From: exchangeinfo@nymex.com
To: tana.jones@enron.com
Date: 2001-06-07 14:20:00+00:00
Subject: (01-190) Changes to Audit Trail Summary Fine Structure-NYMEX &
 COMEX Divisions

Notice to Members No. 01-190
June 7, 2001

REMINDER ) THIRD NOTICE

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


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 the 80% timely submission standard 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 on Thursday, June 14, Tuesday, July 
10, and Wednesday, August 15, 2001 by a team comprised of Committee Members 
and Compliance Staff with the assistance of the Training and Education 
Committee.  You may sign up for these classes at the Corrections Windows on 
the 3rd and 5th floors, or by contacting Lois S. Shapiro, Associate 
Compliance Counsel, at (212) 299-2853.  The June 14, 2001 class will be held 
in the Seminar Room on the 10th floor at 3:45 p.m.  Plan to stay until 6:00 
p.m.  Credit will not be given to anyone who does not attend the entire class.

As incentive, any member attending any one 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 improve pit card submission statistics Exchange-wide by 
reducing the number of individual members falling below the 80% standard for 
timely pit card submission and to facilitate their return 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 on June 14, July10, and August 
15, 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 
percentage.  Members will be required to analyze their own trading style in 
light of the material presented and pinpoint areas in which they need to 
improve.  Members will also be required to outline a plan for raising their 
pit card performance rates.  Each plan will be discussed with the group and 
members will receive feedback from Floor Committee 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 subse-quent months in which their timely submission rates fall between 
70% and 79%.  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.  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 the warning letter stage 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 the above 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 on an individual basis.  
Further, staff will supply daily or weekly statistics to any member by e-mail 
or telephone upon request.

_ Members are eligible for only one class per year.  A member must take a 
class to take advantage of the benefits listed herein.  Classes will be 
offered on June 14, July 10 and August 15, 2001, and the program will apply 
to the next full month of audit trail statistics.  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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