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Gasoline is the largest single volume refined product sold in the United States and accounts for almost half of national oil consumption. It is a highly diverse market, with hundreds of wholesale distributors and thousands of retail outlets, making it subject to intense competition and price volatility. The NYMEX Division New York harbor unleaded gasoline futures contract and reformulated gasoline blendstock for oxygen blending (RBOB) futures contract trade in units of 42,000 gallons (1,000 barrels). They are based on delivery at petroleum products terminals in the harbor, the major East Coast trading center for imports and domestic shipments from refineries in the New York harbor area or from the Gulf Coast refining centers. The unleaded gasoline contract specifications conform to those for oxygenated gasoline, required in many areas for controlling emissions that can adversely affect air quality. With the ongoing phaseout of the oxygenate methyl tertiary butyl ether (MTBE) the industry is shifting towards ethanol. RBOB conforms to industry standards for reformulated regular gasoline blendstock for blending with 10% denatured fuel ethanol (92% purity) as listed by the Colonial Pipeline for fungible F grade for sales in New York and New Jersey. RBOB is a wholesale non-oxygentated blendstock traded in the New York Harbor barge market that is ready for the addition of 10% ethanol at the truck rack.
To ensure that the terms and conditions of the gasoline futures contract continue to mirror the cash market, the Exchange maintains close contact with federal and state officials and continues to evaluate changes in the regulations. Along with the futures contracts, options contracts, calendar spread options contracts, crack spread options contracts, and average price options contracts provide a slate of flexible, liquid financial instruments.
Contract Specifications
Trading Unit
Futures: 42,000 U.S. gallons (1,000 barrels)
Options: One NYMEX Division New York harbor gasoline futures contract.
Trading Hours
Futures and Options: Open outcry trading is conducted from 9:00 AM until 2:30 PM Eastern Time
Electronic trading is conducted from 6:00 PM until 5:15 PM via the CME Globex® trading platform, Sunday through Friday. There is a 45-minute break each day between 5:15PM (current trade date) and 6:00 PM (next trade date).
Trading Months
36 consecutive months.
Minimum Price Fluctuation
$0.0001 (0.01˘) per gallon ($4.20 per contract).
Maximum Daily Price Fluctuation
Futures: $0.25 per gallon ($10,500 per contract) for all months. If any contract is traded, bid, or offered at the limit for five minutes, trading is halted for five minutes. When trading resumes, the limit is expanded by $0.25 per gallon in either direction. If another halt were triggered, the market would continue to be expanded by $0.25 per gallon in either direction after each successive five-minute trading halt. There will be no maximum price fluctuation limits during any one trading session.
Last Trading Day
Futures: Trading terminates at the close of business on the last business day of the month preceding the delivery month.
Options: Expiration occurs three business days before the underlying futures contract.
Exercise of Options
By a clearing member to the Exchange clearinghouse not later than 5:30 PM or 45 minutes after the underlying futures settlement price is posted, whichever is later, on any day up to and including the options expiration.
Option Strike Prices
Twenty strike prices in $0.01 (1˘) per gallon increments above and below the at-the-money strike price, and the next 10 strike prices in $0.05 (5˘) increments above the highest and below the lowest existing strike prices for a total of at least 61 strike prices. The at-the-money strike price is the nearest to the previous day's close of the underlying futures contract. Strike price boundaries are adjusted according to the futures price movements.
Delivery
F.O.B. seller's facility in New York harbor ex-shore. All duties, entitlements, taxes, fees, and other charges paid. Requirements for seller's shore facility: capability to deliver into barges. Delivery may also be completed by pipeline, tanker, book transfer, or inter- or intra-facility transfer. Delivery must be made in accordance with applicable federal, state, and local licensing and tax laws. Delivery shall comply with all state laws related to oxygen content.
Delivery Period
Deliveries may only be initiated the day after the fifth business day and must be completed before the last business day of the delivery month.Exchange of Futures for, or in Connection with, Physicals (EFP)
The commercial 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
Generally conforms to industry standards for reformulated regular gasoline blendstock for oxygen blending (RBOB) with 10% denatured fuel ethanol (92% purity) as listed by the Colonial Pipeline for fungible F grade for sales in New York and New Jersey. RBOB is a wholesale non-oxygentated blendstock traded in the New York Harbor barge market that is ready for the addition of 10% ethanol at the truck rack.
Margin Requirements
Margins are required for open futures and short options positions.
Trading Symbol
RB
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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