contracts. 60 Information sharing agreements with markets trading securities underlying a
derivative product are an important part of a self-regulatory organization’s ability to monitor for
trading abuses in derivative products. Although an information sharing agreement with the OTC
silver market is not possible, the Commission believes that Amex’s information sharing
agreement with NYMEX (of which COMEX is a division) and Exchange Rules 1203A and
1204A, create the basis for Amex to monitor for fraudulent and manipulative practices in the
trading of the Silver Shares.
The Exchange also represents that it will review firms that have been actively acquiring
or selling Silver Shares. 61 Moreover, Amex Rule 1204A will require that the specialist handling
the Silver Shares provide the Exchange with information relating to its trading in physical silver,
silver futures contracts, options on silver futures, or any other silver derivative. The Commission
believes these reporting and record-keeping requirements will assist the Exchange in identifying
situations potentially susceptible to manipulation. Amex Rule 1204A will also prohibit the
specialist in the Silver Shares from using any material nonpublic information received from any
person associated with a member or employee of such person regarding trading by such person
or employee in physical silver, silver futures contracts, options on silver futures, or any other
silver derivatives (including the Silver Shares). In addition, Amex Rule 1203A will prohibit the
specialist in the Silver Shares from being affiliated with a market maker in physical silver, silver
futures, or options on silver futures unless adequate information barriers are in place and
approved by the Exchange.
See Wolkoff Letter, supra note 7.