Notice No. 624 December 5, 2008 Compliance/Market Regulation Advisory Concerning Changes to the Disciplinary Committee Structure and Disciplinary Processes Effective December 4, 2008, NYMEX adopted rule language with respect to COMEX and NYMEX Divisions’ disciplinary committee structure and disciplinary processes. Previously, disciplinary rules were located in Chapter 8 of the rulebook. The new rules are viewable in the NYMEX rulebook as are changes to the COMEX by-laws which address disciplinary panel composition. The rules have been harmonized (to the extent practicable, given variations within exchanges) with disciplinary rules of the CME Group and relocated to Chapter 4 of the rulebook. This advisory presents an overview of the committee structure; the detailed rules may be found in Chapter 4 of the rulebook. Probable Cause Committee ("PCC") COMEX and NYMEX shall have a PCC that will act through a panel comprised of a chairman, three members or employees of member firms, and three non-members. The panel chairman may be a member or a non-member. A majority of the members/employees of member firms on the panel will be selected from the division concerned. The PCC reviews investigative reports prepared by the Compliance/Market Regulation Department, and is responsible for determining whether or not a reasonable basis exists for finding that a violation of exchange rules may have occurred which warrants disciplinary action. If so, the PCC shall issue appropriate charges. The PCC will not establish preliminary penalties, consider settlement offers or conduct hearings. Business Conduct Committee ("BCC") Each exchange shall have a BCC that will act through a panel comprised of a chairman, three exchange members or employees of member firms, and three non-members. The panel chairman may be a member or a non-member. A majority of the members/employees of member firms on the panel will be selected from the division concerned. The BCC is responsible for the consideration of all settlement offers and for conducting hearings in connection with charges issued by the PCC. The BCC is also responsible for conducting hearings on charges issued by the Clearing House Risk Committee. The BCC has broad sanctioning authority, including the ability to impose fines of up to $1 million per violation, plus the amount of any benefit received as a result of the violation, and to impose suspensions of any length. The BCC may also expel a member. The BCC hears appeals of Floor Committee fines in excess of $1,000. Clearing House Risk Committee ("CHRC") There will be a single CHRC for all exchanges within the CME Group (CME, CBOT, COMEX and NYMEX) comprised of at least two co-chairmen, who shall be members of the Board, and at least seven additional individuals, five who shall be Clearing Member representatives and at least one who shall be a non-member. The CHRC is responsible for enforcing rules pertaining to the financial integrity of Clearing Members and also those pertaining to the business conduct of Clearing Members and their compliance with exchange rules that are not otherwise within the purview of the BCC. The CHRC may conduct investigations, issue charges and consider settlement offers on its own initiative or by referral from exchange staff, the PCC or the BCC. A panel of the CHRC is responsible for hearing appeals of administrative fines in excess of $25,000 that are imposed pursuant to Rule 852 ("Fines for Errors, Delays and Omissions"). Appeals to a Hearing Panel of the Board of Directors Appeals from decisions of the BCC are heard by a hearing panel of the Board of Directors. The Chairman of the Board shall appoint a Director to serve as the Appellate Panel Chairman and two additional Directors, including one non-member, to serve on the panel. A request for appeal must be made within 10 business days of the notice of the decision, and only decisions that impose a monetary sanction greater than $10,000 and/or an access denial or suspension of any membership privileges for greater than five business days may be appealed. The Compliance/Market Regulation Department may appeal any refusal by the PCC to issue charges that it requested or any decision of, or sanction imposed by, the BCC. Should you have any questions or require any further information, please contact ExchangeInformation@cmegroup.com