Amendments to NYMEX/COMEX Chapter 7 Rulebook in Connection with the Listing of Physically Delivered COMEX Aluminum Futures Contract, Conveyance and Alternate Load-Out Instructions for COMEX Aluminum Futures Contract

Effective Monday, May 5, 2014, for trade date Tuesday May 6, 2014, the New York Mercantile Exchange, Inc. (NYMEX or Exchange) and the Commodity Exchange, Inc. (COMEX or Exchange) will implement amendments to NYMEX/COMEX Chapter 7 in order to incorporate the terms and conditions for delivery of the new COMEX Aluminum futures contract which will be listed for trading on CME Globex and the COMEX trading floor and for submission for clearing through CME ClearPort on May 6, 2014. The amendments to Chapter 7 also include certain administrative, non-substantive changes.

A summary of the significant changes is provided below for your convenience.  Chapter 7 in its entirety is set forth in Exhibit A, with additions underscored and deletions overstruck.

• Indoor and Outdoor Storage Requirements: Aluminum facilities shall be required to provide both indoor and outdoor space for the storage of aluminum deliverable against the COMEX Aluminum futures contract.

• Insurance Coverage: Aluminum storage facilities shall be required to carry Warehouseman’s Legal Liability insurance for aluminum in store. Elimination of waiver to procure all risk insurance if the net capital of a precious metal storage facility is greater than $250,000,000, such that copper, gold, silver, platinum, and palladium facilities shall continue to carry all-risk insurance notwithstanding the net capital of a facility.

• Third-Party Warehouse Operator Structure: In the event a third-party performs the daily operations of the storage facility such third party shall act as an agent of the regular facility and the regular facility shall be responsible for the conduct of its agent.

• Load-Out Rate: In accordance with new Rule 703.C.3.b, the minimum daily load-out rate for aluminum shall be 2% of inventory with a minimum daily load-out rate of 1,000 metric tons for each business day. Total inventory is defined as registered and eligible aluminum reported to the Exchange on the first business day of the month.  Notice from the facility to the Exchange that the facility has not permitted the withdrawal of registered aluminum has been set at 20 days from the date of tender to the facility for withdrawal.

• Withdrawal of Approved Status:  In the event an approved facility (metal storage facilities and NY Harbor terminals) wishes to withdraw from regularity, a minimum 6-month notification period to the Exchange shall be provided unless the Exchange expressly authorizes a shorter notification period.

• Storage and Handling Charges: The storage and handling fees for the respective facilities shall be set as the maximum rates charged by the facility.

In addition, with the declaration of regularity of a Shed for the storage of aluminum deliverable against the COMEX Aluminum futures contract, the Exchange shall designate a primary conveyance and an alternate conveyance, if applicable, for the Shed.  Primary conveyance shall mean the conveyance which shall be subject to the minimum guaranteed daily load out rate as prescribed in NYMEX Chapter 7, Rule 703.C.3.b., contingent on any pending conveyance orders submitted prior to the primary conveyance order. Alternate conveyance shall mean the conveyance which shall be subject to Rule 107103 (“Alternate Load-Out Instructions”) of the Aluminum futures contract, contingent on any pending conveyance orders submitted prior to the alternate conveyance order. 

At all times, the Shed shall be required to meet a cumulative minimum guaranteed daily load out rate as prescribed in NYMEX Chapter 7, Rule 703.C.3.b. for all pending load out orders, on a first come first served basis.

A party may elect to load out at the approved Shed by an alternate conveyance, if available. In electing an alternate conveyance, the minimum guaranteed daily load out rate for the alternate conveyance as published under the Interpretations & Special Notices Related to Chapter 7 shall apply absent any pending conveyance orders submitted prior to the alternate conveyance order.

No Shed shall be approved without a designated primary conveyance. The handling out fees for the primary and alternate conveyances shall be published under the Interpretations & Special Notices Related to Chapter 7.

Pending all relevant CFTC regulatory review periods, the proposed amendments to Chapter 7 and the listing of the Aluminum futures contract shall be effective for trade date May 6, 2014.

Please refer questions on this subject to:

Market Surveillance

Products:                      Nadine Brown               Nadine.Brown@cmegroup.com             (212) 299-2223

Registrar:                     Terry Gehring               Terry.Gehring@cmegroup.com             (312) 435-3644