible registered principals who wish to conduct a Block Trade without the use of a registered broker may contact the NFD at (866) 246-9639 in order to submit Block Trades for an additional fee.
Regulatory Highlights:
All Block Transactions must conform to the minimum size as prescribed by NYMEX. Further, aggregation of orders to meet the minimum Block size requirement is prohibited, except in connection with the activity of registered CTAs.
While all parties to a Block Transaction must be an Eligible Contract Participant ("ECP") as that term is defined in Section 1a(12) of the Commodity Exchange Act, all Members of the contract market who maintain trading rights are considered ECPs under the Commodity Exchange Act for purposes of conducting Block Transactions in contracts that are available for trading.
All Block Trades must be submitted to the Exchange within 5 minutes of execution.
The Exchange will price report all block transactions.
As cited above, individuals submitting Block Trades must be properly registered with the National Futures Association ("NFA") as the transaction is conducted on a contract market.
ENTIRE RULE IS NEW
COMEX Rule 104.36C, Block Trades
(A) Block trades (privately negotiated transactions) shall be permitted in such COMEX Division products, and for such minimum threshold quantities and under other such conditions as are listed in paragraph (B) of this Rule 104.36C. The following shall govern block trades:
(1) A block trade must be for a quantity that is at or in excess of the applicable minimum threshold. Orders from different accounts may not be aggregated in order to meet the minimum threshold, except in connection with the activities of a registered commodity trading advisor or foreign person performing a similar role, as described in Paragraphs 8 and 9, below.
(2) Each party to a block trade must be an Eligible Contract Participant as that term is defined in Section 1a(12) of the Commodity Exchange Act.
(3) A member shall not execute any order by means of a block trade for a customer unless such customer has specified that the order be executed as a block trade.
(4) The price at which a block trade is executed must be fair and reasonable in light of (i) the size of the block trade, (ii) the prices and sizes of other transactions in the same contract at the relevant time, (iii) the prices and sizes of transactions in other relevant markets, including without limitation the underlying cash and futures markets, at the relevant time, and (iv) the circumstances of the markets or the parties to the block trade.
(5) Block trades shall not set off conditional orders (e.g., Stop Orders and MIT Orders) or otherwise affect orders in the regular market.
(6) The buyer and seller must ensure that each block trade is reported to the Exchange within five minutes of the time of execution. The block trade must be submitted in accordance with procedures prescribed by the Exchange. The Exchange shall promptly publish such information separately from the reports of transactions in the regular market.
(7) Clearing members and members involved in the execution of block trades must maintain a complete record of the transaction in accordance with Exchange Rule 8.50.
(8) A commodity trading advisor ("CTA") registered or exempt from registration under the Act, including, without limitation, any investment advisor registered or exempt from registration under the Investment Advisors Act of 1940, shall be the applicable entity for purposes of Paragraphs 1, 2, 3, and 4, provided such advisors have total assets under management exceeding $25 million and the block trade is suitable for the customers of such advisors.
(9) A foreign Person performing a similar role or function to a CTA or investment advisor as described in Section I, and subject as such to foreign regulation, shall be the applicable entity for purposes of Paragraphs 1, 2, 3, and 4, provided such Persons have total assets under management exceeding $25 million and the block trade is suitable for the customers of such Persons.
(B) Block trades shall be permitted in accordance with this Rule 104.36C in the following Exchange products, under the conditions described:
Gold futures contracts (GC), for a threshold minimum quantity of 200 contracts.
Silver Futures contracts (SI), for a threshold minimum quantity of 200 contracts.
Copper futures contracts (HG), for a threshold minimum quantity of 100 contracts.
Aluminum futures contracts (AL), for a threshold minimum quantity of 100 contracts;