Message-ID: <23109182.1075858943021.JavaMail.evans@thyme> Date: Mon, 22 Oct 2001 07:20:53 -0700 (PDT) From: marketing@nymex.com To: marketing@nymex.com Subject: (01-350) Copper Options Expiration Operational Procedures Mime-Version: 1.0 Content-Type: text/plain; charset=us-ascii Content-Transfer-Encoding: 7bit X-From: Exchange Information @ENRON X-To: Exchange Information X-cc: X-bcc: X-Folder: \TJONES (Non-Privileged)\Jones, Tana\Deleted Items X-Origin: Jones-T X-FileName: TJONES (Non-Privileged).pst > Notice No. 01-350 > October 22, 2001 > > > > TO: All COMEX Division Members/Member Firms > All COMEX Division Clearing Members > All COMEX Division Floor Traders > All COMEX Division Operations Managers > > FROM: Michael Campanelli, Vice President > Floor Operations / COMEX Division > > RE: Options Expiration Operational Procedures for the Trading > Floor and Clearing Members - Shortened Hours > __________________________________________________________________________ > ____ > > The expiration date for the November 2001 options contract for Copper (HX > X1) is Friday, October 26, 2001. > > GENERAL OPERATIONAL PROCEDURES > > All Clearing Members and Qualified Floor Traders that carried an options > position as of the close of business day prior to the expiration day, or > engaged in trading activity on Expiration Day in the expiring options > contract will be required to have a knowledgeable, duly authorized on-line > trade entry ("OLTE") system trained representative available until > released by the Exchange staff. All adjustments and/or corrections, must > be accompanied by relevant supporting documentation prior to being > incorporated into expiration processing, in essence making the expiration > processing an extension of the afternoon trade resolution procedures. > > Exchange Clearing (299-2110) and Trade Processing (299-2465 and 299-2044) > personnel will be available to assist with the processing of notices of > Exercise and Abandonment, position transfers, trade corrections and other > questions or problems you may have. > > Failure by any Clearing Member or qualified Floor Trader to comply with > procedures as outlined herein may result in severe disciplinary action by > the Exchange and potential financial liability to customers or members for > failure to exercise diligence in the processing of information. > > TRADING FLOOR OPERATIONAL PROCEDURES > > > The following schedule of operational procedures is based on shortened > trading hours as described in Notice to Members # 01-333 > (http://www.nymex.com/refernce/notices/2001/ntm_333.htm) > > Trading in the November 2001 Copper Options Contract will cease at 1:00 > P.M. on October 26, 2001. All Brokers and Traders must inform their > Clearing Members of their intentions to exercise or abandon such Options > by 3:00 P.M. > > On Friday, October 26, 2001, all Brokers and Clearing Members must have a > duly authorized, On-Line Trade Entry ("OLTE") system trained > representative available until such time as the Exchange deems necessary. > > NOTE: After 3:30 P.M. all expiring option trade data must be inputted on > special "OLTE" terminals located in the Trade Processing Room. Any other > means of submission will be rejected by the Exchange. Members will be > able to submit all other trade data until 4:00 P.M. > > After the Unmatched Trade Reports and the Preliminary Spot Month Matched > Trade Reports are displayed, Clearing Member representatives will be able > to pick up their Preliminary Clearing reports at the Clearing Department. > > A final review of all submissions will be made. The Supervisor of the > Trade Processing Room will detain only those Clearing Members and/or > Broker representatives involved. All final corrections will be made at > this time and upon determination of the Supervisor that all option > processing is complete, all representatives will be released. > > Exchange Reports based on Friday's submissions and processing will be > available on Monday morning October 29, 2001. > > In the event that you have any questions regarding these trading floor > procedures please contact Michael Campanelli at (212) 299-2072 or David > Sherman at (212) 299-2061. > > CLEARING DEPARTMENT OPERATIONAL PROCEDURES > > 1. OPEN POSITION CONFIRMATION ("OPC") - The OPC should reflect as > accurately as possible all futures and options gross positions as of > close-of business on the business day prior to expiration. Review the > estimated current gross positions as shown and make appropriate > adjustments. The OPC must be submitted not later than 9:00 A.M. > > 2. OPTIONS EXERCISE/ABANDONMENT REQUESTS FORM ("E/A") - An expiring > option with a strike price in-the-money by one tick or more will be > subject to automatic exercise unless an Option Abandonment Request form is > submitted advising that a Clearing Member ("CM") elects to abandon some or > all of its position in that strike price (i.e., for the option series). > All other options series in the expiring month will be subject to > automatic abandonment unless an Option Exercise Request form is submitted. > When submitting an E/A form, please note the following: > > (a) An E/A form must be submitted not later than 4:00 PM. > (b) Do not submit an Exercise form for positions in strike prices which > are subject to automatic > Exercise nor submit an Abandonment form for positions in strike > prices which are subject to automatic abandonment. > (c) If a CM wishes to submit an E/A form to abandon a position in a > strike price subject to automatic exercise or wishes to exercise a > position in a strike price which is out of the money, it is necessary to > notify Clearing by telephone of such anticipated action. The CM must have > an officer available to confirm such intention. > (d) CMs may secure from Clearing a time-stamped receipt of the CM copy > to assure submission of the CM's E/A forms. > > 3. OPTION POSITION REDUCTION REQUEST FORM ("OPRR") - As a general rule, > purchases and sales of option contracts are presumed to be new business. > If some or all of your purchases and sales are in fact undertaken for > position liquidation purposes, OPRR forms may be submitted on the day of > expiration and will be used in conjunction with trade data to reduce your > projected position in an expiring contract. OPRR requests in excess of > actual traded volume will be rejected. Exception: Cabinet trades and > cancel correction trades will automatically liquidate existing positions, > therefore do not submit an OPRR form for cabinet or cancel correction > trades. > The OPRR form must be submitted not later than 4:00 PM. > > 4. HOUSE/CUSTOMER POSITION TRANSFER REQUEST FORM ("H/C") - H/C forms > may be used only to transfer previously cleared contracts between a CM's > house and customer accounts. Problem trades (those which have not cleared > prior to expiration day) must be corrected using COMEX's on-line trade > entry system under the direct supervision of the Trade Audits Department > of COMEX ("Trade Audits"). The H/C form must be submitted not later than > 2:30 PM. > > 5. EX-PIT POSITION TRANSFER REQUEST FORM ("Ex-Pit") - Ex Pit forms may > be used only to transfer previously cleared contracts between CMs. > Problem trades (those which have not cleared prior to expiration day) must > be corrected on the on-line trade entry system under the direct > supervision of Trade Audits. The Ex-Pit form must be submitted not later > than 2:30 PM. > > ***** > A) At approximately 3:15 PM, two PRELIMINARY reports of the expiration > process will be available for distribution at the NYMEX Clearing > Department: > 1. OPTION EXPIRATION REPORT AND CONFIRMATION - The purpose of this > report is to project the CM's present position going into the expiration > based upon the transactions which have already been submitted to Clearing. > CMs should review and modify their adjusted gross positions as of > close-of-business on the business day prior to expiration. Further > adjustments may be submitted not later than 4:00 PM. The projected ending > gross positions will reflect transactions accepted or rejected for > clearance on expiration night, inclusive of Ex-Pit, H/C and OPRR > transactions which have been submitted to Clearing prior to 2:30 PM, and > trade information submitted to COMEX prior to 2:45 PM. Normally, this > report will also reflect manually submitted Exercise and Abandonment > instructions, the projected number of exercises and maximum potential > assignments for each strike price, the type of exercise (manual or > automatic), whether the strike is In, At or Out of the money, and the > exercise value associated therewith based on settlement prices established > by COMEX on the day of expiration. > > 2. TRANSACTION LISTING - This listing will include in detail all > expiring option trades submitted to COMEX prior to 2:45 PM on expiration > day, and all H/C, ExPit, OPRR and E/A transactions submitted to Clearing > Prior to 2:30 PM. > > Please note: Trade information reflected on the option expiration report > and transaction listing are trades submitted only. To inquire whether > trades have matched, each CM must review the trade reports provided by > COMEX's On-Line Trade Entry ("OLTE") system. > > B) At approximately 4:30 PM, FINAL reports of the expiration process, > including all submissions to Clearing and trade information submitted to > COMEX made by 4:00 PM, will be available for distribution at the NYMEX > Clearing Department. > > C) At 4:45 PM, Preliminary In The Money Abandonment and Out Of The > Money Exercise information will be announced on Fast Facts. > > D) At Approximately 6:30 PM, a Final Notice of Exercise/Assignments > will be available in each CM's lockbox located at the NYMEX Clearing > Department. Each CM which has exercised or been assigned one or more > options will receive a separate statement showing exercises and/or > assignments for each option series. Please check this statement > carefully. Although long options positions in-the-money by one tick or > more will be automatically exercised, not all short option positions will > be assigned if there are any options manually abandoned at such strike > prices. Please note that there also may be some at or out-of-the money > options being exercised. > > E) At approximately 8:00 PM, the final set of clearing sheets will be > available in each CM's lockbox located at the NYMEX Clearing Department. > > It is strongly recommended that each CM have a representative(s) that is > properly trained to handle the option expiration process available > beginning at 3:15 PM and who will receive the CM's reports at the specific > times. It is solely the responsibility of the CM to review these reports > and to notify the Clearing staff immediately of any discrepancies. > > To obtain the exact time of the availability for each report, clearing > members should call (212) 301-4871, access code 701. The announcement > time will occur 1/2 hour prior to availability. > > Attached please find a Clearing Member Procedure Summary for ease of > reference. Please contact Anthony DiBenedetto at (212) 299-2152 or John > Ramos at (212) 299-2142 if you have any questions. > > <> - OPTIEXPI(ShortndSchdl).xls