As one of the five Designated Contract Markets under the Chicago Mercantile Exchange (CME) Group umbrella, COMEX -- the Commodity Exchange -- along with the New York Mercantile Exchange (NYMEX), offers metals products in a regulated environment where professional traders and the public can gain exposure to profit-making opportunities. While both COMEX and NYMEX deal with precious metals, it is COMEX that carries base metals, whereas NYMEX works with the ferrous markets.
COMEX Participant Rules
If buying or selling futures and options on metals appeals to you, you may be able to participate in what COMEX has to offer, provided you abide by the rules for the products you are trading. In the case of COMEX products, you will be subject to the rules found in the NYMEX Rulebook. You can trade the metals you wish using trading systems provided by CME and access the products through a self-directed account or via a broker. Those who trade for a living can apply for membership in order to obtain discounts on exchange fees over other retail customers. Corporate and clearing memberships are also available.
Reviewing the Products
COMEX publishes contract specifications, performance bond and margin information, as well as a product calendar for each of the metals products it offers. Included in its suite of metal offerings are copper futures and options, and the calendar swaps of each. Swaps are risk management instruments. Silver futures and options are also listed. Gold, in addition to futures, has American and short-term options, as well as Volatility Index (VIX) European options. Silver and gold both have miNY versions, which are half the size of the full contract.
Note that depending on the instrument, settlement may be in either physical or financial form. Trading hours vary depending on the product. Delivery of the actual metal follows a settlement procedure, which is described for each metal product. Additional rules may be applicable.
Regulation and Oversight
The CME Group oversees the activity of COMEX through its Market Regulation Department. The department's objective is to make sure that COMEX follows through on its own self-regulatory duties. When issues arise that could impact the overall efficiency of the marketplace, the department may take action by issuing market regulation advisory notices, conducting investigations and taking disciplinary actions against abusive trading practices and other disruptions to the marketplace.
Other Available Services
In addition to detailed summaries of the products listed, COMEX also publishes several reports pertinent to metals for the public. It supplies delayed quotes, bulletins, volume and daily reports on its products. Because COMEX falls under the umbrella of the CME Group, its participants have access to other services under that group, such as CME ClearPort, which clears trades by institutions and other trading entities.
Timothea Xi has been writing business and finance articles since 2013. She has worked as an alternative investment adviser in Miami, specializing in managed futures. Xi has also worked as a stockbroker in New York City.