NYMEX is requesting permission from the CFTC to allow it to carry funds from futures contracts traded on NYMEX Europe in segregated accounts.
London-based NYMEX Europe Limited is a subsidiary of NYMEX Holdings, Inc., and an affiliate of the New York Mercantile Exchange (NYMEX) Inc., the physical commodity futures exchange and energy trading forum.
As part of a global strategy and to meet the express needs of the London oil trading community, NYMEX Europe intends to conduct open outcry trading of Brent crude oil futures and gasoil futures contracts on its trading floor in London upon receipt of regulatory approval.
The contracts will clear through the NYMEX clearinghouse, which mitigates counterparty credit risk. Brent is a light sweet North Sea crude oil that serves as a benchmark grade and widely trades as a differential to the NYMEX Division bellwether light sweet crude oil futures contract, often referred to as West Texas Intermediate (WTI).
Under CFTC Regulation 30.7, NYMEX has to hold customer positions and funds from futures contracts traded on NYMEX Europe in secured amount accounts.
In a letter sent by its lawyers to the CFTC dated 10 August, NYMEX requested that these positions be covered instead under Section 4d of the Commodity Exchange Act and CFTC Regulation 1.20, which facilitate holding customer positions and funds in segregated accounts. This will make it easer for CFTC-registered futures commission merchants (FCMs) to manage their transactions via NYMEX.