From: exchangeinfo@nymex.com
To: sara.shackleton@enron.com
Date: 2001-04-20 12:48:00+00:00
Subject: (01-137) Rule Changes to Implement enymex(sm)

Notice # 01-137
April 20, 2001

TO:
All New York Mercantile Exchange Members and Member Firms

FROM:
Neal L. Wolkoff, Executive Vice President

RE:
Rule Changes to Implement enymex(sm)

DATE:
April 19, 2001

===========================================================

Please be advised that the NYMEX Board of Directors has approved a number of 
rule changes, which are summarized below, to incorporate the implementation 
of enymexK. These rule changes, which have been filed with the CFTC and thus 
may become effective at any time, will be implemented upon the launch of 
enymexK.

An unmarked version of these rule changes can be found on the Exchange,s 
website.  A hard copy &black-line8 version of the rule changes, which shows 
changes from the current rules, can be obtained by calling Kelly Ann Neeson 
at (212) 299-2217 in the Exchange,s Legal Department.

The rule changes include the following areas: trading; position limits, 
accountability and reporting; arbitration, Clearing Member obligations and a 
summary disciplinary procedure for denial of access.

 Trading Rules
A number of changes are being made to existing rules to reflect the roll-out 
of enymexK, such as expanding such rules to cover both NYMEX ACCESS7 and 
enymexK.  For example, the NYMEX ACCESS7 error trade rule has been retitled 
and revised to cover error trades occurring on either system.

EFP and EFS. Similarly, Rule 6.21B and 6.21C are the Exchange,s rules that 
respectively govern EFP and EFS transactions for futures contracts traded 
only on NYMEX ACCESS7, i.e., electricity futures contracts.  These rules will 
now also govern enymexK EFP and EFS transactions.

Settlement Procedures. New NYMEX Rule 6.52E (&enymexK Settlement Price 
Procedures8) was modeled upon the current settlement price rule for 
electricity contracts trading only on NYMEX ACCESS7. Thus, settlement prices 
generally would be determined manually by the Settlement Committee, or if the 
Settlement Committee was not available, by Exchange staff using the same 
criteria used by the applicable Settlement Committee.  However, one 
difference is that the electricity settlement rule provides that no 
settlement price shall be established that would be lower than the best bid 
or higher than the best offer that: (a) was for at least twenty-five (25) 
contracts, and (b) had been posted with the Exchange and remained available 
for execution and unfilled for the final 30 minutes of trading.  By 
comparison, new NYMEX Rule 6.52E contains more general language that would 
allow the Exchange to customize for each enymexK contract the bids and offers 
that would be protected in the settleme!
nt!
 process.

Position Limits, Accountability and Reporting.  With regard to the four 
physical delivery enymexK crude oil contracts, the amendments to NYMEX Rules 
9.26 and 9.27 provide for position accountability in the back months and a 
spot month limit of 2,000 contracts for each of these four contracts.  Also, 
the Exchange,s current hedge exemption procedures will be made applicable to 
the enymexK contracts. With regard to the cash-settled enymexK contracts, the 
rule amendments provide for position accountability across all contract 
months. The amendments to Rule 9.34 establish a reporting level of 25 
contracts for each enymexK contract, the same reporting level currently used 
for many other Exchange contracts. However, NYMEX staff also has initiated 
discussions with CFTC staff regarding possible regulatory relief to exempt 
market participants from these reporting requirements to the CFTC for the 
cash-settled contracts.

Brokerage and Clearing Member Financial Responsibility. As to brokerage, new 
Rule 9.04A (&enymexK Trading8) permits brokerage to be done for enymexK 
products.  Section (C) of new Rule 9.04A clarifies that a Clearing Member 
will be financially responsible for trades done for each account it carries, 
even if there is a system malfunction.

 Arbitration Rules
The Exchange,s arbitration rules are being amended to reference Non-Member 
enymexK Users and to provide that disputes between a Member and a Non-Member 
enymexK User or between Non-Member enymexK Users would be subject to Exchange 
arbitration on a permissive rather than on a mandatory basis.

 Summary Disciplinary Procedures
The sole disciplinary sanction that would be applicable to a Non-Member 
enymexK User would be denial of further direct access to the system.  
Consistent with this approach, new Exchange Rule 8.99A establishes a summary 
disciplinary procedure that would allow the Exchange to take action when 
necessary on an expedited basis.

Please note that Exchange Members who are enymexK Users also will continue to 
be subject to Exchange rules.

If you have any questions concerning these rules, please contact Christopher 
K. Bowen, Senior Vice President and General Counsel, NYMEX Legal Department, 
at (212) 299-22200; or Brian Regan, Senior Associate General Counsel, NYMEX 
Legal Department, at (212) 299-2207.



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