02/16/2007
Prior to the market open of the last trading day of each expiration, NYMEX will require all market participants with positions above the Expiration Position Limit (1,000 contracts) to supply information on their complete book of all positions linked to the settlement price of the expiring NG contract. NYMEX has developed a form for submission of this information which will be provided to all market participants who currently maintain any NG exemptions. Please note that NYMEX may, as per its authority pursuant to any exemption, request underlying documentation as to any information supplied.
NYMEX will assess this information according to a two-pronged test.
1) Positions in excess of 1,000 contracts must offset a demonstrated risk in the book, and;Consequences of failure to meet these tests:
2) The net exposure of the entire book (including the hedge position in the NG contract justified under test (1)) must be no more than 1,000 contracts on the side of the market that could benefit by trading by that market participant during the closing range (e.g., if a market participant holds a short position in excess of 1,000 NG contracts and will (potentially) be buying back that position during the closing range, the position of the complete book must be no more than net long 1,000 contracts).
- If point #1 above is not met, the position must be reduced prior to the closing range to a level justified as a hedge or to the position limit of 1,000 contracts.
- If point #2 above is not met, the position must be reduced to the position limit of 1,000 contracts prior to the closing range.
- The failure of a market participant to abide by the procedures set forth above may result in revocation of the exemption and/or disciplinary action by NYMEX.