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Legal Regulation Of The Us Crude Oil And Refined Products Stock Market
 
PIIS231243500022053-6-1
DOI10.18572/2410-4390-2018-3-105-108
Publication type Article
Status Published
Authors
Rustam R. Shakerov 
Affiliation: Kutafin Moscow State Law University (MSAL)
Address: Russian Federation, Moscow
Journal nameEnergy law forum
EditionIssue 3
Pages105-108
Abstract

The sources of law governing the crude oil and refined products exchange trading in the USA include various regulatory legal acts, which can be conventionally divided into the following groups: the regulatory legal acts governing the activity of exchanges and clearing organizations; and the regulatory legal acts governing the relations regarding the crude oil and refined products exchange trading. The NYMEX Rulebook is the main document containing the rules of trading on the New York Mercantile Exchange and includes 1395 Chapters with the requirements for the sale of crude oil and refined products. The main requirements for a crude oil and refined products purchase and sale contract contained in the Exchange Rulebook stipulate that such contract must provide for the rights and obligations of the sellers and the buyers. The seller and the buyer can agree the oil delivery under the terms and conditions other than those established by the Exchange Rules, but prior to that the parties must agree with the Exchange the amendments being made to the contract. The Exchange has developed special Regulations containing the requirements for various types of crude oil and refined products, as well as for the procedure for making respective purchase and sale contracts. The given study pays special attention to the legal regulation of monitoring exchange trading in crude oil and refined products.

Keywordsenergy law, legal regulation of exchange trading in crude oil and refined products, US laws, legal treatment of crude oil and refined products as items of exchange trading
Received06.08.2018
Publication date30.09.2018
Number of characters11267
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1 The sources of law governing the crude oil and refined products exchange trading in the USA include various regulatory legal acts, which can be conventionally divided into the following groups:
2 The regulatory legal acts governing the activity of exchanges and clearing organizations;
3 And the regulatory legal acts governing the relations regarding the crude oil and refined products exchange trading.
4 The regulatory legal acts governing the activity of exchanges and clearing organizations in crude oil and refined products trading include the US Commodity Exchange Act [1]. The Act defines and establishes the main requirements for the exchange participants, which include: dealers and brokers; associated person being a swap dealer or a major swap participant; a person who is associated with a swap dealer or major swap participant as a partner, employee, or agent. Thus, it can be represented by any participant of trading having a similar status or performing similar functions (the solicitation or acceptance of swaps; or the supervision of any person engaged in trading).
5 It should be noted that the brokers and dealers engaged in the crude oil and refined products exchange trading shall be registered in accordance with the requirements of the US Securities Exchange Act of 1934.
6 The basic regulation of crude oil and refined products exchange trading in the USA is entrusted to: the New York Mercantile Exchange (NYMEX), which is the platform for crude oil and refined products trading.
7 CME Group, of which the New York Mercantile Exchange is a member. The Group identifies and prevents possible violations of trading rules within all its member organizations (CME, CBOT, NYMEX, and COMEX).
8 The legal regulation by CME Group has for its objective ensuring of an independent surveillance of the policy and programs related to performing the exchanges activity.[2] The Group activity is governed in accordance with the US Commodity Exchange Act.
9 The NYMEX Rulebook is the main document containing the rules of trading on the New York Mercantile Exchange and includes 1395 Chapters [3] with the requirements for the sale of crude oil and refined products.
10 Procedure for the sellers’ and the buyers’ participation in trading
11 One of the main provisions of the Exchange Rulebook is the requirements for the procedure for the sellers’ and the buyers’ participation in trading.
12 To be admitted to trading, a seller or buyer has to become members of the exchange. The candidate for membership shall sign the documents required, pay membership fees, and file the application with the Committee. Various membership categories are stipulated to participate in trading with respective variance of membership fees.
13 All members shall be responsible for ensuring that their employees comply with all exchange trading rules. The Exchange’s Disciplinary Committee may charge a member a fine for its employee having committed a violation. The Exchange may, in its sole discretion, elect to notify a member of an investigation involving the member’s employee.
14 The disciplinary committee of the NYMEX Exchange interviews such employee having violated the rules, and, if the violation is detected, such employee may be dismissed.
15 A participant of crude oil and refined products exchange is prohibited from engaging in activities requiring additional registration under the Commodity Exchange Act. In case of engaging in activities requiring additional registration, exchange participants shall obtain special permission.
16 For the purposes of ensuring security of the exchange operation, its employees may read and retain any electronic messages received or sent by participants to each other within the framework of exchange trading. Participants and their employees admitted to exchange trading shall be notified of the possible access of the exchange to such information.
17 Requirements for the crude oil and refined products purchase and sale contract
18 The main requirements for the crude oil and refined products purchase and sale contract contained in the Exchange Rulebook stipulate that such contract must provide for the rights and obligations of the sellers and the buyers. [4]
19 Placing an order to sell crude or refined products, the seller is entitled to the receipt of an automatic notice of the number assigned by the Clearing House to the short futures contract made on the Exchange with the price and the delivery month specified therein.
20 In its turn, the buyer may submit a notice of purchase at any time prior to expiration of the option. In that case, the Clearing House automatically makes a short futures contract with the buyer on the exchange with the price and the delivery month specified therein.
21 Upon the receipt of the contract notice, the seller shall notify the buyer thereof as soon as practically possible. The buyer shall thoroughly check the correctness of the received details of the transaction made.
22 A contracts price is 1,000 US barrels. Each contract is valued as the contract quantity (1.000) multiplied by the estimated price. The minimal price fluctuation shall be USD 0.01 per barrel. The prices shall be specified in dollars and cents per barrel.

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1. US Commodity Exchange Act. Electronic source: http://legcounsel.house.gov/Comps/COMEX_NEW.pdf 
2. Charter of the Market Regulation Oversight Committee. Electronic source: http://www.cmegroup.com/market-regu-  lation.html
3. NYMEX Rulebook. Electronic source: http://www.cmegroup.com/market-regulation/rulebook.html  -
4. NYMEX Rulebook Requirements for a Purchase and Sale Contract. Electronic source: http://www.cmegroup.com/  content/dam/cmegroup/rulebook/NYMEX/3/300.pdf ssylka privedena na dokument TRADING QUALIFICATIONS AND PRACTICES (perevod ukazannogo istochnika doslovnyjprotivorechie)
5. Crude Oil Contracts Regulation, Exchange Rulebook. Electronic source: http://www.cmegroup.com/content/dam/  cmegroup/rulebook/NYMEX/2/200.pdfssylka privedena na dokument TRADING QUALIFICATIONS AND PRACTICES (perevod ukazannogo istochnika doslovnyjprotivorechie)
6. Charter of the Market Regulation Oversight Committee. Electronic source: http://www.cmegroup.com/market-regu-  lation.html
7. Chapter 6 of CME Group Rulebook. Electronic source: www.cmegroup.com/content/dam/cmegroup/rulebook/ CME/I/6/6.pdf
8. Energy Markets: Issues and Tasks of the Legal Regulation. Monograph Edited by V.V. Romanova, Doctor of Law. Moscow : Yurist Publishing House. 2018. s. 189–205.

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