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View Full Version : No LIMIT on Silver for the COMEX



rasputin
18th October 2008, 18:28
Dear Friends,

On Friday I called the CFTC "Washington" office to complain about the drop in silver. My understanding was that the limit down for silver appeared to be $1.50. According to what I read (and it's been hard to find), a halt in trading for at least 5 minutes is suppose to occur if silver went down $1.50

Of course this didn't happen, and I called to inquire about it.

I received a call back today from a Mr. Tom (deleted) at the "New York" CFTC office.

Mr. (DELTED) was at first quite polite. I asked him what the limit down was for silver.

He said: "Well, I don't have it right now in front of me". (He is suppose to be responsible for monitoring the precious metals futures market)

I angrily replied, and raising my voice, basically shouting: "What the hell? This is suppose to be YOUR JOB, how can you not know this."

I continued: "Based on what I can find, limit down is suppose to be $1.50 on the comex , and there is suppose to be a 5 minute halt in trading"

He responded: "That is for the futures contracts, NOT for the spot month."

I said " Well ALL the contracts were down $2.50, and no trading stopped"

(I also threw in a few expletives while shouting)

He replied back with how he doesn't have to take this and hung up on me.

A few minutes later he called back to tell me:

"All the limits were removed a few years ago by unanimous vote."

So, according to Tom (DELETED), there is NO limit on silver (perhaps gold as well). I'm assuming this applies to limit down.


So, I dug into the exchange rule book.

I have found the following cryptic entry in the COMEX exchange rulebook:

http://www.nymex.com/rule_main.aspx?pg=23

116.05 Price Limits and Cessation of Trading in Silver Futures Options
Trades in silver futures options shall not be subject to price limits. Should trading in silver futures cease after reaching the applicable price limit set forth in Rule 112.14, however, trading in silver futures options will halt until trading in silver futures resumes.


I'm not an English scholar, nor am I a contract lawyer, but this "rule" seems to conflict with it's self. Entirely.

And the smoking gun for all this Rule #: 112.14

http://www.nymex.com/rule_main.aspx?pg=20#112.14

It's "DELETED". Not there anymore, GONE.



Additionally, I have found the following entry in the exchange rulebook

http://www.nymex.com/rule_main.aspx?pg=6#6.09

6.09 Maximum Price Variations
The Board may provide, at any time, by Rule or resolution that there shall be no trading during any one business day or trading session day in any commodity for futures delivery in any specified month or months at prices more than a fixed limit above or below the settlement price for the preceding business day. At the discretion of the Board, any limitation provided in this Rule §6.09 may be changed or suspended or temporarily modified from time to time and without prior notice. Trading in options contracts shall not be subject to price fluctuation limitations.


The way I read this, is the exchange can at any moment, freeze the upside of PM's to the previous days closing price.

Rasputin

5-9's
18th October 2008, 19:09
At the discretion of the Board, any limitation provided in this Rule §6.09 may be changed or suspended or temporarily modified from time to time and without prior notice.

And this is why the COMEX will always be an illegitimate & farcical price discovery mechanism. The only rule is than any and all rules can be changed on the fly to influence price in whatever way they want.

Tribal Warrior
18th October 2008, 19:29
With the global market events occuring, I'd say get IT while you can.

research24
18th October 2008, 19:40
This sort of corruption is now so widespread that it is an epidemic. The banking system has collapsed and so likely will everything else. I'd have to say that if you wish to play the game with mega corporations, you have to be aware of the risk that they exist to fleece YOU!

No one should be surprised at anything like the Comex rules unless one is congenitally naive or living under a rock. Wake up people, we are living in a banana republic where the rich make the rules for themselves.