FRE 6791s Project

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Semi project about Basel II standards

Semi project about Basel II standards

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  • 1. FRE 6131 Prof: Roy Freedman “ NYMEX” Clearing & Settlement
  • 2. New York Mercantile Exchange “NYMEX”
    • (NYMEX) is the world's largest physical commodity futures exchange, located in New York City.
    • NYMEX & the New York Commodities Exchange (COMEX), which were independent companies but are now merged.
  • 3. Criteria of Futures Contract:
    • 1- Commodity
    • 2- Quantity
    • 3- Quality
    • 4- Month of Delivery
    • 5- Place of Delivery
    • NOTE: NYMEX insures that each contract meets the above criteria.
  • 4. Trading Hours
    • 1- Trading floor: From 9.00 AM to 2.30 PM
    • 2- GLOBEX System:
    • From 6.00 PM to 5.15 PM (next trading day).
    • NOTE: 45 minutes break everyday .
    • 3- Last Trading Day: the third business day prior to the 25th calendar day of the month preceding the delivery month.
  • 5. Trade Reporting System
    • 1- The buy and sell traders fill in the trade data on their trading cards.
    • 2- Within one minute after the trade, the sell trader tosses a sell card into the ring.
    • 3- NYMEX employees time stamp the cards.
    • 4- A runner carries the cards to the chute which sends them down to data entry.
    • 5- Data entry then enters the trades into the trading management system (TMS)
  • 6. Price Trading System
    • 1- When a trade is made, the trader must insure that a price reporter records the month and the price.
    • 2- The price reporters stand in the ring and record the trade data on hand held.
    • 3- the data is transmitted through wireless technology and displayed on the wallboard.
    • 4- the data goes out on the ticker where it is picked up by vendors and transmitted their clients.
  • 7. Clearing House at NYMEX
    • It registers and manages commitments resulting from market transactions.
    • It provides a central counter-party role.
    • Finally, it ensures the integrity of its operations.
    • Also, Clearing at NYMEX is done by NYMEX Clear-Port
  • 8. How Clearing works?
    • All participants execute transactions on NYMEX Clear-Port must open an account with an Exchange clearing firm.
    • When the transactions are submitted, margin are calculated and the transactions are processed by the clearing-house.
    • For margining, NYMEX uses software SPAN (Standard Portfolio Analysis).
  • 9. NYMEX Clear-Port ®
    • Gives market participants unparalleled flexibility to either trade this extensive slate of derivatives through the NYMEX Clear-Port.
    • An open system, which allows trading firms to customize their front-end software to meet their particular trading requirements.
    • All market participants desiring to execute transactions on NYMEX Clear-Port must first establish an account with an exchange clearing memebr firm.
    • Getting started to trade or submit transactions for clearing via NYMEX Clear-Port is easy. Once an account has been established with a clearing member, complete the on-line. Once approved, you'll be able to begin trading immediately .
  • 10. NYMEX Clear-Port ® Clearing
    • Market participants can negotiate their own transactions of the Exchange from a slate of more than 350 energy and metals futures and options contracts and post an exchange of futures for swaps (EFS) or exchange of futures for physicals (EFP) transaction directly to the NYMEX Clear-Port clearing system.
    • When the transactions are submitted, margin requirements are calculated and the transactions are processed by the clearinghouse in the same manner as the Exchange's core futures contracts.
    • NYMEX Clear-Port clearing is available from 6:00 PM Sunday through 5:15 PM Friday, with a 45-minute break between 5:15 PM and 6:00 PM on Mondays through Thursdays.
  • 11. Settlement at NYMEX
    • Cash-market brokers and market participants provide their assessments of market value for the Exchange contracts as of close of regular-trading-hours for the exchange.
    • The Exchange collects additional information that is either directly or indirectly related to its cleared bilateral products from other sources on market prices and values.
    • Exchange staff evaluates all of this information and approves settle prices for the Exchange contracts where there is open-interest. Final settlement will be based on an index of cash market data collected by Argus Media, and Reuters during the trading day.
  • 12. International Petroleum Exchange
    • IPE is Europe's leading energy futures and options exchange.
    • Over $8 billion daily in underlying value is traded on the IPE (at current price).
    • The IPE is a significant institution in the global energy market and has secured a solid reputation.
  • 13. CLEARING AT IPE
    • Under, London Clearing House, formally, LCH. Clear-net provides a key role by providing both a clearing function and a guarantee system for every contract registered through its clearing members.
    • LCH. Clear-net enables Clearing Members to control their own risk without the additional uncertainty of the counter-party risk associated with a mutual agreement.
  • 14. Best Thank 
    • Saud & Moh’d
    • FRE 6131
    • Spring 2008
  • 15. References:
    • www.nymex. com
    • http://www.nymex.com/cpc_overview.aspx
    • http://inductive.net/fe/ 6431 /sampleprojects /nymex
    • http://en.wikipedia.org/wiki/NYMEX
    • Mr Jang and Mr Liao’s Project on NEMEX 2007
    • http://www.lchclearnet.com/
    • previuos project on NYMEX, FRE 6431, Fall 2007
    • http://inductive.net/fe/613/sample-projects/futures-report.pdf