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Silver has attracted man's interest for thousands of years. In ancient times, silver deposits were plentiful on or near the earth's surface. Relics of ancient civilizations, include jewelry, religious artifacts, and food vessels formed from the durable, malleable metal. In 1792, silver assumed a key role in the United States monetary system when Congress based the currency on the silver dollar, and its fixed relationship to gold. Silver was used for the nation's coinage until its use was discontinued in 1965. At the turn of the century, an even more important economic function was emerging for silver, that of an industrial raw material. Today, silver is sought as a valuable and practical industrial commodity, and as an appealing investment. The largest industrial users of silver are the photographic, jewelry, and electronic industries.
Newly mined metal provides most of the needed supply, and Mexico, the United States, and Peru are the primary producers. Secondary silver sources include coin melt, scrap recovery, and dishoarding from countries where export is restricted. Secondary sources are particularly price sensitive. Mining companies, fabricators of finished products, and users of silver-content industrial materials can use the COMEX Division silver futures and options contracts to manage their price risk. As a precious metal, silver also plays a role in investment portfolios.
Contract Specifications
Trading Unit
Futures: 5,000 troy ounces.
Options: One COMEX Division silver futures contract.
Trading Hours
Futures and Options: Open outcry trading is conducted from 8:25 AM until 1:25 PM Eastern Time
Electronic trading is conducted via the CME Globex® trading platform from 6:00 PM Sundays through 5:15 PM Fridays, Eastern Time, with a 45-minute break each day between 5:15 PM and 6:00 PM.
Trading Months
Futures: Trading is conducted for delivery during the current calendar month; the next two calendar months; any January, March, May, and September falling within a 23-month period; and any July and December falling within a 60-month period beginning with the current month.
Options: The nearest five of the following contract months: March, May, July, September, and December. Additional contract months – January, February, April, June, August, October, and November – will be listed for trading for a period of two months. A 60-month options contract is added from the current calendar month on a July/December cycle.
Minimum Price Fluctuation
Price changes for outright transactions, including EFPs, are in multiples of one-half cent (0.5˘ or $0.005) per troy ounce, equivalent to $25.00 per contract. For straddle or spread transactions, as well as the determination of settlement prices, the price changes are registered in multiples of one-tenth of a cent (0.10˘ or $0.001) per troy ounce, equivalent to $5.00 per contract. A fluctuation of one cent (1˘ or $0.01) is equivalent to $50.00 per contract.
Last Trading Day
Futures: Trading terminates at the close of business on the third to last business day of the maturing delivery month.
Options: Expiration occurs on the fourth business day prior to the underlying futures delivery month. If the expiration day falls on a Friday or immediately prior to an Exchange holiday, expiration will occur on the previous business day.
Exercise of Options
Until one hour after the contract market close, New York time, on any business day for which the options contract is listed for trading. On expiration day, the buyer has until 4:30 PM, New York time, to exercise an options contract.
Option Strike Prices
10˘ ($0.10) and 25˘ ($0.25) per ounce apart for strike prices less than or equal to $8.00; 25˘ ($0.25) per ounce apart for strike prices greater than $8.00 and up to $15.00; and 50˘ ($0.50) per ounce apart for strike prices greater than $15.00 during the first six nearby trading months. For all other months up to two years to expiration, increments are 25˘ ($0.25) per ounce apart for strike prices up to $8.00; 50˘ ($0.50) per ounce apart for strike prices greater than $8.00 and up to $15.00; and $1.00 per ounce apart for strike prices greater than $15.00. For months greater than two years to expiration, strike increments will be $1.00.
Delivery
Silver delivered against the futures contract must bear a serial number and identifying stamp of a refiner's officially listed brand. Delivery must be must be made from a warehouse or vault licensed or designated by the Exchange specifically for the storage of silver.
Delivery Period
The first delivery day is the first business day of the delivery month; the last delivery day is the last business day of the delivery month.Exchange of Futures for, or in Connection with, Physicals (EFP)
The buyer or seller may exchange a futures position for a physical position of equal quantity by submitting a notice to the Exchange. EFPs may be used to either initiate or liquidate a futures position.
Grade and Quality Specifications
In fulfillment of each contract, the seller must deliver 5,000 troy ounces (±6%) of refined silver, assaying not less than .999 fineness, in cast bars weighing 1,000 or 1,100 troy ounces each and bearing a serial number and identifying stamp of a refiner approved and listed by the Exchange. A list of approved refiners and assayers is available from the Exchange upon request.
Margin Requirements
Margins are required for open futures and short options positions.
Trading Symbol
SI
Safeguards and Standards Overview The New York Mercantile Exchange is not only the world's premier market for energy and metals trading, it is also the safest. A sophisticated, intricate system of safeguards virtually guarantees against counterparty credit risk and default, an assurance that is absent from over-the-counter markets and many foreign exchanges.
Because the rules of the Exchange give it broad self-regulatory responsibilities, market participants can trade confident of the financial protection offered by a fully margined clearinghouse.
This self-regulatory authority derives from regulations of the Commodity Futures Trading Commission (CFTC) which, in turn, is overseen by the U.S. Congress.
The Exchange maintains absolute neutrality toward the markets because its rules apply to both sides of a transaction. The Exchange does not trade futures or options, does not take positions in the market, and does not advise others on what positions to take. Instead, the Exchange provides a forum where members, on behalf of their customers, their employers, or themselves, can trade the Exchange's standardized contracts in a safe, efficient, and orderly manner.
This section explains how the Exchange's rules and procedures are designed to assure all who use its markets - commercial hedgers and investors alike - of the highest standards of integrity and financial security.
Organization of The Exchange
The Exchange is a Delaware for-profit entity organized as a stock holding company with a subsidiary membership company. Equity rights and trading rights are joined and cannot be separated without a vote of the shareholders. Following the 1994 merger with the Commodity Exchange, Inc., trading is conducted through two divisions, the NYMEX Division and the COMEX Division.
The NYMEX Division consists of 816 seats held by approximately 600 individual members who can trade energy and platinum group metals futures and options and have proprietary electronic trading rights for all COMEX Division contracts. The COMEX Division is composed of 772 seats held by approximately 615 individuals, who can trade futures and options on gold, silver, copper, and aluminum, as well as the NYMEX Division platinum group metals contracts.
Members of the Exchange include approximately 40 clearing firms and 110 non-clearing firms. The Exchange is owned by its shareholders and is governed by an elected board of directors who set policy and establish the future direction and scope of Exchange activities. Members need to be approved by the board and must meet strict standards for business integrity and financial solvency. These standards are even higher for clearing members. They include rigidly enforced capitalization requirements which the Exchange monitors on a daily basis.
Regulation of Market Participants
Among the more important Exchange rules and regulations are those governing position and price limits, margin requirements, and delivery procedures. These rules and regulations, which allow the Exchange to maintain fair and orderly markets, are vital to the smooth operation of the Exchange. Enforcement rests with the Exchange compliance department, which is divided into three groups: trade, market, and financial surveillance and risk management. Trade surveillance focuses on the trading activity of Exchange members and member firms. Market surveillance reviews large trader data and surveys activity in the various physical markets underlying the futures contracts. Financial surveillance and risk management monitors the fiscal suitability of participants in the Exchange markets and conducts periodic audits of certain member firms.
Commodity Futures Options Trading
The risk of loss exists in futures and options trading.
Past performance is not necessarily indicative of future results.
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