SUBMISSION COVER SHEET

IMPORTANT: Check box if Confidential Treatment is requested

Registered Entity Identifier Code (optional): 15-018 (1 of 2)

Organization: New York Mercantile Exchange, Inc. ("NYMEX")

Filing as a: DCM SEF DCO SDR 

Please note - only ONE choice allowed.

Filing Date (mm/dd/yy): March 13, 2015 Filing Description: Notification Regarding 

the Initial Listing of Two (2) Options on Coal Futures Contracts

SPECIFY FILING TYPE 

Please note only ONE choice allowed per Submission.

Organization Rules and Rule Amendments

Certification § 40.6(a)

Approval § 40.5(a)

Notification § 40.6(d)

Advance Notice of SIDCO Rule Change § 40.10(a)

SIDCO Emergency Rule Change § 40.10(h)

Rule Numbers: 

New Product Please note only ONE product per Submission.

Certification § 40.2(a) 

Certification Security Futures § 41.23(a)

Certification Swap Class § 40.2(d)

Approval § 40.3(a)

Approval Security Futures § 41.23(b)

Novel Derivative Product Notification § 40.12(a)

Swap Submission § 39.5

Official Product Name: Coal (API 2) cif ARA (Argus/McCloskey) Short Dated Option on Calendar 

Futures Strip; Coal (API 4) fob Richards Bay (Argus/McCloskey) Short Dated Option on Calendar 

Futures Strip

Product Terms and Conditions (product related Rules and Rule Amendments)

Certification § 40.6(a) 

Certification Made Available to Trade Determination § 40.6(a)

Certification Security Futures § 41.24(a)

Delisting (No Open Interest) § 40.6(a) 

Approval § 40.5(a)

Approval Made Available to Trade Determination § 40.5(a)

Approval Security Futures § 41.24(c)

Approval Amendments to enumerated agricultural products § 40.4(a), § 40.5(a)

“Non-Material Agricultural Rule Change” § 40.4(b)(5)

Notification § 40.6(d)

Official Name(s) of Product(s) Affected: 

Rule Numbers: 
1 North End Avenue New York, NY 10282 T 212 299 2200 F 212 299 2299 christopher.bowen@cmegroup.com cmegroup.com

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Christopher Bowen 

Managing Director and Chief Regulatory Counsel

Legal Department

March 13, 2015

VIA ELECTRONIC PORTAL

Mr. Christopher J. Kirkpatrick

Office of the Secretariat

Commodity Futures Trading Commission

Three Lafayette Centre

1155 21st Street, N.W.

Washington, DC 20581

Re: CFTC Regulation 40.2(a) Certification. Notification Regarding the Initial

Listing of Two (2) Options on Coal Futures Contracts.

NYMEX Submission No. 15-018 (1 of 2)

Dear Mr. Kirkpatrick:

New York Mercantile Exchange, Inc. (“NYMEX” or “Exchange”) is notifying the Commodity Futures 

Trading Commission (“CFTC” or “Commission”) that it is self-certifying the listing of two (2) new options 

on coal futures contracts (the “Contracts”) for trading on CME Globex and the NYMEX trading floor and 

for submission for clearing through CME ClearPort, effective on Sunday, March 29, 2015 for trade date 

Monday, March 30, 2015.

Pursuant to Commission Regulation 40.6(a), NYMEX is separately self-certifying block trading on these 

Contracts with a minimum threshold of 5 contracts in the two (2) new products listed in NYMEX/COMEX 

Submission No. 15-093. 

The specifications for the two (2) new option contracts are provided below for your convenience.

Contract Title Commodity

Code

Underlying 

Futures 

Contract 

Commodity 

Code

NYMEX 

Rulebook

Chapter

First Listed 

Contract

Month

Listing

Schedule

Coal (API 2) cif ARA 

(Argus/McCloskey) Short 

Dated Option on Calendar 

Futures Strip

MTC MTF 1115 July 2015 April, July and 

October contracts 

listed for the 

current calendar 

year and next 

calendar year

Coal (API 4) fob Richards 

Bay (Argus/McCloskey) 

Short Dated Option on

Calendar Futures Strip

MFR MFF 1114 July 2015 April, July and 

October contracts 

listed for the 

current calendar 

year and next 

calendar year
1 North End Avenue New York, NY 10282 T 212 299 2200 F 212 299 2299 christopher.bowen@cmegroup.com cmegroup.com

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Contract Unit:

Strip of twelve futures contracts reflecting the underlying calendar year period, ie 1,000 metric tons per 

month, or 12,000 metric tons in total. The underlying calendar year is the full calendar year following the 

expiry of the option, for example the underlying for the April 2015 option is the strip of twelve contract 

months from January 2016 to December 2016 inclusive.

Price Quotation:

US dollars and cents per metric ton

Minimum Price Tick:

$0.01 ($120 per contract); a cabinet trade may occur at a price of $ 0.001 per metric ton, or $12.00 per 

contract, however, if it results in the liquidation of positions for both parties to the trade.

Exercise Prices:

Available in $0.50 increments, ie $x.00 and $x.50 values.

Trading and Clearing Hours:

CME ClearPort: Sunday – Friday 6:00 p.m. – 5:15 p.m. (5:00 p.m. – 4:15 p.m. Chicago Time/CT)

with a 45-minute break each day beginning at 5:15 p.m. (4:15 p.m. CT).

Open Outcry: Monday – Friday 9:00 a.m. – 2:30 p.m. (8:00 a.m. – 1:30 p.m. CT).

Termination of Trading:

5:00 p.m. London time, on the Expiration Day

Expiration Day:

Thirty days prior to the first calendar day of the contract month, if this day is not a UK business day, 

trading shall terminate on the preceding UK business day.

Option Expiration:

Notice of Exercise must be received by the Clearing House no later than 6:00 p.m. London time on the 

Expiration Day

Settlement Methodology:

Delivery of futures at the option exercise price, as described in the relevant Rule Chapter

In-the-money positions will be automatically exercised following option expiry. The Exchange will refer to 

the end-of-day coal prices published by the London Energy Brokers’ Association (LEBA) to determine 

whether an option is in-the-money. Holders of long positions will have the ability to submit contraexercise instructions.

Trading and Clearing Fees

Member Day Member Cross Division Non-Member IIP

Pit $12.00 $12.00 $15.00 $18.00

CME Globex $12.00 $12.00 $15.00 $18.00 $15.00
1 North End Avenue New York, NY 10282 T 212 299 2200 F 212 299 2299 christopher.bowen@cmegroup.com cmegroup.com

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CME ClearPort $12.00 $18.00

Agency Cross $12.00 $18.00

Other Processing Fees

House 

Acct

Customer 

Acct

Options E/A Notice $0.40 $0.85

Additional Fees and Surcharges

Facilitation Desk Fee $0.30

The Exchange is also notifying the CFTC that it is self-certifying the insertion of the terms and conditions 

for the new contracts into the Position Limit, Position Accountability and Reportable Level Table and 

Header Notes located in the Interpretations and Special Notices Section of Chapter 5 of the NYMEX 

Rulebook in relation to the listing of the new contracts. These terms and conditions establish the all 

month/any one month accountability levels, expiration month position limit, reportable level, and 

aggregation allocation for the new contracts, as presented below in Appendix B (attached under separate 

cover).

In addition, the Exchange is self-certifying the amendment of the all month position limit aggregation 

ratios for the Coal (API 2) cif ARA (ARGUS - McCloskey) Option on Calendar Futures Strip (NYMEX 

Commodity Code CLA, NYMEX Rule Chapter 910), and the Coal (API 4) fob Richards Bay (ARGUS -

McCloskey) Option on Calendar Futures Strip (NYMEX Commodity Code RLA, NYMEX Rule Chapter 

918). These amendments are also presented in Appendix B (attached under separate cover).

The Exchange reviewed the designated contract market core principles (“Core Principles”) as set forth in 

the Commodity Exchange Act (“Act” or “CEA”) and identified that the new products may have some 

bearing on the following Core Principles:

• Prevention of Market Disruption: Trading in these contracts will be subject to Chapters 4, 5 and 7 of 

the NYMEX Rulebook (“Rulebook”) which include prohibitions on manipulation, price distortion and 

disruptions of the delivery or cash-settlement process. As with all products listed for trading on one of 

CME Group’s designated contract markets, activity in the new products will be subject to extensive 

monitoring and surveillance by CME Group’s Market Regulation Department.

• Contracts Not Readily Susceptible to Manipulation: The new contracts are not readily susceptible to 

manipulation due to the liquidity and robustness in the underlying cash market, which provides diverse 

participation and sufficient spot transactions to support the final settlement index as assessed by 

Argus Media and IHS McCloskey (methodology provided in the attached Cash Market Overview, 

Appendix D).

• Compliance with Rules: Trading in these contracts will be subject to the rules in Rulebook Chapter 4 

which includes prohibitions against fraudulent, noncompetitive, unfair and abusive practices. 

Additionally, trading in this contract will also be subject to the full panoply of trade practice rules, the 

majority of which are contained in Chapter 5 and Chapter 8 of the Rulebook. As with all products listed 

for trading on one of CME Group’s designated contract markets, activity in the new products will be 

subject to extensive monitoring and surveillance by CME Group’s Market Regulation Department. The 
1 North End Avenue New York, NY 10282 T 212 299 2200 F 212 299 2299 christopher.bowen@cmegroup.com cmegroup.com

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Market Regulation Department has the authority to exercise its investigatory and enforcement power 

where potential rule violations are identified.

• Position Limitations or Accountability: The spot month position limits for the contracts are set at less 

than the threshold of 25% of the deliverable supply in the underlying market in accordance with the 

Commission guidance.

• Availability of General Information: The Exchange will publish information on the contracts’ 

specifications on its website, together with daily trading volume, open interest and price information.

• Daily Publication of Trading Information: Trading volume, open interest and price information will be 

published daily on the Exchange’s website and via quote vendors.

• Financial Integrity of Contracts: All contracts traded on the Exchange will be cleared by the Clearing 

House of the Chicago Mercantile Exchange Inc. which is a registered derivatives clearing organization 

with the Commission and is subject to all Commission regulations related thereto.

• Execution of Transactions: The new contracts are to be listed for clearing through the CME ClearPort 

platform and for trading on the CME Globex trading platform and on the NYMEX trading floor for open 

outcry trading. The CME ClearPort platform provides a competitive, open and efficient mechanism for 

novating transactions that are competitively executed by brokers. The CME Globex electronic trading 

platform provides for a competitive and open execution of transactions due to its advanced 

functionality, high reliability and global connectivity. It runs continuously, so it is not restricted by 

borders or time zones. CME Globex remains among the fastest global electronic trading systems. The 

NYMEX trading floor is available as an additional venue to provide for competitive and open execution 

of transactions.

• Trade Information: All required trade information is included in the audit trail and is sufficient for the 

Market Regulation Department to monitor for market abuse.

• Protection of Market Participants: Rulebook Chapters 4 and 5 contain multiple prohibitions precluding 

intermediaries from disadvantaging their customers. These rules apply to trading on all of the 

Exchange’s competitive trading venues and will be applicable to transactions in this product.

• Disciplinary Procedures: Chapter 4 of the Rulebook contains provisions that allow the Exchange to 

discipline, suspend or expel members or market participants that violate the Rulebook. Trading in 

these contracts will be subject to Chapter 4, and the Market Regulation Department has the authority 

to exercise its enforcement power in the event rule violations in these products are identified.

• Dispute Resolution: Disputes with respect to trading in these contracts will be subject to the arbitration 

provisions set forth in Chapter 6 of the Rulebook. Chapter 6 allows all non-members to submit a claim 

for financial losses resulting from transactions on the Exchange to arbitration. A member named as a 

respondent in a claim submitted by a nonmember is required to participate in the arbitration pursuant 

to Chapter 6. Additionally, the Exchange requires that members resolve all disputes concerning 

transactions on the Exchange via arbitration.

Pursuant to Section 5c(c) of the Act and CFTC Regulation 40.2(a), the Exchange hereby certifies that the 

new product listings comply with the Act, including regulations under the Act. A description of the cash 

market for these new products is attached in Appendix D.

The Exchange certifies that this submission has been concurrently posted on the Exchange’s website at

http://www.cmegroup.com/market-regulation/rule-filings.html.
1 North End Avenue New York, NY 10282 T 212 299 2200 F 212 299 2299 christopher.bowen@cmegroup.com cmegroup.com

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Should you have any questions concerning the above, please contact the undersigned at (212) 299-2200

or via e-mail at CMEGSubmissionInquiry@cmegroup.com.

Sincerely,

/s/ Christopher Bowen

Managing Director and Chief Regulatory Counsel

Attachments:

Appendix A: NYMEX Rulebook Chapters

Appendix B: Position Limit, Position Accountability, and Reportable Level Table in Chapter 5 of the 

NYMEX Rulebook (attached under separate cover)

Appendix C: NYMEX Rule 588.H – Globex Non-Reviewable Ranges

Appendix D: Cash Market Overview and Analysis of Deliverable Supply
6

Appendix A

NYMEX Rulebook Chapters

Chapter 1115

Coal (API 2) cif ARA (Argus-McCloskey) Short Dated Option

on Calendar Futures Strip

1115100. SCOPE OF CHAPTER 

This chapter is limited in application to short dated put and call options on calendar year strips of Coal 

(API 2) cif ARA (Argus-McCloskey) futures contracts. In addition to the rules of this chapter, 

transactions in short dated options on calendar year strips of Coal (API 2) cif ARA (Argus-McCloskey) 

futures shall be subject to the general rules of the Exchange insofar as applicable. 

1115101. OPTION CHARACTERISTICS 

The number of months open for trading at a given time shall be determined by the Exchange. 

1115101.A. Trading Schedule 

The hours of trading for this contract shall be determined by the Exchange. 

1115101.B. Trading Unit 

The Coal (API 2) cif ARA (Argus-McCloskey) Short Dated Option on Calendar Futures Strip is an 

option on the Coal (API 2) cif ARA (Argus-McCloskey) futures contract. On expiration of a call option, 

the long position will be assigned twelve consecutive long futures months, beginning with the January 

contract for the calendar year following the option expiry month, of the Coal (API 2) cif ARA (ArgusMcCloskey) futures contract at the strike price. On exercise of a put option, the long position will be 

assigned twelve consecutive short futures months, beginning with the January contract for the calendar 

year following the option expiry month, of the Coal (API 2) cif ARA (Argus-McCloskey) futures contract 

at the strike price.

1115101.C. Price Increments 

The minimum price fluctuation is $0.01 per metric ton ($120 per contract). Prices shall be quoted in US 

dollars and cents per metric ton. A cabinet trade may occur at a price of $0.001 per metric ton, or 

$12.00 per contract, however, if it results in the liquidation of positions for both parties to the trade. 

1115101.D. Position Limits, Exemptions, Position Accountability and Reportable Levels 

The applicable position limits and/or accountability levels, in addition to the reportable levels, are set 

forth in the Position Limit, Position Accountability and Reportable Level Table in the Interpretations & 

Special Notices Section of Chapter 5. 

A Person seeking an exemption from position limits for bona fide commercial purposes shall apply to 

the Market Regulation Department on forms provided by the Exchange, and the Market Regulation 

Department may grant qualified exemptions in its sole discretion. 

Refer to Rule 559 for requirements concerning the aggregation of positions and allowable exemptions 

from the specified position limits. 

1115101.E. Termination of Trading 

The option Expiration Day shall be 30 calendar days prior to the first calendar day of the contract 

month. If such day is not a UK business day, the Expiration Day shall be the first preceding UK 

business day. Trading shall cease at 5:00 p.m. London time on the option’s Expiration Day. 

Notice of exercise must be delivered by a Clearing Member to the Clearing House not later than 6:00 

p.m. London time on the Expiration Day, except as noted below. The option shall be available for 

automatic exercise. The in-the-money value of the option shall be based on a methodology to be 

published by the Exchange that reflects markets prices at the termination of trading of a contract. In 

the event the underlying reference price used by the Exchange is not available by 5:45 p.m. London 
7

time, the notice of exercise may be delivered no later than fifteen (15) minutes after the publication of 

the underlying reference price.

1115101.F. Type Option 

The option is a European-style option which can only be exercised into the underlying futures on 

Expiration Day. 

1115102. EXERCISE PRICES 

Trading shall be conducted for option contracts with strike prices in increments as set forth below. 

1. On the first business day of trading in an option contract month, trading shall be at the following 

strike prices: (i) the previous day's settlement price for the Coal (API 2) cif ARA (ArgusMcCloskey) futures contracts in the first calendar month in the strip of deliverable futures (or 

implied previous day’s settlement price if listing is concurrent) rounded off to the nearest $0.50 

strike price unless such settlement price is precisely midway between two strike prices in which 

case it shall be rounded off to the lower strike price and (ii) the ten $0.50 increment strike prices 

which are ten $0.50 increments higher than the strike price described in (i) of this Rule, and (iii) 

the ten $0.50 increment strike prices which are ten $0.50 increments lower than the strike price 

described in (i) of this Rule. 

2. Thereafter, on any business day prior to the expiration of the option contract, new consecutive 

strike prices for both puts and calls will be added such that there will be ten strike prices at $0.50 

increments above and below the at-the-money option, provided that each such strike price shall

be above zero. 

3. Notwithstanding the provisions of subsections (1) and (2) of this rule, if the Exchange determines 

that trading in the option contract will be facilitated thereby, the Exchange may change the 

increments between strike prices, the number of strike prices which shall be traded on the first 

day in any new option contract month, the number of new strike prices which will be introduced on 

each business day or the period preceding the expiration of an option contract in which no new 

strike prices may be introduced.

1115103. DISCLAIMER

The Coal (API 2) cif ARA (Argus-McCloskey) Short Dated Option on Calendar Futures Strip (the 

“Product”) is not sponsored, endorsed, sold or promoted by Argus Media Inc. (“Argus”) or IHS Global 

Ltd. (“IHS”). Argus and IHS make no representation or warranty, express or implied, to the owners of 

the Product or any member of the public regarding the advisability of trading in the Product. Argus’ and 

IHS’ only relationship to Chicago Mercantile Exchange Inc., CME Clearing Europe Ltd. and New York 

Mercantile Exchange, Inc. (together, “CME”) is the licensing of certain trademarks and trade names of 

Argus and IHS, and of the API 2 and API 4 indexes (which are determined, composed and calculated 

by Argus and IHS without regard to CME or the Product), and Argus and IHS have no obligation to take 

the needs of CME or the owners of the Product into consideration in determining, composing or 

calculating the API 2 and API 4 indexes. Argus and IHS are not responsible for and have not 

participated in the determination of the timing of, prices at, or quantities of the Product to be listed or in 

the determination or calculation of the equation by which the Product is to be converted into cash. 

Argus and IHS have no obligation or liability in connection with the administration, marketing or trading 

of the Product.

ARGUS, IHS AND CME DO NOT GUARANTEE THE ACCURACY AND/OR THE COMPLETENESS 

OF THE API 2 AND API 4 INDEXES OR ANY DATA RELATED THERETO AND NEITHER ARGUS, 

IHS, NOR CME SHALL HAVE ANY LIABILITY FOR ANY ERRORS, OMISSIONS, OR 

INTERRUPTIONS THEREIN. ARGUS, IHS AND CME MAKE NO WARRANTY, EXPRESS OR 

IMPLIED, AS TO RESULTS TO BE OBTAINED BY CME, OWNERS OF THE PRODUCT, OR ANY 

OTHER PERSON OR ENTITY FROM THE USE OF THE API 2 AND API 4 INDEXES OR ANY DATA 

RELATED THERETO. ARGUS, IHS, AND CME MAKE NO EXPRESS OR IMPLIED WARRANTIES, 

AND EXPRESSLY DISCLAIM ALL WARRANTIES, OF MERCHANTABILITY OR FITNESS FOR A 

PARTICULAR PURPOSE OR USE WITH RESPECT TO THE API 2 AND API 4 INDEXES OR ANY 

DATA RELATED THERETO. WITHOUT LIMITING ANY OF THE FOREGOING, IN NO EVENT SHALL 

ARGUS, IHS, OR CME HAVE ANY LIABILITY FOR ANY DAMAGES WHATSOEVER, WHETHER 

DIRECT OR INDIRECT, INCLUDING WITHOUT LIMITATION, LOST PROFITS OR INDIRECT, 

PUNITIVE, SPECIAL OR CONSEQUENTIAL DAMAGES (INCLUDING LOST PROFITS), EVEN IF 

NOTIFIED OF THE POSSIBILITY OF SUCH DAMAGES. THERE ARE NO THIRD PARTY 
8

BENEFICIARIES OF ANY AGREEMENTS OR ARRANGEMENTS BETWEEN ARGUS, IHS, AND 

CME.

Without prejudice to any of the above provisions and in addition to them, each and every third party 

should and must note that, insofar as New York Mercantile Exchange, Inc. (“NYMEX”) may list any 

index for trading in or in connection or by reference therewith, none of:

a. NYMEX;

b. its directors or officers; or

c. any relevant party that NYMEX may contract with for the supply of the index or information in 

relation thereto;

(each of the foregoing, a “Relevant Party”) assume any obligation or liability in connection with the 

trading of any contract based on such index. Accordingly, no Relevant Party shall be in any way 

responsible for any losses, expenses or damages (in all cases direct or indirect) arising in connection 

with or referable to the trading of any contract linked or referable to the said index, provided that 

nothing herein shall affect either the obligations of NYMEX or its Members as Parties trading in any 

contract so linked or referable. None of the Relevant Parties guarantee or warrant or undertake in any 

manner the accuracy or completeness of any such index or any information or data included in or 

referable to it.

NONE OF THE RELEVANT PARTIES MAKE ANY WARRANTY OR GIVES ANY GUARANTEE OR 

UNDERTAKING, EXPRESS OR IMPLIED, AS TO THE ACCURACY OR COMPLETENESS OF, OR 

THE RESULTS TO BE OBTAINED BY ANY PERSON OR ENTITY FROM THE USE OF ANY SUCH 

INDEX, AND PROXY RELATED OR REFERABLE THERETO OR ANY INFORMATION OR DATA 

INCLUDED IN OR REFERABLE TO IT IN CONNECTION WITH ANY TRADING OR ANY 

CONTRACTS OR FOR ANY OTHER USE. NONE OF THE RELEVANT PARTIES MAKE ANY 

EXPRESS OR IMPLIED WARRANTY OF MERCHANTABILITY OR FITNESS FOR ANY 

PARTICULAR PURPOSE WITH RESPECT TO ANY SUCH INDEX, ANY RELATED OR REFERABLE 

THERETO OR ANY INFORMATION OR DATA INCLUDED IN OR REFERABLE TO ANY SUCH 

INDEX.
9

Chapter 1114

Coal (API 4) fob Richards Bay (Argus-McCloskey) Short Dated Option on Calendar 

Futures Strip

1114100. SCOPE OF CHAPTER 

This chapter is limited in application to short dated put and call options on calendar year strips of Coal 

(API 4) fob Richards Bay (Argus-McCloskey) futures contracts. In addition to the rules of this chapter, 

transactions in short dated options on calendar year strips of Coal (API 4) fob Richards Bay (ArgusMcCloskey) futures shall be subject to the general rules of the Exchange insofar as applicable. 

1114101. OPTION CHARACTERISTICS 

The number of months open for trading at a given time shall be determined by the Exchange. 

1114101.A. Trading Schedule 

The hours of trading for this contract shall be determined by the Exchange. 

1114101.B. Trading Unit 

Coal (API 4) fob Richards Bay (Argus-McCloskey) Short Dated Option on Calendar Futures Strip is an 

option on the Coal (API 4) fob Richards Bay (Argus-McCloskey) futures contract. On expiration of a 

call option, the long position will be assigned twelve consecutive long futures months, beginning with 

the January contract for the calendar year following the option expiry month, of the Coal (API 4) fob 

Richards Bay (Argus-McCloskey) futures contract at the strike price. On exercise of a put option, the 

long position will be assigned twelve consecutive short futures months, beginning with the January 

contract for the calendar year following the option expiry month, of the Coal (API 4) fob Richards Bay 

(Argus-McCloskey) futures contract at the strike price.

1114101.C. Price Increments 

The minimum price fluctuation is $0.01 per metric ton ($120 per contract). Prices shall be quoted in US 

dollars and cents per metric ton. A cabinet trade may occur at a price of $0.001 per metric ton, or 

$12.00 per contract, however, if it results in the liquidation of positions for both parties to the trade. 

1114101.D. Position Limits, Exemptions, Position Accountability and Reportable Levels 

The applicable position limits and/or accountability levels, in addition to the reportable levels, are set 

forth in the Position Limit, Position Accountability and Reportable Level Table in the Interpretations & 

Special Notices Section of Chapter 5. 

A Person seeking an exemption from position limits for bona fide commercial purposes shall apply to 

the Market Regulation Department on forms provided by the Exchange, and the Market Regulation 

Department may grant qualified exemptions in its sole discretion. 

Refer to Rule 559 for requirements concerning the aggregation of positions and allowable exemptions 

from the specified position limits. 

1114101.E. Termination of Trading 

The option Expiration Day shall be 30 calendar days prior to the first calendar day of the contract 

month. If such day is not a UK business day, the Expiration Day shall be the first preceding UK 

business day. Trading shall cease at 5:00 p.m. London time on the option’s Expiration Day. 

Notice of exercise must be delivered by a Clearing Member to the Clearing House not later than 6:00 

p.m. London time on the Expiration Day, except as noted below. The option shall be available for 

automatic exercise. The in-the-money value of the option shall be based on a methodology to be 

published by the Exchange that reflects markets prices at the termination of trading of a contract. In 

the event the underlying reference price used by the Exchange is not available by 5:45 p.m. London 

time, the notice of exercise may be delivered no later than fifteen (15) minutes after the publication of 

the underlying reference price.

1114101.F. Type Option 

The option is a European-style option which can only be exercised into the underlying futures on 

Expiration Day. 
10

1114102. EXERCISE PRICES 

Trading shall be conducted for option contracts with strike prices in increments as set forth below. 

1. On the first business day of trading in an option contract month, trading shall be at the following 

strike prices: (i) the previous day's settlement price for the Coal (API 4) fob Richards Bay (ArgusMcCloskey) futures contracts in the first calendar month in the strip of deliverable futures (or 

implied previous day’s settlement price if listing is concurrent) rounded off to the nearest $0.50 

strike price unless such settlement price is precisely midway between two strike prices in which 

case it shall be rounded off to the lower strike price and (ii) the ten $0.50 increment strike prices 

which are ten $0.50 increments higher than the strike price described in (i) of this Rule, and (iii) 

the ten $0.50 increment strike prices which are ten $0.50 increments lower than the strike price 

described in (i) of this Rule. 

2. Thereafter, on any business day prior to the expiration of the option contract, new consecutive 

strike prices for both puts and calls will be added such that there will be ten strike prices at $0.50 

increments above and below the at-the-money option, provided that each such strike price shall 

be above zero. 

3. Notwithstanding the provisions of subsections (1) and (2) of this rule, if the Exchange determines 

that trading in the option contract will be facilitated thereby, the Exchange may change the 

increments between strike prices, the number of strike prices which shall be traded on the first 

day in any new option contract month, the number of new strike prices which will be introduced on 

each business day or the period preceding the expiration of an option contract in which no new 

strike prices may be introduced.

1114103. DISCLAIMER

The Coal (API 4) fob Richards Bay (Argus-McCloskey) Short Dated Option on Calendar Futures Strip 

(the “Product”) is not sponsored, endorsed, sold or promoted by Argus Media Inc. (“Argus”) or IHS 

Global Ltd. (“IHS”). Argus and IHS make no representation or warranty, express or implied, to the 

owners of the Product or any member of the public regarding the advisability of trading in the Product. 

Argus’ and IHS’ only relationship to Chicago Mercantile Exchange Inc., CME Clearing Europe Ltd. and 

New York Mercantile Exchange, Inc. (together, “CME”) is the licensing of certain trademarks and trade 

names of Argus and IHS, and of the API 2 and API 4 indexes (which are determined, composed and 

calculated by Argus and IHS without regard to CME or the Product), and Argus and IHS have no 

obligation to take the needs of CME or the owners of the Product into consideration in determining, 

composing or calculating the API 2 and API 4 indexes. Argus and IHS are not responsible for and have 

not participated in the determination of the timing of, prices at, or quantities of the Product to be listed 

or in the determination or calculation of the equation by which the Product is to be converted into cash. 

Argus and IHS have no obligation or liability in connection with the administration, marketing or trading 

of the Product.

ARGUS, IHS AND CME DO NOT GUARANTEE THE ACCURACY AND/OR THE COMPLETENESS 

OF THE API 2 AND API 4 INDEXES OR ANY DATA RELATED THERETO AND NEITHER ARGUS, 

IHS, NOR CME SHALL HAVE ANY LIABILITY FOR ANY ERRORS, OMISSIONS, OR 

INTERRUPTIONS THEREIN. ARGUS, IHS AND CME MAKE NO WARRANTY, EXPRESS OR 

IMPLIED, AS TO RESULTS TO BE OBTAINED BY CME, OWNERS OF THE PRODUCT, OR ANY 

OTHER PERSON OR ENTITY FROM THE USE OF THE API 2 AND API 4 INDEXES OR ANY DATA 

RELATED THERETO. ARGUS, IHS, AND CME MAKE NO EXPRESS OR IMPLIED WARRANTIES, 

AND EXPRESSLY DISCLAIM ALL WARRANTIES, OF MERCHANTABILITY OR FITNESS FOR A 

PARTICULAR PURPOSE OR USE WITH RESPECT TO THE API 2 AND API 4 INDEXES OR ANY 

DATA RELATED THERETO. WITHOUT LIMITING ANY OF THE FOREGOING, IN NO EVENT SHALL 

ARGUS, IHS, OR CME HAVE ANY LIABILITY FOR ANY DAMAGES WHATSOEVER, WHETHER 

DIRECT OR INDIRECT, INCLUDING WITHOUT LIMITATION, LOST PROFITS OR INDIRECT, 

PUNITIVE, SPECIAL OR CONSEQUENTIAL DAMAGES (INCLUDING LOST PROFITS), EVEN IF 

NOTIFIED OF THE POSSIBILITY OF SUCH DAMAGES. THERE ARE NO THIRD PARTY 

BENEFICIARIES OF ANY AGREEMENTS OR ARRANGEMENTS BETWEEN ARGUS, IHS, AND 

CME.

Without prejudice to any of the above provisions and in addition to them, each and every third party 

should and must note that, insofar as New York Mercantile Exchange, Inc. (“NYMEX”) may list any 

index for trading in or in connection or by reference therewith, none of:
11

a. NYMEX;

b. its directors or officers; or

c. any relevant party that NYMEX may contract with for the supply of the index or information in 

relation thereto;

(each of the foregoing, a “Relevant Party”) assume any obligation or liability in connection with the 

trading of any contract based on such index. Accordingly, no Relevant Party shall be in any way 

responsible for any losses, expenses or damages (in all cases direct or indirect) arising in connection 

with or referable to the trading of any contract linked or referable to the said index, provided that 

nothing herein shall affect either the obligations of NYMEX or its Members as Parties trading in any 

contract so linked or referable. None of the Relevant Parties guarantee or warrant or undertake in any 

manner the accuracy or completeness of any such index or any information or data included in or 

referable to it.

NONE OF THE RELEVANT PARTIES MAKE ANY WARRANTY OR GIVES ANY GUARANTEE OR 

UNDERTAKING, EXPRESS OR IMPLIED, AS TO THE ACCURACY OR COMPLETENESS OF, OR 

THE RESULTS TO BE OBTAINED BY ANY PERSON OR ENTITY FROM THE USE OF ANY SUCH 

INDEX, AND PROXY RELATED OR REFERABLE THERETO OR ANY INFORMATION OR DATA 

INCLUDED IN OR REFERABLE TO IT IN CONNECTION WITH ANY TRADING OR ANY 

CONTRACTS OR FOR ANY OTHER USE. NONE OF THE RELEVANT PARTIES MAKE ANY 

EXPRESS OR IMPLIED WARRANTY OF MERCHANTABILITY OR FITNESS FOR ANY 

PARTICULAR PURPOSE WITH RESPECT TO ANY SUCH INDEX, ANY RELATED OR REFERABLE 

THERETO OR ANY INFORMATION OR DATA INCLUDED IN OR REFERABLE TO ANY SUCH 

INDEX.
12

Appendix B

NYMEX Rulebook Chapter 5 Position Limit Table

(Attached under separate cover)
13

Appendix C

Rule 588.H – Globex Non-Reviewable Ranges

Product Name Globex Code Allowable (No Bust) Range Bid/Ask Reasonability

Coal (API 2) cif ARA 

(Argus/McCloskey) Short 

Dated Option on Calendar 

Futures Strip

MTC 20% of premium up to 1/4 of 

the underlying futures' nonreviewable range with a 

minimum of 1 tick

The greater of the delta times the underlying futures' 

non-reviewable range or 20% of the fair value 

premium up to the underlying futures' non-reviewable 

range with a minimum reasonability of $0.30

Coal (API 4) fob Richards Bay 

(Argus/McCloskey) Short 

Dated Option on Calendar 

Futures Strip

MFR 20% of premium up to 1/4 of 

the underlying futures' nonreviewable range with a 

minimum of 1 tick

The greater of the delta times the underlying futures' 

non-reviewable range or 20% of the fair value 

premium up to the underlying futures' non-reviewable 

range with a minimum reasonability of $0.30
14

Appendix D

Cash Market Overview and Analysis of Deliverable Supply

Coal as a Traded Commodity

Coal is a globally traded commodity. As a naturally occurring substance, coal is found with a range of 

qualities and levels of impurities, and is traded accordingly. There are two primary classifications of coal that 

are traded internationally. Coking coal, or metallurgical coal, is used in the production of steel.

Steam coal, or thermal coal, is used in the production of electrical power. With its higher carbon 

content, and lower levels of impurities, coking coal can be considered the superior class, and typically trades 

at a premium to steam coal. The majority of coal is utilized in power generation. Coal is usually transported 

by truck over short distances. Trains and barges are used for relatively longer distances within the domestic 

markets. Ships are generally used for long distances, including international transportation of coal. Steam 

coal is traded in the international markets mainly through three types of vessels: handysize; panamax; and 

capesize vessels. Seaborne trade in steam coal has increased by an average of around 7% per year over 

the period 1990 to 20101

. The two major thermal coal markets are the Atlantic and Pacific markets. In the 

Atlantic, the main importers are Western European countries, such as the UK, Germany and Spain. In the 

Pacific market, import demand comes mainly from Japan, China, South Korea and Taiwan. India is also a 

major importer from both Atlantic and Pacific suppliers.

South Africa is a natural point of convergence between the two markets. In recent years, a greater 

proportion of South African produced coal has been exported to the Pacific market.

Tables 1, 2 and 3 show the world’s most important coal producing, exporting and importing countries

respectively.

 1 Source: World Coal Association www.worldcoal.org The World Coal Association is a global industry association 

comprising the major international coal producers and stakeholders.
15

Table 1: Top Steam Coal Producers (2013e)

(million tons)

Source: World Coal Association2

Country Production

PR China 3,034

USA 756

India 526

Indonesia 486

South Africa 255

Australia 239

Russia 201

Kazakhstan 103

Colombia 81

Poland 65

Table 2: Top Coal Exporters (2013e)

(million tons)

Source: World Coal Association3

Country Total of which

Steam Coking

Indonesia 426 423 3

Australia 336 182 154

Russia 141 118 22

USA 107 47 60

Colombia 74 73 1

South Africa 72 72 0

Canada 37 4 33

 2 http://www.worldcoal.org/resources/coal-statistics/

3 http://www.worldcoal.org/resources/coal-statistics/
16

Table 3: Top Coal Importers (2013e)

(million tons)

Source: World Coal Association4

Country Total of which

Steam Coking

PR China 327 250 77

Japan 196 142 54

India 180 142 38

South Korea 126 95 31

Chinese Taipei 68 61 7

Germany 51 43 8

UK 50 44 6

North West Europe Coal Market

The API 2 coal index is a price assessment for steam coal in North West Europe. North West 

Europe is an active market for coal, with the ports of Amsterdam, Rotterdam and Antwerp (‘ARA’) being the 

major pricing reference point and Europe’s largest coal import hub. The European Sea Ports Organisation 

collates port throughput data for European ports. Import data for coal at these ports is shown in Table 4.

Table 4: ARA Ports Coal Imports

(thousand metric tons)

Source: European Sea Ports Organisation5

Port 2009 2010 2011 2012 2013

Amsterdam 17,022 17,631 19,042 17,818 20,303

Rotterdam 23,655 23,278 25,708 24,821 30,388

Antwerp 5,719 4,928 5,147 5,611 2,142

 4 http://www.worldcoal.org/resources/coal-statistics/

5 http://www.espo.be/index.php?option=com_content&view=article&id=95&Itemid=90
17

The main participant countries in the ARA region are Germany, UK, Netherlands, France, and 

Belgium. The US Energy Information Administration compiles data for coal production, consumption, 

imports, exports and stocks for these countries, as shown in the tables below. At the date of writing, this 

data is only available up to calendar year 2012.

Table 5: North West Europe Coal Production

(thousand short tons)

Source: US Energy Information Administration6

Country 2007 2008 2009 2010 2011 2012

Belgium 0 0 0 0 0 0

France 0 0 0 0 0 0

Germany 225,526 214,268 202,410 200,955 207,853 217,144

Netherlands 0 0 0 0 0 0

United Kingdom 18,232 19,405 19,152 19,640 19,723 17,953

of which bituminous coal:

Country 2007 2008 2009 2010 2011 2012

Belgium 0 0 0 0 0 0

France 0 0 0 0 0 0

Germany 24,470 18,920 13,090 12,050 11,082 10,527

Netherlands 0 0 0 0 0 0

United Kingdom 16,896 17,986 17,756 18,372 18,430 16,620

 6 http://www.eia.gov/cfapps/ipdbproject/IEDIndex3.cfm?tid=1&pid=7&aid=1
18

Table 6: North West Europe Coal Consumption

(thousand short tons)

Source: US Energy Information Administration7

Country 2007 2008 2009 2010 2011 2012

Belgium 7,330 7,490 5,176 5,488 5,018 4,752

France 22,427 21,122 18,855 20,020 17,192 19,016

Germany 281,443 267,882 247,867 255,958 262,245 269,435

Netherlands 14,858 14,061 13,191 13,248 13,062 14,377

United Kingdom 69,668 64,502 53,274 55,392 54,890 69,807

Table 7: North West Europe Coal Imports

(thousand short tons)

Source: US Energy Information Administration8

Country 2007 2008 2009 2010 2011 2012

Belgium 8,762 9,439 5,685 6,546 6,208 5,687

France 22,134 24,984 18,195 20,786 17,326 18,588

Germany 56,226 54,897 45,915 55,154 56,493 53,406

Netherlands 29,324 23,554 22,070 22,831 27,161 12,531

United Kingdom 48,979 49,160 42,268 29,381 35,884 49,613

 7 http://www.eia.gov/cfapps/ipdbproject/IEDIndex3.cfm?tid=1&pid=1&aid=2 8 http://www.eia.gov/cfapps/ipdbproject/IEDIndex3.cfm?tid=1&pid=1&aid=3
19

Table 8: North West Europe Coal Exports

(thousand short tons)

Source: US Energy Information Administration9

Country 2007 2008 2009 2010 2011 2012

Belgium 1,733 1,455 1,423 1,157 1,136 935

France 1,112 1,300 787 280 162 274

Germany 477 773 500 487 425 664

Netherlands 13,722 8,548 5,365 6,634 13,948 890

United Kingdom 883 864 873 1,321 1,056 1,112

Eurostat, the European Union’s statistic agency, publishes coal import data broken down coal type. 

This data is summarised in Table 9.

Table 9: North West Europe Coal Imports by Type of Coal

(thousand metric tons)

Source: Eurostat10

Product 2008 2009 2010 2011 2012 2013

Anthracite 11,110 7,460 8,906 6,085 5,595 5,052

Coking Coal 36,817 24,547 31,259 29,483 28,716 32,420

Bituminous (ex Coking Coal) 65,219 57,488 47,741 64,121 77,768 86,146

Other Coal 45,767 39,801 36,593 35,806 40,350 47,604

 9 http://www.eia.gov/cfapps/ipdbproject/IEDIndex3.cfm?tid=1&pid=1&aid=4 10 Combined data for Belgium, France, Germany, Netherlands and UK: 

http://epp.eurostat.ec.europa.eu/portal/page/portal/statistics/search_database See ‘Tradtional International Trade 

Database Access’, ‘EU Trade Since 1988 by CN8’
20

South African Coal Market

The API 4 coal index is a price assessment for steam coal exported from South Africa. As shown in 

Tables 1 and 2 above, South Africa is major coal producing and exporting country. US Energy Information 

Administration data for South Africa is shown in the following tables.

Table 10: South African Coal Production

(thousand short tons)

Source: US Energy Information Administration11

Country 2007 2008 2009 2010 2011 2012

South Africa 273,005 278,017 275,015 280,562 278,617 285,832

of which bituminous coal:

Country 2007 2008 2009 2010 2011 2012

South Africa 270,416 275,584 273,176 278,276 275,802 282,921

Table 11: South African Coal Consumption

(thousand short tons)

Source: US Energy Information Administration12

Country 2007 2008 2009 2010 2011 2012

South Africa 201,156 216,854 211,825 209,698 205,405 206,328

 11 http://www.eia.gov/cfapps/ipdbproject/IEDIndex3.cfm?tid=1&pid=7&aid=1 12 http://www.eia.gov/cfapps/ipdbproject/IEDIndex3.cfm?tid=1&pid=1&aid=2
21

Table 12: South African Coal Imports

(thousand short tons)

Source: US Energy Information Administration13

Country 2007 2008 2009 2010 2011 2012

South Africa 1,965 2,651 2,178 2,035 2,635 2,453

Table 13: South African Coal Exports

(thousand short tons)

Source: US Energy Information Administration14

Country 2007 2008 2009 2010 2011 2012

South Africa 73,814 63,814 57,295 73,189 75,847 81,956

The port of Richards Bay is the primary export port for coal in South Africa. Volume of coal exported 

from Richards Bay in recent years is as follows.

Table 14: Richards Bay Coal Exports

(thousand metric tons)

Source: Richards Bay Coal Terminal Proprietary Limited15

2009 2010 2011 2012 2013

Exports 61,136 63,457 65,512 68,341 70,234

 13 http://www.eia.gov/cfapps/ipdbproject/IEDIndex3.cfm?tid=1&pid=1&aid=3 14 http://www.eia.gov/cfapps/ipdbproject/IEDIndex3.cfm?tid=1&pid=1&aid=4 15 http://www.rbct.co.za/default.asp?id=1173
22

Coal Price Assessments

The Exchange currently provides trading and clearing services for futures and option contracts 

based on the API 2 and API 4 coal indices, which are international benchmarks for steam coal. These 

indices are owned and published jointly by Argus Media and IHS McCloskey, part of IHS.

CME Group (the parent company of NYMEX) has license arrangements in place to reference these 

indices for this purpose. Further details on these indices follow.

Each of the two indices is an average of coal price assessments published by Argus Media (“Argus”) 

and IHS McCloskey. The API 2 price assessment is the average of the Argus cif ARA price assessment and 

the IHS McCloskey North West European steam coal marker16. The API 4 price assessment is the average 

of the Argus fob Richards Bay price assessment and the IHS McCloskey fob Richards Bay marker17. Since 

January 2010, each of these contributor prices, and the two indices, are published daily. A weekly price is 

also published each Friday, which represents the average of the daily prices published during the week. The 

derivatives market convention is to transact calendar month contracts where the floating price reference is 

the average of weekly prices published during the month, rather than the average of daily prices published 

during the month.

Argus Media is a leading provider of price assessments, business intelligence and market data on 

the global coal, electricity, oil, gas, emissions and transportation industries. It is headquartered in London, 

and has offices in Houston, New York, Washington, Dubai, Singapore, Tokyo, Beijing, Moscow, Astana, Kiev 

and other key centers of the energy industry. Argus was founded in 1970 and is a privately held UK 

registered company18.

 16 See http://live.en.argusmedia.com/Methodology-and-Reference/Key-Prices/API-2 17 See http://live.en.argusmedia.com/Methodology-and-Reference/Key-Prices/API-4 18 See http://www.argusmedia.com/coal
23

Argus’ methodology for producing coal prices is available online at 

http://www.argusmedia.com/~/media/Files/PDFs/Meth/argus_coal_dailyint.ashx. Both the Argus cif ARA and 

fob Richards Bay prices are determined through a structure based on 50% on deals reported to Argus and 

50% on a survey of active market participants. Where no deals are reported to Argus on a given day, the 

assessment will be based 50% on bids and offers reported to Argus and 50% on the market survey. 

IHS McCloskey is a leading source of news and analysis on the international coal industry. It is one 

of the major pricing services that are used in the OTC market for pricing swap contracts, and the 

methodology utilized by IHS McCloskey is well-known in the global coal industry19. The McCloskey Group 

was founded in the UK in 1987, and was acquired by IHS Inc. in 200720.

IHS McCloskey’s methodology for assessing coal prices can be found at 

http://cr.mccloskeycoal.com/hybrid.asp?typeCode=28&pubCode=7&navcode=418. Both the North West 

Europe Steam Coal Marker and the Richards Bay FOB Marker are published daily. The price assessments 

are combination of price information on deals done received by IHS McCloskey, and price information 

received through a survey of active market participants. 

 19 See http://www.mccloskeycoal.com/ 20 http://press.ihs.com/press-release/corporate-financial/ihs-acquires-mccloskey-group-leading-coal-markets-researchfirm
24

Analysis of Deliverable Supply

The Exchange is planning to launch two new options contracts. For the purposes of assessing 

position size, positions in these new contracts will be aggregated into positions for underlying futures 

contract, i.e. the Coal (API2) CIF ARA (ARGUS-McCloskey) Futures (commodity code MTF, NYMEX rule 

chapter 926), and the Coal (API4) FOB Richards Bay (ARGUS-McCloskey) Futures (commodity code MFF, 

NYMEX rule chapter 928).

The API 2 coal price assessment is for steam coal available in the North West Europe region. The 

Exchange’s analysis of deliverable supply is based on the production and imports amounts reported by EIA. 

Table 5 above shows that production of bituminous coal in the region was on average 29.0 million short tons 

per annum for the period 2010-2012. One short ton is the equivalent of 0.9072 metric tons, therefore this 

production figure is the equivalent of 26.3 million metric tons.

Table 7 above shows that North West Europe coal imports were on average 139.2 million short tons 

per annum. This figure represents all types of coal. The data in Table 9 shows that of this amount steam 

coal – represented as ‘bituminous (ex coking coal)’ and ‘other coal’ in the table – is 73.3% of all coal during 

the period 2010-2012 and 76.6% during the period 2011-2013. Steam coal imports are therefore 102.1 

million short tons, which is the equivalent of 92.6 million metric tons per annum.

The deliverable supply can therefore be assessed as the combination of production and import 

volumes, which is 118.9 million metric tons per annum for the period 2010-2012. This is the equivalent of 

9.91 million metric tons per calendar month. The contract size of the Coal (API2) CIF ARA (ARGUSMcCloskey) Futures contract is 1,000 metric tons. The spot month position limit is being set at 2,000 lots, 

the equivalent of 2.0 million metric tons per calendar month, which is 20.2% of the deliverable supply.

The API 4 coal price assessment is for steam coal exported from South Africa. The Exchange’s 

analysis of deliverable supply is based on the South African production amounts reported by EIA. Whilst 

South Africa has a substantial internal consumption of steam coal, there is also a substantial export market, 

and all domestic supply can be considered available to be deliverable into an export contract. Table 10 

above shows that production of bituminous coal in South Africa was on average 279.0 million short tons per 
25

annum for the period 2010-2013. One short ton is the equivalent of 0.9072 metric tons, therefore this 

production figure is the equivalent of 253.1 million metric tons.

Given the relatively large domestic supply for coal, it is anticipated that South African imports are for 

specific purposes, and therefore unlikely to be available for re-export. The deliverable supply can therefore 

be assessed as the production volumes, which is 253.1 million metric tons per annum for the period 2010-

2012. This is the equivalent of 21.1 million metric tons per calendar month. The contract size of the Coal 

(API4) FOB Richards Bay (ARGUS-McCloskey) Futures contract is 1,000 metric tons. The spot month 

position limit is being set at 2,500 lots, the equivalent of 2.5 million metric tons per calendar month, which is 

11.8% of the deliverable supply.