From: exchangeinfo@nymex.com
To: tana.jones@enron.com
Date: 2001-05-16 13:41:00+00:00
Subject: (01-167) Changes to Audit Trail Summary Fine Structure-NYMEX &
 COMEX Divisions...

Notice to Members No. 01-167
May 16, 2001


To:
All NYMEX Division Members
All COMEX Division Members

From:
Neal Wolkoff, Executive Vice President

Re:
-Changes to Audit Trail Summary Fine Structure-NYMEX & COMEX Divisions
-Incorporation of Spreads into One Minute Trade Time Submission for NYMEX


Modification of &Clear-out Period8

The Board of Directors has approved modifications to the fine structure for 
one-minute trade time submission for both NYMEX and COMEX divisions. 
Presently members falling below 80% timely submission per month are issued 
escalating warning letters and fines unless and until they clear out their 
record by being in compliance for six consecutive months.  After six months, 
the member returns to a &warning letter8 level.  Effective immediately, this 
&clear-out period8 is reduced from six months to four months.  One-minute 
trade timing statistics for the month ending April 30, 2001 will reflect this 
modification.


Implementation of One-Minute Trade-Time Classes

The Board also accepted the recommendation of the Compliance Review Committee 
and Floor Committee to adopt a training program for members facing one-minute 
trade time fines on the NYMEX division.  The purpose of the program is to 
improve Exchange trade submission timing through member education by 
identifying individual issues, tailoring individual solutions and statistical 
follow-up.  Training will be conducted at dates to be announced during June, 
July and August 2001 by a team comprised of Committee Members and Compliance 
Staff with the assistance of the Training and Education Committee.

As incentive, any member attending the class will be allowed to &do over8 up 
to two subsequent months in which their trade time rates are between 70% and 
79%.  The member will still have to complete four violation free months 
before his record is &cleared out8 but he may take up to six months to do 
so.  Members may take one class per year.

Audit Trail Classes

? Purpose*to reduce number of members falling below the 80% standard for pit 
card submission and to facilitate the return of members to a &warning letter8 
level.
? Members who have received a warning letter or a fine for pit card 
violations may:
 Attend an audit trail class, to be offered in June, July and August of 2001, 
with future dates to be determined by the Floor Committee/Compliance Review 
Committee.  The class will be an intensive discussion of pit card problems 
and pitfalls.  Materials will focus on how the audit trail works and 
successful strategies for achieving a passing grade.  Members attending class 
will be required to analyze their own trading style in light of the material 
presented and pinpoint areas which they need to improve.  Members will also 
be required to outline a plan of attack to address raising their pit card 
performance rates.  Each plan will be discussed with the group and members 
will receive feedback from Floor and Compliance Review Committee Members, and 
Compliance and Floor Department Staff.  Members attending classes are 
strongly encouraged to bring their clerks with them!
 Upon completion of the class, members will be allowed to &do over8 up to two 
subsequent months in which they received the warning or fine for substandard 
trade time rates between 70% and 79%, on their way to achieving four months 
clear.  No fine or warning letter will be issued for a &do over8 month but 
the month will not count as a passing month.  A member who falls below 70% 
will receive a fine or warning letter.
 The benefit to the member will be that the month that would have counted as 
a failing month will not count at all, as long as the member achieved at 
least a 70% rate.  Members still need four problem free months to return to a 
warning letter stage from a fine stage.  A member who has been problem free 
for 3 months would benefit by &doing over8 a fourth (and possibly a fifth) 
failing month, thus having the opportunity to return to a warning letter 
phase despite intervening failing months.  A member who falls below 70% 
before achieving four problem free months will receive a fine or a warning 
letter, as appropriate.  The member can still use a second &do over8 month as 
long as he meets all criteria.
 Staff will follow up with members attending the classes.  Members will 
receive a breakdown of their most recent audit trail fine.  They will also be 
invited to discuss their percentages with staff one-on-one.  Further, staff 
will supply daily or weekly statistics to any member by e-mail upon request.
 Members are eligible for only one class per year.  A member must take a 
class before being given the benefits listed herein.  Classes will be offered 
in the third week of the months listed, at a date to be announced, and the 
program will apply to the next full month of audit trail results.  The 
Compliance Review Committee and the Floor Committee will evaluate the results 
of this program before deciding whether to extend this program into 2002.




Incorporation of Spreads into One-Minute
Trade Time &Pit Card8 Statistics for NYMEX Division

Present one-minute trade time &pit card8 statistics do not include spread 
times.  During the most recent NYMEX Rule Enforcement Review--the CFTC audit 
of the Exchange,s Compliance programs and procedures--the CFTC recommended 
that the NYMEX Division incorporate spread trades into the one-minute time 
statistics.  The CFTC has made this recommendation in the past and the 
Exchange has committed to respond to it. The COMEX Division one-minute trade 
time statistics already include spreads.

NYMEX Division Members should note that intra-commodity spread trades will be 
incorporated into pit card one-minute trade time accuracy rates after a 
&phase in8 process of approximately 90 days.  In order to avoid substandard 
percentages once spreads are incorporated, members must make sure that their 
spread prints are price reported in order to ensure that the Price Change 
Register for spreads is accurate.  If a spread print is not reported, you 
will not be credited with timely submission of pit cards, even if you throw 
the trade into the pit in a timely manner.

Pit card statistics for outright trades are presently posted on the NYMEX 
floor on a weekly basis.  Compliance Staff will continue to post statistics 
for outright trades and will additionally post the statistics for spread 
trades.  These spread trade statistics are for information only so that you 
can assess your pit card submission rate in advance of incorporation of 
spreads in the one-minute trade time submission percentages.  For information 
purposes, the seller of the spread is considered to be the party who sells 
the premium month.  In the case where the spread trades flat, the seller is 
the party who sells the nearby month.

If you have any questions about this information, please call Nancy Minett, 
Compliance Counsel, at (212) 299-2940, or Thomas LaSala, Vice President 
Compliance, at (212) 299-2897.



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