Notice # 01-175
May 23, 2001

TO:
All NYMEX and COMEX Members and Member Firms

FROM:
Neal L. Wolkoff, Executive Vice President

RE:
Implementation of New Specialist Market Maker for Aluminum Futures by Koch

===========================================================

The Exchange has executed an agreement with Koch Metals Division (&Koch8), a 
division of Koch Carbon, Inc., to serve as the new Specialist Market Maker 
(&SMM8) for Aluminum Futures. The new SMM program with Koch in Aluminum will 
begin next week on Tuesday, May 29, 2001.  Please note that the terms of this 
new SMM program differ from the old SMM program with AIG:

! Unlike the prior SMM program, Koch will not have any responsibilities 
regarding maintaining a limit order book or otherwise executing customer 
orders.

! Instead, during the RTH session, Koch must maintain an orderly two-sided 
market consisting of a current bid and offer quote for Koch,s proprietary 
account on a RFQ basis as provided below.

Trading up to Last Trading Day of Month Preceding Current Delivery Month

! Under normal market conditions, Koch must make a two-sided market for:

(a) a minimum of  25 contracts at a maximum bid/ask spread of 20 points for 
the first 4 listed trading months;

(b) any consecutive four-month calendar strip during the first 12 listed 
contract months for 10 contracts per month at a maximum bid/ask spread of 25 
points; and

(c) a minimum of 50 spread contracts at a maximum bid/ask spread of 20 points 
for any and all inter-month spreads involving the first 12 listed trading 
months.

! In abnormal market conditions (as reasonably determined by Koch in good 
faith) Koch must make a two-sided market for the quantities listed above but 
at a bid/ask spread as determined by Koch in good faith.

Trading Between First Notice Day and Last Trading Day of Current Delivery 
Month

! During this period, Koch will not be required to make quotes but instead 
using reasonable discretion must make efforts under normal conditions to 
provide quotes.

SMM Disclosure Statement

! Under the prior SMM program, which required the SMM to maintain a limit 
order book of customer orders, Member Firms were required to distribute a 
special SMM Disclosure Statement to a customer before that customer could 
trade in an Exchange contract that had been designated with a SMM facility, 
i.e., Aluminum.

! By contrast, because Koch as the new SMM will not be handling a limit order 
book, the SMM Disclosure Statement will no longer be relevant, and the 
Exchange is discontinuing use of this disclosure statement for the new 
Aluminum SMM program with Koch.

If you have any questions concerning this new SMM program, please contact Al 
Getz, Director of Metals Research, Research Department, at (212) 299- 2608; 
Richard Strait, Director, Metals Marketing, Marketing Department, at (212) 
299-2335; or Michael Campanelli, Vice President, Floor Department, at (212) 
299-2072.



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