The program will be open to any market participant who executes transactions through the trading floor where the monthly PJM electricity futures contract trades via open outcry during the day. The contract is also traded on NYMEX ClearPortsm after hours as well as during the delivery month when it is traded as a balance–of–month contract. Off–exchange transactions in the contract can be submitted solely for clearing through NYMEX ClearPortsm.
Market–makers will be required to maintain a presence in the NYMEX Division electricity trading ring, as well as a minimum daily average position of 100 lots of open interest across at least five of the first 12 months. At least 80% of the PJM monthly electricity contracts traded by the market–makers must be executed in the trading ring each quarter. The market–maker will be compensated with credits toward Exchange fees that are good for the following three quarters.
During quarters when the volume averages less than 4,000 contracts per day, market-makers will receive a $5.40 credit for each contract they trade on the floor themselves and a $2.70 credit for each contract traded on the floor by a broker on their behalf. In quarters when the average daily volume exceeds an average of 4,000 contracts per day, market–makers will receive a credit of $3.60 for each contract they trade on the floor and a $1.80 credit for each contract another broker trades on the floor on their behalf.
Market–makers who aren't members will also receive member rates on margins on positions in the contract or spread against a position in the contract.
The program will run through at least December 2006 and the Exchange will provide at least six months notice prior to terminating after that date.
There is a $250 application fee and clearing member approval is required for eligibility. Applications are available at www.nymex.com. For more information, visit the Exchange website or e–mail exchangeinfo@nymex.com.
