(01-190) Changes to Audit Trail Summary Fine Structure-NYMEX & ,
 Notice to Members No. 01-190
June 7, 2001

REMINDER =01) THIRD NOTICE

To:
All NYMEX Division Members
All COMEX Division Members

From:
Neal Wolkoff, Executive Vice President

Re:
Changes to Audit Trail Summary Fine Structure-NYMEX & COMEX Divisions


Modification of =01&Clear-out Period=018

The Board of Directors has approved modifications to the fine structure for=
=20
one-minute trade time submission for both NYMEX and COMEX Divisions. =20
Presently members falling below the 80% timely submission standard are issu=
ed=20
escalating warning letters and fines unless and until they clear out their=
=20
record by being in compliance for six consecutive months.  After six months=
,=20
the member returns to a =01&warning letter=018 level.  Effective immediatel=
y, this=20
=01&clear-out period=018 is reduced from six months to four months.  One-mi=
nute=20
trade timing statistics for the month ending April 30, 2001 will reflect th=
is=20
modification.


Implementation of One-Minute Trade-Time Classes

The Board also accepted the recommendation of the Compliance Review Committ=
ee=20
and Floor Committee to adopt a training program for members facing one-minu=
te=20
trade time fines on the NYMEX Division.  The purpose of the program is to=
=20
improve Exchange trade submission timing through member education by=20
identifying individual issues, tailoring individual solutions and statistic=
al=20
follow-up.  Training will be conducted on Thursday, June 14, Tuesday, July=
=20
10, and Wednesday, August 15, 2001 by a team comprised of Committee Members=
=20
and Compliance Staff with the assistance of the Training and Education=20
Committee.  You may sign up for these classes at the Corrections Windows on=
=20
the 3rd and 5th floors, or by contacting Lois S. Shapiro, Associate=20
Compliance Counsel, at (212) 299-2853.  The June 14, 2001 class will be hel=
d=20
in the Seminar Room on the 10th floor at 3:45 p.m.  Plan to stay until 6:00=
=20
p.m.  Credit will not be given to anyone who does not attend the entire cla=
ss.

As incentive, any member attending any one class will be allowed to =01&do =
over=018=20
up to two subsequent months in which their trade time rates are between 70%=
=20
and 79%.  The member will still have to complete four violation-free months=
=20
before his record is =01&cleared out=018 but he may take up to six months t=
o do=20
so.  Members may take one class per year.

Audit Trail Classes

? Purpose:   to improve pit card submission statistics Exchange-wide by=20
reducing the number of individual members falling below the 80% standard fo=
r=20
timely pit card submission and to facilitate their return to a =01&warning=
=20
letter=018 level.

? Members who have received a warning letter or a fine for pit card=20
violations may:

_ Attend an audit trail class, to be offered on June 14, July10, and August=
=20
15, 2001, with future dates to be determined by the Floor=20
Committee/Compliance Review Committee.  The class will be an intensive=20
discussion of pit card problems and pitfalls.  Materials will focus on how=
=20
the audit trail works and successful strategies for achieving a passing=20
percentage.  Members will be required to analyze their own trading style in=
=20
light of the material presented and pinpoint areas in which they need to=20
improve.  Members will also be required to outline a plan for raising their=
=20
pit card performance rates.  Each plan will be discussed with the group and=
=20
members will receive feedback from Floor Committee and Compliance Review=20
Committee Members, and Compliance and Floor Department Staff.  Members=20
attending classes are strongly encouraged to bring their clerks with them!

_ Upon completion of the class, members will be allowed to =01&do over=018 =
up to=20
two subse-quent months in which their timely submission rates fall between=
=20
70% and 79%.  No fine or warning letter will be issued for a =01&do over=01=
8 month,=20
but the month will not count as a passing month.  A member who falls below=
=20
70% will receive a fine or warning letter.

_ The benefit to the member will be that the month that would have counted =
as=20
a failing month will not count at all, as long as the member achieved at=20
least a 70% rate.  Members still need four problem-free months to return to=
 a=20
warning letter stage.  A member who has been problem-free for 3 months woul=
d=20
benefit by =01&doing over=018 a fourth (and possibly a fifth) failing month=
, thus=20
having the opportunity to return to the warning letter stage despite=20
intervening failing months.  A member who falls below 70% before achieving=
=20
four problem-free months will receive a fine or a warning letter, as=20
appropriate.  The member can still use a second =01&do over=018 month as lo=
ng as he=20
meets all the above criteria.

_ Staff will follow up with members attending the classes.  Members will=20
receive a breakdown of their most recent audit trail fine.  They will also =
be=20
invited to discuss their percentages with staff on an individual basis. =20
Further, staff will supply daily or weekly statistics to any member by e-ma=
il=20
or telephone upon request.

_ Members are eligible for only one class per year.  A member must take a=
=20
class to take advantage of the benefits listed herein.  Classes will be=20
offered on June 14, July 10 and August 15, 2001, and the program will apply=
=20
to the next full month of audit trail statistics.  The Compliance Review=20
Committee and the Floor Committee will evaluate the results of this program=
=20
before deciding whether to extend this program into 2002.




Incorporation of Spreads into One-Minute
Trade Time =01&Pit Card=018 Statistics for NYMEX Division

Present one-minute trade time =01&pit card=018 statistics do not include sp=
read=20
times.  During the most recent NYMEX Rule Enforcement Review--the CFTC audi=
t=20
of the Exchange=01,s Compliance programs and procedures--the CFTC recommend=
ed=20
that the NYMEX Division incorporate spread trades into the one-minute time=
=20
statistics.  The CFTC has made this recommendation in the past and the=20
Exchange has committed to respond to it. The COMEX Division one-minute trad=
e=20
time statistics already include spreads.

NYMEX Division Members should note that intra-commodity spread trades will =
be=20
incorporated into pit card one-minute trade time accuracy rates after a=20
=01&phase in=018 process of approximately 90 days.  In order to avoid subst=
andard=20
percentages once spreads are incorporated, members must make sure that thei=
r=20
spread prints are price reported in order to ensure that the Price Change=
=20
Register for spreads is accurate.  If a spread print is not reported, you=
=20
will not be credited with timely submission of pit cards, even if you throw=
=20
the trade into the pit in a timely manner.

Pit card statistics for outright trades are presently posted on the NYMEX=
=20
floor on a weekly basis.  Compliance Staff will continue to post statistics=
=20
for outright trades and will additionally post the statistics for spread=20
trades.  These spread trade statistics are for information only so that you=
=20
can assess your pit card submission rate in advance of incorporation of=20
spreads in the one-minute trade time submission percentages.  For informati=
on=20
purposes, the seller of the spread is considered to be the party who sells=
=20
the premium month.  In the case where the spread trades flat, the seller is=
=20
the party who sells the nearby month.

If you have any questions about this information, please call Nancy Minett,=
=20
Compliance Counsel, at (212) 299-2940, or Thomas LaSala, Vice President=20
Compliance, at (212) 299-2897.



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