@-Each Member Fi hich Fut ra issieon- Merchant fe
broek ibus-basis—shall-cell. i Maint Margi
ed-ofsuch onthe b: a-fe " :]

Such t t-be-mad ther-f d-a-C: Membei tmake-t.
Pay ‘Yy 2 ¥ y
th tend-credit+ the P; f Exehi Opt
‘pay iB
fe). Ne-Carnine Member shall -b: ired-te-obtain the Premium-k Exch Opti hased
tet FE ped yx Be-OP P
Busi D; hich is-effset-b Jesine T ti +h Busi Day-]
‘y y y S ag

Rule 5.0[4]3. [Original Margin] Margin

(a) Member Firms shall calculate the amount of Original Margin required to be collected from each
Person for which it carries an account holding Exchange Futures and/or Options Contracts using the
SPANTM (Standard Portfolio Analysis of Risk) margining system unless otherwise determined by the
Board.

[€2)] (b) The minimum amount of Original Margin which must be obtained by Member Firms from
other Persons for any account carrying Exchange Futures and/or Options Contracts shall be as follows:

(i) With respect to Cocoa, Coffee, Cotton, Ethanol, FCOJ and Sugar Futures and Option Contracts
and where such other Person is a Member or Member of the Trade, the Original Margin required to be
deposited in each such account shall be_no less than H00%-ef th it det
awvith SPANams] the Hedge Margin Rate applicable to each such Commodity Contract as published by
the Exchange and modified from time to time.

(ii) With respect to Cocoa, Coffee, Cotton, Ethanol, FCOJ and Sugar Futures and Options Contracts
and where such other Person is not a Member or Member of the Trade, the Original Margin required
to be deposited in each such account shall be [440% ef+h thet edt ith
SPAN] no less than 140% of the Hedge Margin Rate applicable to each such Commodity Contract as
published by the Exchange and modified from time to time.

(iii) With respect to Financial Contracts and where such other Person is not a Member or Member
of the Trade, the Original Margin required to be deposited in each such account shall be no Jess than


x} i }: d-by United States FT: Depart: te-be-valued-at t-not-t

(i) with respectte-Cotton No-2-and- the Fi 1 Contract: 1
£ Australia, Canada,the Burepean-U: J, the United Ki: d-Nertth
Ireland tentwith CFEC Regulation +49-and local Jat that-th
é fadditienal jes-from-the folk a Peosit
Post e
Ei jal-Contracts-that d tedin-th sae
5 Barys
N land-N. ¥, Sweden, Switzerland, and South Afi
Gdidovith +to-the-Ci Coffee-EthanelS Ne-H-and-S: Ne-14 Contracts—d it
7 iP r 5 7 UB F 3 2 7 OPK
£ British pounds-te-be-valued-at ntnett eed: rket-yahie-] pplicable haircut
d-by Resulation 24015-6314 ided that each Member Fi inits-disereti: fer 24
¢ ROE fs +P a 5
h itt tice-inclides—facsimile-tel. th Jat \ to dt5-Cust st
© z 'PPFOP? 7
h British ds-inte-LLS-dellars-t t-yvariation Marein-Calls:
Pt add r= 5
ed hfe 4 eribed_by-the Exch: d-by-a-d it hich -has-bi
Pi y B y “pe y
d-by- the Clearine O: ization fori d firmati £ Jett fereditin & £

(e)- Bach Carrying Memb: hich i t-that-i: ired-to- reinstate Orizinal
{ey FRE ft i
M ided4. h-(b) ofthis Rule shall for Marsin-withi: any
Si ParagrapA {oy ‘BH 1}
Busi Dayafterth + is required to reinstate Original Margin-Bach Carrying Memb:
\ and
+

Rule 5.05[6]. Change in Margin Requirements

(a) The Board or, where so delegated, the Margin Committee, as the case may be, may at any time
and from time to time change the amounts of the Original Margin requirements or maintenance levels and
require that any Carrying Member require additional Original Margin for any account or establish greater
Maintenance Levels for any account, with respect to existing Exchange Futures Contract Positions, new
Exchange Futures Contract Positions, existing Exchange Options, new Exchange Options, or any
combination thereof, on any terms and conditions as the Board or, where so delegated, the Margin
Committee, in its discretion may adopt, which terms and conditions may include (but need not be limited
to) making any such requirement applicable to:

(i) Exchange Futures Contracts or Exchange Option Positions carried before, on or after the
effective date of such changed Margin requirements or Maintenance Levels; and/or


[)] G@) [Griginal]Margin for Exchange Futures and Options Contracts may be deposited or credited
in any one (1) or more of the following forms, subject to such terms and conditions as may be established
by each Member Firm:

(i) United States currency [er], checks payable in United States currency; or any currency freely
convertible to United States currency. If foreign currency is deposited, its U.S. Dollar equivalent
calculated at the current rate of exchange must satisfy the Customer’s Margin obligation. The

Clearing Member’s record of calculation shall be kept and shall be open for inspection in accordance
with section 1.31 of the regulation of the Commodity Futures Trading Commission.

(ii) Securities issued by the United States Treasury Department; valued at an amount not to exceed
market value less applicable haircuts as required by SEC Regulation 240.15c3-1.

(iii) Available Equity;

(iv) Net unrealized market appreciation;

(v) Liquidation of Futures Contracts or closing Transactions for Options carried in the account;

(vi) [e]Electronic warehouse receipts (“EWRs”) for Coffee, Cocoa and Cotton certified for delivery
in Exchange licensed warehouses and which identify the Carrying Member as the title holder, to be
valued at no more than 70% of their value based upon the Settlement Price of the nearby contract for

the Commodity (determined in accordance with such procedures as may from time to time be
established by the Exchange);

[a9 4 ipts-for-Ci ertified for-deli in Exch hi 4 h di
Rv} P y i>
£ the Carmine Member-te-be-valued-at than-70% of their value based. th
P SBE p Pt
Setth +Price- ofth by tract forthe Cy dity-(determined+ J ith such
d: from-timeto-time-be established -by-the Exch:
P 'y ry O75
GHD -EWRs for Cott tified for-deli: in- Exch Hi ed. 4 hich identify-th
rH} ¥ > Y
Carpine Memb the-title held.
YE

4x)](vii) Negotiable warehouse receipts covering FCOJ stored in Exchange licensed warehouses;

[@8](viii) Negotiable shipping certificates covering FCOJ issued by Exchange licensed tank
facilities;

[9 ](ix) Fully paid equity securities not issued by the Clearing Member’s Customer or the
Customer’s affiliates which are listed [en-the] for trading on the New York Stock Exchange, Inc., [er]
the American Stock Exchange, Inc., or Nasdaq [whieh are tradedinth +h

Beard-of G £ the Federal R Board,provided+h “ Te]Such
equity securities should be [Gare] free from liens and encumbrances, [@)] represent no more than
5% of the issued and outstanding shares of any one issuer, [(3}] have a market value of at least $10
per share and are valued at 75% of the market value. [thereef]

[Gi With respeet-te-the Cotten No-2-and Fi jal-Centracts-and istent-avith CEEC
Resulation+49-and Jecal Jati th jes-of- Australia-Canada_the Ex Uni

8 e a p r Pt 5
Japan_andthe United Kingdom of Great Britai d- Northern _Ireland--in addition-Member Fi

1 thi fromthe follow: tries-t in Pesiti in Fi jal
ry ORY P eS =



[4339¢-0fth tdetermined4 d ith SPAN:] 133% of the Hedge Margin Rate
applicable to each_ Financial Contract as published by the Exchange and modified from time to time.

(iv) With respect to Index Contracts and where such other Person is not a Member or Member of
the Trade, the Original Margin required to be deposited in each such account shall be [400%-efthe
t-determ: ith SPAN] no less than 100% of the Hedge Margin Rate
applicable to each such Index Contract as published by the Exchange and modified from time to time.

(v) For purposes of margining any account carrying positions in Cotton and FCOJ Futures and
Options Contracts, the net liquidating value of each account at the close of trading on any Business
Day on which trading ceases because of the application of price limits shall be computed by using as
the Settlement Price such synthetic price as_the Exchange and/or the Clearing Organization shall
determine.

({c) Before the opening of trading on each Business Day, each Carrying Member shall compute, for
each account with an open Position in Exchange Futures and Options Contracts, the net liquidating value,
the Original Margin and Maintenance Margin Level required (pursuant to these Rules or such greater
Margin requirement as may be established by the Carrying Member), the amount of any unpaid Margin
Call and the length of time any such Margin Call has been outstanding, all as of the close of trading on the
preceding Business Day: provided, however, that such computations shall not be required before the
opening of trading if prevented by causes beyond the control of the Carrying Member, including
computer malfunction or similar cause, in which case such computations shall be made as soon as
possible under the circumstances. Such records shall be kept and shall be open for inspection in
accordance with Section 1.31 of the regulations of the CFTC.

(d) The margin level which must be maintained (the “Maintenance Level”) by all Carrying Members
for each account which has an open Position in Exchange Futures and Options Contracts shall be 100% of
the Hedge Margin Rate established by the Exchange with respect to each Commodity Contract.

(e)_At the close of trading on any Business Day when the net liquidating value of any account is less
than the Maintenance Level, the Carrying Member carrying such account shall require the reinstatement
of Original Margin to the full amount required pursuant to the Rules, within a Reasonable Time.

(f) Each Carrying Member which carries an account that is required to reinstate Original Margin shall
issue a call for Margin within one (1) Business Day after the account is required to reinstate Original
Margin. Each Carrying Member shall maintain written records of all Margin Calls (and any cancellations
of Margin Calls). Such records shall be kept and shall be open for inspection in accordance with section
1.31 of the regulations of the CFTC.

(g) A Carrying Firm may liquidate any or all Positions in an account that does not meet a call for
Margin as required by these Rules. Any loss or deficiency resulting from such liquidation shall be the

liability of the accountholder,

(bh) A Carrying Firm shall not accept orders for new Trades for an undermargined account except for
Risk Reducing Trades, unless the Carrying Firm has been given assurances by the Person for whom the
account is carried that funds to restore the equity in the account to the then prevailing Original Margin
requirement are forthcoming and will be received within a Reasonable Time.

(i) A Carrying Firm shall not permit any withdrawal from an account that would cause the net
liquidating value of the account to be less than the then prevailing Original Margin requirement.



i} Ey therfaty 3 7 vl sti. the Maint M. }: ired-f fat
y y Pp 7 gin req
ty 7 - vat underthi a f thy sh, hich fate +t: 7 vl 4
pt Bi pt
traded.
b) Atthe-cl £ tradi B Day-when-the Net Liquidatine Value-of
{ey e- ry y e S- ay
nt-is-lessthan-the Maint Level ted-i ed th. ha) of thi
iP paragraph
Rule_theC: Member i h t-shall ire-the-reinstat a inal
HE YiBE-
M: intothefall +t ired4 ttotheRuk ithi bl}. ied-ef+ti t
eq Pr a Pt
fe) Berth f eellectis Maint M, infor-Cott dECOFFut d
PeEpes
Opts Cent fs ized hb} -abk the Net-Lieuidat: Wah £ +h ft
P Og yy paragrapn{b} 2 S
t-the-cl £ tradi Busi Day-shall-be det d-by-r0f to-the Settlement
Pr tablished-bythe-Exch:
eA iad
{ad} The-O: jnalM: $7+E ‘3 yy tated -b raat binati fthe
is ry y yy any y
following metheds-which i .ds-the tof the-total M: Call-subject+e-suchterms
d- iti: Py ty tablished My ber-Fi a
G4 it-ofadditi IUnited-Stat heck blein-United Stat -
(yeep ¥ pay oa
Gi) net lized-market .
€ PP: 5
G awe idatier-efFur Cont fs |. T; tis for-Onti jed-in-th. ts
q iS P 2
(+ EWRs for Coffee certified for delivery-in-Exchangeti d " d-awhich identify th
Carrying-Memberas the title holder, to-be-valued at than-70%-of th Jue based-upon-th
Sett} + Price of th by-centract for the C dity-(determined i di ith such
t i} hy iptsfor-Cr tiftedfordeli: i7-Exch:; 2 4. d i 4
Pp £ the Carrying Member-to-be-valued-at than-70% of their-value based upon-th
Set} +P: th -by-contract for the Commodity (determinedi d ithsuch
ed £¥ + 40-44: be-established-by-the- Exch: ):
P Pa eA Ty
Oe) -EWRs-for Cott ified fordeli: in-Exch:; di vl he hich identifyth:
rey a i J
far rf M. be thetitle- helder:
YRS
Gai tiabl. Hy +: ECOIT st din-Exch: 4i. a ih, q
vit} neg: e- >
Gx} tiabl his i. tiffcat ry d-by-Exeh: je Wdfacilities:
{rep neg PPE: y ro 5
€ + iti: Jisted the -N, YorkSteek-Exch: es Jnc- theA i Steck Exch. re tne-
hich are-traded-in-the th y ket df in-by-the Board-of G.
PP’ gin by
fthe Fed, | R. BR 4 ided-that h Hi 4} fr £; 44 a. ib;
Q) + +h; 9, f£ the db d- tstandi: hai fF is: 43}
(Fp e- x €
Hued-at-75% £ thy -ket. J, +h,



OMS SEP 5 . HOS GI NEW YORK.

World Financial Center
One North End Avenue
New York, New York 10282

BY ELECTRONIC TRANSMISSION

05-40
September 16, 2005

Ms. Jean A. Webb

Secretary of the Commission

Office of the Secretariat

Commodity Futures Trading Commission
Three Lafayette Centre

1155 21% Street, NW

Washington, DC 20581

Re: Amendments to Chapter 5 -
Submission Pursuant to Section 5c(c)(1) of the Act and Regulation 40.6

Dear Ms. Webb:

Pursuant to Section 5c(c)(1) of the Commodity Exchange Act, as amended, and
Commission Regulation 40.6, the Board of Trade of the City of New York, Inc. (“Exchange”)
submits, by written certification, amendments to Chapter 5, attached as Exhibit A.

The amendments conform the Rules to industry practice, consolidate redundant
provisions and delete provisions that have become obsolete. All of the main provisions
concerning margins, e.g., the hedge and spec formula and the forms of margin that are
acceptable, are consolidated into Rule 5.03. The remaining rules and their amendments address
special situations, such as codifying the Board’s right to change margin requirements or impose
separate requirements, the margining of omnibus accounts and restrictions on trading by a floor
member whose accounts are in deficit.

The Exchange certifies that the amendments comply with the requirements of the
Commodity Exchange Act and the rules and regulations promulgated thereunder.

The amendments were adopted by the Exchange’s Board of Governors on September 14,
2005. They will become effective on September 19, 2005. No substantive opposing views were
expressed by members or others with respect to the amendments.


(ii) Exchange Futures Contracts or Exchange Option Positions carried on only one (1) side of the
market.

Without limiting the generality of the foregoing, any such requirement may be made to apply differently
for different Carrying Members or classes of Carrying Members, different Customers or classes of
Customers, different forms of Exchange Futures Contracts, different delivery months of the same
Exchange Futures Contract, different types of Exchange Call Options or Exchange Put Options, different
Striking Prices or Option months of the same Exchange Call Options or Exchange Put Options, different
types of Option Transactions and different types of accounts or positions involving Exchange Futures or
Options Contracts.

(b) Notwithstanding the provisions of paragraph (a) of this Rule, at no time shall Margin
requirements be less than the minimum Margin required for all Exchange Futures and Options
Contracts set by the Clearing Organization; provided, however, that this prohibition shall not
apply to Margin requirements established for Arbitrage Positions in Coffee, Sugar and Cocoa
Futures and Options Contracts.

(c) Nothing in this Chapter 5 shall prevent any Carrying Member Firm at any time from requiring
Original Margins in excess of the amounts prescribed pursuant to these Margin Rules or establishing
greater Maintenance Levels for any account, or taking any other action which is not contrary to these
Margin Rules or the Rules.

Beforeth eftrad: h Busi: DB; wal Member-shall wute—fi h
Penns S vs YE Z
eS tawith Pesitior Exch: Put -Onti Contracts_the NetL datine-Value_th

be-established-by the Carrying Member), the Mainte Level ired,th tof. id
Marein Call-and the lensth of 4 Marsin-Call has-bi tstandi Ht £thech £
8 y ars



Pt P 5 Bays
Zealand Ni Sweden, Switzerland-and South Afi
did With tto-the-C Coffee—Ethanel_S: Ne-H-and-S: Ne-H Contracts-British
eH} P 5 5 7 TUBE S p
ds-te-be-valued-at tet ed. ket-value. licable-h: t db:
P PP:
SEC Resulation 240-15-63-+4 ided-that- each Member Fj in-its-diseret: fertyent
i = +P Xs z y
four 24)h itt tice-inclades—facsimile tel. th: iat ) t6-its- Cust
{24} as 5 PPFOP: u oi
vert-such British pounds inte-U.S_delars+ -variation Margin-Calls:]

[69] (x) Irrevocable letter of credit in favor of the Clearing Member carrying the account; such
letter of credit shall comply with the requirements of Rule 505(b) of the Clearing Organization
and shall be issued in such form as may be prescribed by the Exchange and by a depository which has
been approved by the Clearing Organization for issuance and confirmation of letters of credit in favor
of the Clearing Members;

[<9] (xi) Credit in the Customer’s account arising from a secured loan by the Clearing Member as
such term is defined under CFTC Regulation 1.17. [or Member-Firm_forthe-collateralvalue-of

g
hall net d-the-cellateral-yval the. hased-eptions-determined- i: 4 ith-sueh
Pr ‘opt

J: fromtimeto-time-be-established-by-the Exchange:] and

[@«¥4)](xii) Money market mutual funds allowable under CFTC Regulation 1.25 (to be valued at an
amount not to exceed market value less applicable haircuts as required by SEC Regulation 240.15c3-
1) and acceptable to the Clearing Organization.

[A-Carrying Memb: +t t-as-Oricinal Mare: ther £ ti th:
FRE y P ee ‘BH y YP YF
fc} An- Original Marcin Call be tb ran binati £thi theds-listed-i
S = S 7 ‘y
bby £_and/or-by-the liguidati £ fat tract Josine TE: tiens-f
paragrapa toy 7 y S
i jed-in-th t—which 1 ds-th tof thetetal Marcin-Call_subject-t
7 oq Si 7 SOS
ht d-conditi be-established-b: h Member-]
be ry +

Rule 5.04[5]. [Maintenance-Level] Omnibus Accounts

Each Member Firm which carries an account for a Futures Commission Merchant or a
foreign broker on an omnibus basis, shall collect the Original Margin and Maintenance Margin
required of such account on the basis of the gross Position carried for such account. If the Member Firm
carrying an open position for another domestic or foreign broker allows a Position to be margined as a
spread Position, the carrying Member Firm must obtain and retain for recordkeeping purposes a written
representation from the entity for which the omnibus account is being maintained that each such Position
is entitled to be so margined. The written representation shall be kept and shall be open for inspection in
accordance with section 1.31 of the regulations of the Commodity Futures Trading Commission.

[(a} Phe Maint Leveluwhich tb intained by-all- Carrying Members-fe h
tavhieh-hi fut tiens Pesition-shall b: folk
P pt
43) Fer Exeh: But d-Optiens-Centracts100% of th tof Oricinal M
tH tis 7 Fre} iS
det 4 -d: ith SRAN and ired-j: d th fa)-e£M: Rule
Om ‘paragrapa {ay


Speculative Margin Rate

The rate determined by the Exchange as the rate to be charged as Margin for a Commodity Contract
carried in an account that is not eligible to be margined at the Hedge Margin Rate.

Rule 5.02. [Margin Requirements] Debit or Deficit in Account of Member with Floor Trading
Privileges

[5 -as-hereinaft ided. Carryine-Member-shal} Pesitien+: Exch:
te} Pt P Bi ying ¥ P et
Fat Option-Centact-k tunlessit-cellects the Original Marei
P 8 8
d t-to-the Rul. ithin-a-R ble Ti + for coed
“i P g Pt a
ner t-as-hereinaft ided. Carryins Member-shall a derfora fat epti
v Pt P o prany P
tractif-th " fsuch 1d it th t's Pesit: pif
(Hhe-O1 1M. AP; jred-for-alt tine fate d-eptien Resit: d
the t-has-been-depositedi d ith the Rulesorthe-rul. £ £ thi hang
Ah h fate ti traded)-orthe C: Mermpber-h: a Hf Marei
P TBE y
Pp ed-and-such-eall-has-net b: istandi th R ble-E3 tf
Og S D Pp
Gi} the Net Liguidatine Vak thy t .as-the Maint
Hy S
the Rut. the-C: Member-h: ed. Hf Marei
S Y 3
be tstand: th R b}eT3 t-for-coed
'S Z e
fe} Ne Member shal} b. d-te-ebt 1}-for Original M:
toy + S &
itions-that liguidated-th B: ay
Pt a

€8}44)] (a) No Member with floor trading privileges shall execute a Trade or place an order for the
purchase or sale of any Exchange Futures Contract or the purchase or grant of any Exchange Option if a
debit or a deficit balance exists in the account of such Member or in any account in which such Member
directly or indirectly has an interest, except for the liquidation of existing Positions, or with the prior
approval of the President. A Member with floor trading privileges shall immediately notify the [Seeretary
ofthe Exehange] Vice President of Market Regulation or his Designee if a debit or deficit balance of
$10,000 or more exists in any account or all accounts combined, in which such Member, directly or
indirectly, has an interest.

[@9](b) A Carrying Member may not knowingly accept any Trade or order which is violative of
paragraph [¢4}49] (a) of this Rule, except for Trades which the Carrying Member is obligated to accept as
the Clearing Member guarantor of a Member with floor trading privileges. A Clearing Member guarantor
shall immediately advise the Exchange of any Trades which it accepts pursuant to this paragraph.

[449] (c) A Carrying Member shall immediately notify the [Seeretary-efthe Exchange-] Vice
President of Market Regulation or his Designee if a debit or deficit balance of $10,000 or more exists in
the account of a Member with floor trading privileges or in any account in which such Member, directly
or indirectly, has an interest of which the Carrying Member has knowledge.

[fe}No-Carrying Memb duce Marcin funds fr tunlessfund j £thi
FE y
t's- mini Original Marei A t
8 ei i =



(In the text of the amendments below, additions are underlined and deletions are bracketed and
lined out.)

Rule 5.01. Scope of Chapter and Definitions

This chapter governs the Margins and Premiums required for Exchange Futures and Options
Contracts. The following terms are defined for purposes of this chapter only, and do not apply to other
Rules.

Current Margin Call

A bona fide Margin call which has been outstanding a Reasonable Time as defined in this Rule.

Customer

An account holder trading in any [e]Commodity [fatures-or-eptiens-e] Contract, except the holder
of a proprietary account as defined by CFTC Regulation [4.349] 17(b)(3), or Non-Customer account
as defined by CFTC Regulation 1.17(b)(4).

Hedge Margin Rate

The rate determined by the Exchange as the rate to be charged as Margin for a Commodity Contract
carried in an account that is eligible to be margined at such rate.

Margin Call

A request for Margin funds to bring an account up to the Original Margin requirement when
Margin equity in the account is less than the Maintenance Margin requirement.

Non-Customer

An account holder trading in any C feJommodity [fatures-er-eptions-e]Contract which [is-net
defined.as-Cust proprietary] satisfies the definition in CFTC Regulation 1.17(b)(4).

Omnibus Account

An account held in the name of an FCM or foreign broker that is utilized for placing and clearing
Trades of one (1) or more undisclosed Persons.

Reasonable Time
Less than three (3) Business Days for Members holding floor trading privileges; less than five (5)
Business Days for Customers and less than four (4) Business Days for Non-Customer and Omnibus

Accounts. Note: Days are counted from and including the day the account became undermargined.

Risk Reducing Trades

The establishment or closure of a futures or options Position that reduces the risk of existing
Positions in an account.

EXHIBIT A


-2-

If you have any questions or need further information, please contact me at

jfassler@nybot.com or 212-748-4084.

Sincerely,

Jill S. Fassler
Vice President
Associate General Counsel

ee: Riva Adriance
Thomas Leahy
CFTC, Division of Market Oversight
Allen Cooper
CFTC, New York Regional Office