Market regulation · 15/05/1998

New York Mercantile Exchange Proposed Specialist Market Maker Program

The New York Mercantile Exchange (``NYMEX'' or ``Exchange'') has submitted a proposed new rule and rule amendments that would establish a Specialist Market Maker (``SMM'') program for certain new or low-volume futures contracts. The Exchange would appoint one SMM for each contract market that it determined would benefit from the SMM program. The SMM would be required to maintain a continuous physical presence on the floor of the Exchange throughout the regular trading session of the contract and to maintain a two-sided market in the contract for which he or she had been appointed. The SMM also would be required to maintain a limit order book of member and non-member (i.e., customer) limit orders. In return for these services, the SMM would be paid a contract development fee and receive various priorities with respect to certain transactions executed in the trading ring for the appointed contract. Acting pursuant to the authority delegated by Commission Regulation 140.96, the Division of Trading and Markets (``Division'') has determined to publish the NYMEX proposal for public comment. The Division believes that publication of the proposal is in the public interest and will assist t