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Enron Mail |
November 29, 2001
Notice No. 01-406 TO: NYMEX DIVISION MEMBERS AND MEMBER FIRMS NYMEX DIVISION CLEARING MEMBERS FROM: J. Robert Collins, Jr., President SUBJECT: EXCHANGE TO INTRODUCE HENRY HUB SWAPS; LARGE ORDER EXECUTION AND EXTENDED MONTHS IN NATURAL GAS FUTURES AND OPTIONS ____________________________________________________________________________ _____ The New York Mercantile Exchange, Inc., today announced an expanded slate of natural gas products and services that it plans to introduce on an expedited basis, including an electronically traded, cleared Henry Hub swaps contract for the December 3 trading session, which begins with the NYMEX ACCESS session on Sunday night, December 2; listings of additional natural gas futures contracts as far as six years out beginning with the NYMEX ACCESS session tonight; extended natural gas options contracts beginning with the Monday open outcry session; and large order execution (LOX) in the first two months of the natural gas futures contract also beginning tomorrow. The contract specifications for the Henry Hub swaps contract will closely parallel those of the Henry Hub futures contract other than it will be financially settled, based on the final settlement price of the Henry Hub futures contract. The trading symbol will be NN. Trading will begin at 7 PM Sunday night, with a pre-opening session beginning at 3 PM. The Exchange currently lists the natural gas futures contract for 36 consecutive months and will list an additional 36 consecutive months beginning tomorrow. The Exchange currently lists 12 consecutive months of natural gas options and eight additional quarterly contracts on a March/June/September/December cycle, and, on Monday, will add 12 additional quarterly contracts on the same cycle. The Henry Hub swaps contract will be available for the closest 72 consecutive months. LOX will be permitted throughout the open outcry sessions, except during the closing range. Under the new procedures, orders for a minimum of 250 contracts and a maximum of 5,000 contracts will be permitted outside of the bid/ask spread for smaller trades, as long as the trade is within the session's maximum price fluctuation limits. Floor traders wishing to participate in a LOX market on behalf of a customer or themselves must verbally submit a request for quote (RFQ) to an Exchange employee, who will act as the LOX book holder, stipulating the delivery month and number of contracts involved. The book holder will only recognize initial responses that are for the full amount of the RFQ. Once a response to the RFQ is formally recognized, the requesting member has 30 seconds to react to the market. There will be a $2.50 per contract charge for any RFQ that receives a responding quote. If the RFQ results in a trade, the fee will be reduced to $1.50 per contract. Members trading for their own accounts may participate in a trade subsequent to the initial response, but the member who first responded with the best bid or offer for the large order will never receive less than a 50% allocation of a completed trade. In addition to formally recognizing the participants involved in a LOX order, the book holder will be responsible for enforcing time limits, maintaining records, and ensuring that trades with multiple responding participants are allocated to the provisions in the rules.
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