03/21/2005
The give-up rules and Clearing Rules applicable to both divisions require use of ATOM by floor brokers and clearing members. They also require that these parties enter into an ATOM agreement. Members may receive ATOM payments both for orders that they personally execute and for orders executed by others given up to their ATOM account. A review of ATOM billing for December 2004, however, indicated that several Option Members did receive payments for futures executed by other brokers. These payments were apparently not part of options lay-ups.
Rule 104.17 presently addresses acceptance of orders and specifically trading by Options Brokers. The suggested wording of the amendment would not prevent an options member from charging for the futures leg of a lay-up, but would prevent his/her receiving funds for outright futures trades.
(Additions to the rule are noted in bold italics.)
COMEX Rule 104.17, Acceptance of Orders
(a) Entry of Orders. A floor broker or trader or clerk thereof shall not accept or execute or cause to be executed any order to buy or sell a contract for the future delivery of a commodity or option on such a contract originating on the floor of the Exchange from a person who is not a member of the Exchange. Floor members may receive orders in the ring for execution only from members, member firms, and duly authorized clerks properly functioning in such capacity.
(b) Order Identification. No floor broker or trader or clerk thereof shall accept or execute or cause to be executed any order, including an order from another member, to buy or sell a contract for future delivery of a commodity or option on such a contract unless the name of the clearing member which will clear the transaction and the customer's account number at such clearing firm, are identified in the order.
(c) Clearing Member Authorization. No floor broker, trader or clerk thereof shall accept orders or execute or cause to be executed trades for another person unless the floor member has previously received written authorization (or verbal authorization, if followed by written authorization within three business days) to execute orders for such person or for such account from the clearing member through which the trade is to be cleared.
(d) Acceptance of Futures Option Orders. A member or member firm shall not accept any order to buy or sell a futures option from any futures commission merchant unless the futures commission merchant is (i) a member of the Exchange; (ii) a member of a national futures association registered under the Act and providing for the regulation of the futures option activities of its members; or (iii) trading for its proprietary account.
(e) Exception for Option Permits and Memberships. Notwithstanding the provisions of subparagraphs (a) and (b) of this Rule 104.17, persons who hold Option Memberships ("Option Members"), shall be permitted to directly communicate to floor brokers, traders and clerks thereof but not execute (and such floor brokers, traders and clerks thereof are permitted to accept and execute) orders to purchase and sell futures contracts for the account of such Option Member but only to the extent that such orders represent bona fide hedging of the positions of such Option Members in such futures options as the Option Member is authorized to trade on the Exchange; provided, further, that under no circumstances may positions obtained by an Option Member by direct communication to Floor Brokers, traders or clerks thereof exceed: (i) a number of short futures contracts equal to the sum of the number of long future call options plus the number of short future put options held by the Option Member; and (ii) a number of long futures contracts equal to the sum of the number of short future call options plus the number of long future put options held by the Option Member.
RESOLUTION(f) No Option Member may receive brokerage for any trade which an Option Member is not authorized to execute on the Exchange.
.10 Notwithstanding the provisions of Rule 104.17(e), for the period beginning on October 19, 1992 through September 7, 1993, Option Members shall be permitted to directly communicate to floor brokers, traders and clerks thereof (and such floor brokers, traders, and clerks thereof are permitted to accept and execute) orders to purchase and sell platinum and palladium futures without any limitation as to the nature of the transactions and at the equivalent fee rate applicable to full members through September 7, 1993.