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Enron Mail |
Notice No. 00-370
November 17, 2000 TO: ALL NYMEX AND COMEX DIVISION MEMBERS FROM: Neal L. Wolkoff, Executive Vice President DATE: November 17, 2000 RE: Notice of CFTC Approval of Amendments to NYMEX Rule 6.21C and Related= =20 Implementation of Electricity EFS Program ____________________________________________________________________ Please be advised that the CFTC has approved amendments to NYMEX Rule 6. 21= C=20 ("EXCHANGE OF FUTURES FOR, OR IN CONNECTION WITH, SWAP TRANSACTIONS FOR=20 FUTURES CONTRACTS TRADED ONLY ON VIA NYMEX ACCESS"). The amendments, which= =20 are shown below, permit the exchange of futures for swaps ("EFS") for NYMEX= =20 Division electricity futures contracts. The EFS program for electricity=20 futures will go into effect on Monday, November 27, 2000. One change from the terms of the rule should be noted. Rule 6.21C provide= s=20 for report of EFS transactions to be given to the Exchange "via NYMEX=20 ACCESS." However, this functionality still needs to be added to NYMEX=20 ACCESS. Therefore, the Exchange=01,s current procedures instead provide fo= r=20 reporting EFS transactions to Exchange Floor Dept. staff located in the Lat= e=20 Submissions Area on the NYMEX trading floor in the same manner as the=20 reporting of EFP transactions. Such reports of EFS transactions would be=20 subsequently disseminated to NYMEX ACCESS System Users through a bulletin= =20 message sent via NYMEX ACCESS. As a reminder, it is necessary for market participants to comply with the= =20 CFTC=01,s EFP-related reporting and recordkeeping regulations as if these= =20 regulations applied to EFS transactions. Specifically, the Exchange will= =20 require: 1) Each Exchange member, futures commission merchant ("FCM"), and introduci= ng=20 broker ("IB") to comply with the requirements of Commission Regulation=20 1.35(a) as if this regulation applied to EFS transactions and will further= =20 require each Exchange member, FCM, and IB to provide the required records t= o=20 the Exchange for inspection upon request; 2) Each customer to comply with the requirements of Commission=20 Regulation1.35(a-2)(2) as if this regulation applied to EFS transactions an= d=20 will further require each customer to provide the required records to the= =20 Exchange for inspection upon request; 3) Each Exchange clearing member, FCM, and foreign broker to comply with th= e=20 requirements of Commission Regulations 17.00(a)(1) and (2) as if these=20 regulations applied to EFS transactions, and NYMEX will further require eac= h=20 Exchange clearing member, FCM, and foreign broker to file the required=20 records with the Exchange; 4) Each trader who holds or controls a reportable futures position to compl= y=20 with the requirements of Commission Regulation 18.05 as if this regulation= =20 applied to EFS transactions, and NYMEX will further require each trader to= =20 provide the required records to the Exchange for inspection upon request; a= nd 5) Upon the request of the Commission, each FCM, IB, foreign broker, and=20 trader to comply with the requirements of Commission Regulations=20 24.03(e)(1)(iii) and (e)(2)(iv), and NYMEX will further require each FCM, I= B,=20 foreign broker, and trader to file the required records at the place and=20 within the time frame specified by the Exchange. If you have any questions concerning the operation of this program, pleas= e=20 contact Rick Taibi, Assistant Director, NYMEX ACCESS Operations, NYMEX ACCE= SS=20 Department, at (212) 299-2677, or George Henderson, Vice President, Floor= =20 Department, at (212) 299-2071. APPROVED AMENDMENTS TO NYMEX RULE 6.21C (Brackets indicate additions.) Rule 6.21C. EXCHANGE OF FUTURES FOR, OR IN CONNECTION WITH, SWAP=20 TRANSACTIONS FOR FUTURES CONTRACTS TRADED ONLY ON VIA NYMEX ACCESS (A) (1) An exchange of futures for, or in connection with, a swap (EFS)=20 consists of two discrete, but related, transactions; a swap transaction and= a=20 futures transaction. At the time such transaction is effected, the buyer a= nd=20 seller of the futures must be, respectively, the seller and the buyer of th= e=20 swap. The swap component shall involve the commodity underlying the future= s=20 contract (or a derivative, by-product or related product of such commodity)= . =20 The quantity covered by the swap must be approximately equivalent to the=20 quantity covered by the futures contracts. The swap component of an EFS=20 transaction must comply with the requirements of Commission Regulation Part= =20 35 (Exemption of Swap Agreements). The initial term of the pilot program= =20 shall be three years from the effective date of this Rule 6.21C. (2)The pilot program is available only to commercial market participants. F= or=20 purposes of this rule, a "commercial market participant" shall include a=20 person or entity that transacts business in the normal channels of commerce= =20 in the cash commodity or related commodity underlying the EFS posted on the= =20 Exchange and also shall include an entity that regularly maintains a book o= f=20 and acts as a dealer in swap transactions. (B) The report of an EFS transaction involving a futures contract that is n= ot=20 listed for trading on the Exchange trading floor and instead is listed for= =20 trading only on NYMEX ACCESS shall be given to the Exchange via NYMEX ACCES= S=20 during the hours of trading on NYMEX ACCESS for that futures contract. (C) A report of such EFS transaction shall be submitted to the Exchange by= =20 each Clearing Member representing the buyer and/or seller. Such report sha= ll=20 identify the EFS as made under this Rule and shall contain the following=20 information: a statement that the swap component of the EFS complied with t= he=20 requirements of Part 35 at the time the EFS was entered into between the=20 buyer and seller, a statement that the EFS has resulted or will result in a= =20 change of payments or other such change, the kind and quantity of the=20 futures, the price at which the futures transaction is to be cleared, the= =20 names of the Clearing Member(s) and customers and such other information as= =20 the Exchange may require. Such report (form) shall be submitted to the=20 Compliance Department by 12:00 p.m. New York time, no later than two (2)=20 Exchange business days after the day of posting the EFS via NYMEX ACCESS. (D) Each buyer and seller must satisfy the Exchange, at its request, that t= he=20 transaction is a legitimate EFS transaction. Upon the request of the=20 Exchange, all documentary evidence relating to the EFS, including a master= =20 swap agreement and any supplements thereto, shall be obtained by the Cleari= ng=20 Members from the buyer or seller and made available by the Clearing Members= =20 for examination by the Exchange. (E) A report of each EFS transaction shall be given and notice thereof shal= l=20 be posted on NYMEX ACCESS in the manner provided by the Exchange on the day= =20 that the transaction thereto was made, or if such agreement was made after= =20 the close of trading, then on the next business day. EFS transactions shal= l=20 be cleared through the Exchange in accordance with normal procedures, shall= =20 be clearly identified and marked in the same manner as EFP transactions, an= d=20 shall be recorded by the Exchange and by the Clearing Members involved. (F) All omnibus accounts and foreign brokers shall submit a signed EFS=20 reporting agreement in the form prescribed by the Exchange to the Exchange'= s=20 Compliance Department. Such Agreement shall provide that any omnibus accou= nt=20 or foreign broker identified by a Clearing Member (or another omnibus accou= nt=20 or foreign broker) as the buyer or seller of an EFS pursuant to Rule=20 6.21C(C), shall supply the name of its customer and such other information = as=20 the Exchange may require. Such information shall be submitted to the=20 Exchange_s Compliance Department by 12:00 p.m. New York time no later than= =20 two (2) Exchange business days after the day of posting the EFS on the Floo= r=20 of the Exchange. Failure by an omnibus account or foreign broker to submit= =20 either the agreement or the particular EFS information to the Exchange may= =20 result in a hearing by the Business Conduct Committee to limit, condition o= r=20 deny access of such omnibus account or foreign broker to the market. (G) The Board may, by resolution, authorize the posting of EFS transaction= s=20 in any or all of the futures contracts specified below. Futures Contract EFS Reporting Deadline for Expiring Contract Middle East Sour Crude Oil An EFS is permitted in the expiring futures=20 contract of the Middle East Sour Crude Oil futures contract at any time=20 before 12:00 p.m. New York time on the last business day of the contract=20 month, provided, however, that an EFS which establishes a futures position= =20 for both the buyer and the seller shall not be permitted after the=20 termination of trading. [ Electricity Futures An EFS is permitted in an expiring electricity=20 futures contract at any time before 10:00 a.m. New York time on the first= =20 business day following termination of trading in the applicable futures=20 contract month provided, however, that an EFS which establishes a futures= =20 position for both the buyer and the seller shall not be permitted after the= =20 termination of trading for that contract month.] __________________________________________________ Please click on the link below to indicate you have received this email. "http://208.206.41.61/email/email_log.cfm?useremail=3Dtana.jones@enron.com&= refdo c=3D(00-370)" Note: If you click on the above line and nothing happens, please copy the text between the quotes, open your internet browser, paste it into the web site address and press Return.
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