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Enron Mail |
Notice # 01-154
May 7, 2001 TO: All NYMEX Division Members and Member Firms FROM: Neal L. Wolkoff, Executive Vice President RE: Implementation of New NYMEX Rule 9.11A (=01&Give-Up Trades=018) DATE: May 7, 2001 =3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D= =3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D= =3D=3D=3D=3D=3D=3D=3D=3D=3D Please be advised that beginning on the trade date of Friday, June 1, 2001,= =20 new NYMEX Rule 9.11A (=01&Give-Up Trades=018) will go into effect. ! In the absence of an applicable give-up agreement, new Rule 9.11A will=20 define the respective responsibilities/obligations to an order of executing= =20 brokers, customers and Clearing Members. ! The term =01&executing broker=018 as used in Rule 9.11A refers to the reg= istered=20 billing entity, Member Firm or Floor Broker to whom the order is transmitte= d. ! Rule 9.11 will provide that, in the absence of an applicable give-up=20 agreement, a Clearing Member may reject a trade only if: (1) the trade=20 exceeds trading limits established by the Clearing Member for that customer= =20 that have been communicated to the executing broker as provided by the rule= =20 or (2) the trade is an error for which the executing broker is responsible. ! The new rule also places affirmative obligations on executing brokers to= =20 confirm Clearing Member authorization for an account. For example, prior t= o=20 an executing broker accepting and executing an initial order for any new=20 customer account, such executing broker must confirm with the Clearing Memb= er=20 by telephonic, electronic or written means, that: (a) the customer has a valid account with the Clearing Member; (b) the account number; © the brokerage rate; (d) the customer is authorized by the Clearing Member to place orders with= =20 the executing broker for that account; and (e) a listing or summary of persons authorized to place orders for that=20 account. Moreover, the executing broker must retain a copy of the authorization or t= he=20 specifics of the telephonic confirmation, which includes: opposite party,= =20 date, time, and any other relevant information. The Compliance Department= =20 will conduct periodic audits of such records, and falsification of such=20 information shall be the basis for disciplinary action. If you have any questions concerning this new rule, please contact Bernard= =20 Purta, Senior Vice President, Regulatory Affairs and Operations, at (212)= =20 299- 2380; Thomas LaSala, Vice President, NYMEX Compliance Department, at= =20 (212) 299-2897; or Arthur McCoy, Vice President, Financial Surveillance=20 Section, NYMEX Compliance Department, at (212) 299-2928, NEW RULE 9.11A (=01&Give-Up Trades=018) (Entire rule is new.) Rule 9.11A Give-Up Trades In the absence of a give-up agreement whose terms and conditions govern the= =20 responsibilities/obligations of executing brokers, customers and Clearing= =20 Members, the following rules shall define the respective=20 responsibilities/obligations of those parties to an order. The =01&executi= ng=20 broker=018, as used in this rule, is the registered billing entity, Member = Firm=20 or Floor Broker to whom the order is transmitted. (A) Responsibilities/Obligations of Clearing Members (1). Limits Placed by Clearing Member. A Clearing Member may, in its=20 discretion, place trading limits on the trades it will accept for give-up f= or=20 a customer=01,s account from an executing broker, provided however, that th= e=20 executing broker receives prior written or electronic notice from the=20 Clearing Member of the trading limits on that account. Notice must be=20 received by the executing broker in a timely manner. A copy of such notice= =20 shall be retained by the Clearing Member. (2). Trade Rejection. A Clearing Member may reject (=01&DK=018) a trade on= ly if: =20 (1) the trade exceeds the trading limits established under Section I(A) of= =20 this rule for that customer and it has been communicated to the executing= =20 broker as described in Subsection (A); or (2) the trade is an error for whi= ch=20 the executing broker is responsible. If a Clearing Member has a basis for= =20 rejecting a trade, and chooses to do so in accordance with the provisions o= f=20 Rule 2.21(B), it must notify the executing broker promptly. (3). Billing. A Clearing Member will pay all floor brokerage fees incurred= =20 for all transactions executed by the executing broker for the customer and= =20 subsequently accepted by the Clearing Member by means of the ATOM system. = =20 Floor brokerage fees will be agreed upon in advance among the Clearing=20 Member, customer and the executing broker. (B) Responsibilities/Obligations of Executing Brokers (1) Customer Order Placement. An executing broker will be responsible for determining that all orders are placed or authorized by the customer. Once= =20 an order has been accepted, a broker or the broker=01,s clerk must: (a) confirm the terms of the order with the customer; (b) accurately execute the order according to its terms; © confirm the execution of the order to the customer as soon as=20 practicable; and (d) transmit such executed order to the Clearing Member as soon as=20 practicable in accordance with Exchange Rules and procedures. 2. Use of Other Persons. Unless otherwise agreed in writing, the executing= =20 broker is allowed to use the services of another broker in connection with= =20 the broker=01,s obligations under these rules. The executing broker remain= s=20 responsible to the customer and Clearing Member under these rules. 3. Executing Broker Responsibility for Verifying Clearing Member =20 Authorization. Prior to a broker accepting and executing an initial order= =20 for any new customer account, the executing broker must confirm with the=20 Clearing Member by telephonic, electronic or written means, that: (f) the customer has a valid account with the Clearing Member; (g) the account number; (h) the brokerage rate; (i) the customer is authorized by the Clearing Member to place orders with= =20 the executing broker for that account; and (j) a listing or summary of persons authorized to place orders for that=20 account. The executing broker must retain a copy of the authorization or the specifi= cs=20 of the telephonic confirmation, which includes: opposite party, date, time,= =20 and any other relevant information. The falsification of such information= =20 shall be the basis for disciplinary action. 4. Rejection of Customer Order. Where an executing broker has confirmed=20 Clearing Member authorization to execute orders on behalf of a customer in= =20 accordance with this Rule 9.11A, the broker may, in the broker=01,s discret= ion,=20 reject an order that the customer transmits to the broker for execution. T= he=20 broker shall promptly notify the customer and the Clearing Member(s) of any= =20 such rejection. __________________________________________________ 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(01-154)" 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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