Notice # 01-168
May 17, 2001

TO:
All NYMEX and COMEX Members and Member Firms

FROM:
Neal L. Wolkoff, Executive Vice President

RE:
Revised Implementation Date for New NYMEX Rule 9.11A (&Give-Up Trades8)

DATE:
May 16, 2001
===========================================================
Previously, in Notice to Members #01-154, the Exchange stated that new NYMEX 
Rule 9.11A
(&Give-Up Trades8) would go into effect on June 1, 2001.  The Exchange is 
revising the implementation timeframe in order to provide Floor Members and 
Member Firms with additional time to obtain necessary records and become 
compliant with the requirements.  Accordingly, please be advised that this 
rule now will go into effect beginning on the trade date of August 1, 2001. 
Further, it is anticipated that a similar rule will be implemented for the 
COMEX Division following final review and approval by the COMEX Governors 
Committee.

! In the absence of an applicable give-up agreement, new Rule 9.11A will 
define the respective responsibilities/obligations to an order of executing 
brokers, customers and Clearing Members.

! The term &executing broker8 as used in Rule 9.11A refers to the registered 
billing entity, Member Firm or Floor Broker to whom the order is transmitted.

! Rule 9.11 will provide that, in the absence of an applicable give-up 
agreement, a Clearing Member may reject a trade only if: (1) the trade 
exceeds trading limits established by the Clearing Member for that customer 
that have been communicated to the executing broker as provided by the rule 
or (2) the trade is an error for which the executing broker is responsible.

! The new rule also places affirmative obligations on executing brokers to 
confirm Clearing Member authorization for an account.  For example, prior to 
an executing broker accepting and executing an initial order for any new 
customer account, such executing broker must confirm with the Clearing Member 
by telephonic, electronic or written means, that:
(a) the customer has a valid account with the Clearing Member;
(b) the account number;
(c) the brokerage rate;
(d) the customer is authorized by the Clearing Member to place orders with 
the executing broker for that account; and
(e) a listing or summary of persons authorized to place orders for that 
account.
Moreover, the executing broker must retain a copy of the authorization or the 
specifics of the telephonic confirmation, which includes: opposite party, 
date, time, and any other relevant information.  The Compliance Department 
will conduct periodic audits of such records, and falsification of such 
information shall be the basis for disciplinary action.

If you have any questions concerning this new rule, please contact Bernard 
Purta, Senior Vice President, Regulatory Affairs and Operations, at (212) 
299- 2380; Thomas LaSala, Vice President, NYMEX Compliance Department, at 
(212) 299-2897; or Arthur McCoy, Vice President, Financial Surveillance 
Section, NYMEX Compliance Department, at (212) 299-2928,

NEW RULE 9.11A (&Give-Up Trades8)

(Entire rule is new.)

Rule 9.11A Give-Up Trades

In the absence of a give-up agreement whose terms and conditions govern the 
responsibilities/obligations of executing brokers, customers and Clearing 
Members, the following rules shall define the respective 
responsibilities/obligations of those parties to an order.  The &executing 
broker8, as used in this rule, is the registered billing entity, Member Firm 
or Floor Broker to whom the order is transmitted.

(A)   Responsibilities/Obligations of Clearing Members

(1). Limits Placed by Clearing Member.   A Clearing Member may, in its 
discretion, place trading limits on the trades it will accept for give-up for 
a customer,s account from an executing broker, provided however, that the 
executing broker receives prior written or electronic notice from the 
Clearing Member of the trading limits on that account.  Notice must be 
received by the executing broker in a timely manner.  A copy of such notice 
shall be retained by the Clearing Member.

(2). Trade Rejection.  A Clearing Member may reject (&DK8) a trade only if:  
(1) the trade exceeds the trading limits established under Section I(A) of 
this rule for that customer and it has been communicated to the executing 
broker as described in Subsection (A); or (2) the trade is an error for which 
the executing broker is responsible.  If a Clearing Member has a basis for 
rejecting a trade, and chooses to do so in accordance with the provisions of 
Rule 2.21(B), it must notify the executing broker promptly.

(3). Billing.  A Clearing Member will pay all floor brokerage fees incurred 
for all transactions executed by the executing broker for the customer and 
subsequently accepted by the Clearing Member by means of the ATOM system.  
Floor brokerage fees will be agreed upon in advance among the Clearing 
Member, customer and the executing broker.

(B) Responsibilities/Obligations of Executing Brokers

(1) Customer Order Placement.  An executing broker will be responsible for
determining that all orders are placed or authorized by the customer.  Once 
an order has been accepted, a broker or the broker,s clerk must:

(a) confirm the terms of the order with the customer;
(b) accurately execute the order according to its terms;
(c) confirm the execution of the order to the customer as soon as 
practicable; and
(d) transmit such executed order to the Clearing Member as soon as 
practicable in accordance with Exchange Rules and procedures.

2. Use of Other Persons.  Unless otherwise agreed in writing, the executing 
broker is allowed to use the services of another broker in connection with 
the broker,s obligations under these rules.  The executing broker remains 
responsible to the customer and Clearing Member under these rules.

3.  Executing Broker Responsibility for Verifying Clearing Member  
Authorization.  Prior to a broker accepting and executing an initial order 
for any new customer account, the executing broker must confirm with the 
Clearing Member by telephonic, electronic or written means, that:
(f) the customer has a valid account with the Clearing Member;
(g) the account number;
(h) the brokerage rate;
(i) the customer is authorized by the Clearing Member to place orders with 
the executing broker for that account; and
(j) a listing or summary of persons authorized to place orders for that 
account.
The executing broker must retain a copy of the authorization or the specifics 
of the telephonic confirmation, which includes: opposite party, date, time, 
and any other relevant information.  The falsification of such information 
shall be the basis for disciplinary action.

4. Rejection of Customer Order.  Where an executing broker has confirmed 
Clearing Member authorization to execute orders on behalf of a customer in 
accordance with this Rule 9.11A, the broker may, in the broker,s discretion, 
reject an order that the customer transmits to the broker for execution.  The 
broker shall promptly notify the customer and the Clearing Member(s) of any 
such rejection.



__________________________________________________
Please click on the link below to indicate you have received this
email.

"http://208.206.41.61/email/email_log.cfm?useremail=sara.shackleton@enron.com&
refdoc=(01-168)"

Note: If you click on the above line and nothing happens, please copy
the text between the quotes, open your internet browser,
paste it into the web site address and press Return.