1
 The New York Mercantile Exchange, the world's chief oil futures marketplace, is at a critical juncture.
5117
span

2
 Several longtime observers of the commodities industry think
3
attribution

3
 the fortunes of the Merc over the next decade will be determined to a large extent by how well its new natural gas futures contract does and how successful its new president is in raising the level of compliance by floor traders with exchange and Commodity Futures Trading Commission rules.
5001
span

4
 If the exchange falters in these moves,
5002
span

5
 they say,
4
attribution

6
 it might once again fall behind its chief New York competitor, the Commodity Exchange.
5003
span

7
 On Friday, the Merc's board announced
8
attribution

8
 that it had approved Sabine Pipe Line Co. 's Henry Hub in Erath, La., as the delivery site for its long-awaited natural gas futures contract.
5005
span

9
 It also said 
5006
attribution

10
that it would start trading the contract
5006
span

11
 as soon as the CFTC approved it.
5008
span

12
 The CFTC has 90 days to respond to such applications.
11
elaboration-additional

13
 The Merc first started working on developing this contract in 1984.
5009
background

14
 Only three weeks earlier, the Merc had turned to one of its own executives, 40-year-old R. Patrick Thompson,
5012
span

15
 to replace Rosemary T. McFadden as president.
14
purpose

16
 Mr. Thompson is believed to have a mandate from the board of directors
5014
span

17
 to help improve the Merc's tarnished reputation as an exchange 
5013
span

18
whose floor traders don't follow the rules very well.
17
elaboration-object-attribute-e

19
 Ms. McFadden had been forced out in July in a bitter power struggle with Z. Lou Guttman, chairman and a longtime floor trader on the exchange.
5015
background

20
 Mr. Guttman told one person familiar with the New York exchanges during the search for a replacement
5017
attribution

21
 that he was looking for a president
5017
span

22
 who would be responsive to the needs of the membership and the board.
21
elaboration-object-attribute-e

23
 Mr. Thompson first came to the exchange in 1981
5020
List

24
 and has been executive vice president since March 1988.
5020
List

25
 He previously held posts of senior vice president of compliance and senior vice president and general counsel.
5020
temporal-after

26
 By contrast, the Comex in July imported a highly regarded outsider, Arnold F. Staloff, as its president.
5023
span

27
 Mr. Staloff, 44, was a senior officer of the Philadelphia Stock Exchange 
5022
List

28
and is considered a specialist in new financial products.
5022
List

29
 Mr. Thompson isn't bereft of experience with new products, however.
5039
span

30
 For the past two years,
5027
span

31
 he said,
30
attribution-e

32
 he and the exchange's research department have been working on the new natural gas contract,
5026
span

33
 seeking a good delivery site 
5025
List

34
and studying the natural gas market.
5025
List

35
 Our members are eager to begin trading this contract,
5029
reason

36
 so we expect no difficulty 
5029
span

37
in attracting locals to the natural gas pit,
36
elaboration-object-attribute-e

38
 he said.
5030
attribution

39
 The educational effort
5033
span

40
 of teaching companies in the natural gas industry how to use the futures 
5032
span

41
to hedge 
40
purpose

42
would have to continue for another a year or two,
5034
Same-Unit

43
 he added.
5034
attribution

44
 The Merc's extremely successful contracts in crude oil, gasoline and heating oil have made it the largest futures exchange in New York, and third behind the Chicago Board of Trade and Chicago Mercantile Exchange.
5036
circumstance

45
 In a recent interview, Mr. Thompson said 
5043
attribution

46
the biggest problem
5042
span

47
 facing all commodity exchanges
46
elaboration-object-attribute-e

48
 was one of image.
5043
Same-Unit

49
 Earlier this year, the U.S. attorney indicted 45 floor traders and one clerk at the two big Chicago exchanges.
5049
List

50
 Federal authorities in New York started investigating exchanges in May,
5045
span

51
 though no indictments have been handed down there.
50
antithesis

52
 So far they have issued scores of subpoenas,
5046
span

53
 some of which went to members of the New York Merc.
52
elaboration-object-attribute-e

54
 Mr. Thompson will have to face some of the consequences of those subpoenas.
5047
consequence-s

55
 In a recent General Accounting Office study, the Merc was found to have been the most lax in enforcing exchange rules.
5052
span

56
 It levied the smallest number of suspensions of traders and fines of the four largest commodity exchanges
5051
span

57
 studied over the past five years.
56
elaboration-object-attribute-e

58
 It also had both the fewest, and least experienced, investigators per million contracts traded.
5052
elaboration-additional

59
 The Merc received considerable criticism in 1987 
5057
cause

60
when it was discovered that its compliance director, Kevin P. Conway,
5055
span

61
 who then was responsible for policing the exchange's busy oil and metal pits,
60
elaboration-additional-e

62
 was engaged in other personal business activities on Exchange time, 
5056
span

63
including out-of-state trips,
62
example-e

64
 according to a New York Merc report
5054
span

65
 prepared last year.
64
elaboration-object-attribute-e

66
 Mr. Conway is no longer at the exchange.
5059
consequence-s

67
 We had a management breakdown in 1987 in terms of compliance,
5061
span

68
 Mr. Thompson says.
67
attribution

69
 We recognized the problem 
5062
List

70
and took care of it.
5062
List

71
 He says 
5066
attribution

72
that
5066
Same-Unit

73
 even if the natural gas contract boosts volume at the exchange strongly,
5064
antithesis-e

74
 the 1990 business plan calls for having adequate compliance people 
5064
span

75
to ensure
76
attribution

76
 that exchange rules are being followed.
5063
span

77
 For years the five New York exchanges have been talking about cooperating in various aspects of their business
5074
span

78
 in order to improve the efficiency of their operations.
77
purpose

79
 Periodically, there has even been talk of mergers between one or more exchanges.
5074
elaboration-additional

80
 So far there is little to show for such efforts.
5075
evaluation-s

81
 Mr. Thompson believes
5078
attribution

82
 the case 
5077
span

83
for working together
82
elaboration-object-attribute-e

84
 is stronger now than ever.
5078
Same-Unit

85
 The cost of competition has become extremely high,
5081
span

86
 he says.
85
attribution

87
 We must find ways
5083
span

88
 to save money for the futures commission merchants 
5082
span

89
who do business on our exchanges.
88
elaboration-object-attribute-e

90
 He thinks 
5086
attribution

91
that progress in cooperation can be made in areas
5086
span

92
 where no vested interests have built up.
91
elaboration-object-attribute-e

93
 One of those areas is the development of a hand-held electronic device
5089
span

94
 that would permit floor traders to enter trades 
5088
span

95
as they make them.
94
temporal-same-time

96
 The GAO has recommended the creation of a system 
5091
span

97
to record trade data 
96
elaboration-object-attribute-e

98
so that an independent, verifiable audit trail can be established
5090
span

99
 to prevent customer fraud.
98
purpose

100
 The Merc is now cooperating with the Comex
5094
span

101
 in developing such a device
5093
span

102
 to provide such an audit trail.
101
purpose

103
 The Chicago exchanges also are working on such a device.
5095
elaboration-additional

104
 Another major electronics problem faces Mr. Thompson
5101
span

105
 -- the creation of a 24-hour trading system
5100
span

106
 that can be used outside normal trading hours.
105
elaboration-additional-e

107
 In January, the New York Merc signed a letter of intent with the Chicago Merc as a preliminary step 
5103
span

108
to joining their electronic system
5102
span

109
 called Globex.
108
elaboration-additional-e

110
 But in May, the Chicago Merc said 
5196
attribution

111
it was looking into creating a common system with the Chicago Board of Trade,
5196
span

112
 and it suspended negotiations with the New York Merc.
111
consequence-s

113
 Mr. Thompson says 
114
attribution

114
his exchange isn't waiting for the results of the Chicago exchanges' cooperation.
5108
span

115
 It recently began a pilot program
5111
span

116
 to test an electronic trading system 
5110
span

117
called ATS/2, the automated trading system
5109
span

118
 created by the International Commodities Clearing House.
117
elaboration-object-attribute-e

119
 Looking ahead to commodity markets this week:
5194
span

120
 Copper
5146
TextualOrganization
SectionTitle
121
 Michael Frawley, metals trader for PaineWebber Inc. in New York, said 
5118
attribution

122
there is good technical support between $1.10 and $1.12 a pound for December copper,
5118
span

123
 which ended Friday at $1.1580 a pound, up 1.6 cents.
122
elaboration-additional-e

124
 He views the $1.10 to $1.12 range as a buying opportunity 
5120
List

125
and considers the market oversold.
5120
List

126
 I think
5122
attribution

127
 the market could pop up to the $1.22 to $1.25 level
5122
span

128
 without too much difficulty,
127
circumstance

129
 he said.
5123
attribution

130
 But he said
5125
attribution

131
 it won't climb further 
5125
List

132
and he expects it to remain in a trading range between $1.10 and $1.25.
5125
List

133
 He noted
5129
attribution

134
 that the equity markets will set the tone for the industrial metals this week 
5129
span

135
and traders should keep an eye on Wall Street.
134
evaluation-s

136
 William O'Neill, research director for Elders Futures Inc. in New York, said
5139
attribution

137
 for a rally to occur,
5139
span

138
 there must be demand from the Far East.
137
enablement

139
 He added 
140
attribution

140
that talk of strike settlements at producing mines has been fully discounted.
5134
span

141
 However,
5138
Same-Unit

142
 to resume the bull trend,
5197
span

143
 according to Mr. O'Neill,
142
attribution

144
 copper would have to close over $1.19.
5137
span

145
 He said 
5142
attribution

146
there are two reports this week
5141
span

147
 that might affect prices:
146
elaboration-object-attribute-e

148
 the purchasing managers report on Wednesday and the unemployment report on Friday.
5141
elaboration-set-member

149
 Precious Metals 
5174
TextualOrganization
SectionTitle
150
 Friday's strong price gains confirmed a turnaround in the precious metals markets,
5147
span

151
 according to PaineWebber's Mr. Frawley.
150
attribution

152
 Most traders will be looking to buy {on} pullbacks, 
5148
span

153
he said.
152
attribution

154
 He thought
155
attribution

155
 the moves in the metals last week were most influenced by the uncertainty in the equity and other financial markets.
5150
span

156
 According to Mr. Frawley,
5152
attribution

157
 floor traders say 
158
attribution

158
there is good support for December gold in the $374 to $375 per ounce area, around $5.20 an ounce for December silver and in the $485 to $490 an ounce range for January platinum.
5152
span

159
 William O'Neill, research director for Elders Futures Inc. in New York, said
5155
attribution

160
 the price action for all of last week is the best
5155
span

161
 he has seen on a weekly basis in more than a year.
160
elaboration-object-attribute-e

162
 He said 
163
attribution

163
last week's activity in gold could portend a move to $390 an ounce for the December contract.
5157
span

164
 He also said 
5161
attribution

165
traders should keep an eye on the stock market,
5161
span

166
 because 
5160
Same-Unit

167
if the stock market rallies,
168
condition-e

168
 that could spell trouble for the precious metals.
5159
span

169
 He said
170
attribution

170
 traders should be on the lookout for how metals producers react to this rally.
5163
span

171
 I expect to see some selling,
5167
span

172
 but will they kill this one 
5165
span

173
as they have every rally in the recent past
172
manner

174
 by selling
5164
List

175
 and locking in prices for their production?
5164
List

176
 He noted
177
attribution

177
 that for the first time in months there was some light investor interest in the metals.
5170
span

178
 Grains And Soybeans
5192
TextualOrganization
SectionTitle
179
 Prices this week will likely be dominated by reports on the progress of the corn and soybean harvest as well as by speculation about more purchases of U.S. crops by the Soviet Union.
5181
span

180
 In recent weeks, warm and dry weather has sped the Midwest harvest
5175
consequence-n

181
 and that is permitting farmers to rebuild the stockpiles
5175
span

182
 that were cut by the 1988 drought.
181
elaboration-object-attribute-e

183
 If the weather allowed farmers to work in their fields over the weekend,
5177
condition

184
 many Midwest grain elevators will probably sell futures contracts today at the Chicago Board of Trade 
5177
span

185
in order to hedge their weekend purchases from farmers.
184
purpose

186
 That selling of futures contracts by elevators is what helps keep downward pressure on crop prices during the harvest.
5179
interpretation-s

187
 Traders will also watch for whether the Soviet Union continues its traditional fall buying of U.S. grain.
5182
span

188
 So far this month, the Soviets have bought about 7.2 million metric tons of U.S. corn.
187
elaboration-additional

189
 There may be some activity in soybean prices this week
5184
span

190
 as investors try to get rid of the contract for November delivery.
189
explanation-argumentative

191
 Investors usually don't want to take physical delivery of a contract,
5188
preference

192
 preferring instead to profit from its price swings 
5188
List

193
and then end any obligation 
5186
span

194
to take delivery 
5185
List

195
or make delivery 
5185
List

196
as it nears expiration.
5186
circumstance

5001
span
5004
span

5002
span
6
condition

5003
span
5001
hypothetical

5004
span
5011
span

5005
span
5009
span

5006
span
5007
span

5007
span
5005
elaboration-additional

5008
span
10
condition

5009
span
5010
span

5010
span
5004
elaboration-additional

5011
span
5116
span

5012
span
5015
span

5013
span
16
elaboration-object-attribute-e

5014
span
5012
elaboration-additional

5015
span
5016
span

5016
span
5019
span

5017
span
5018
span

5018
span
5016
circumstance

5019
span
5041
span

5020
multinuc
5021
span

5021
span
5040
span

5022
multinuc
26
elaboration-additional

5023
span
5039
comparison

5024
span
5021
elaboration-additional

5025
multinuc
32
elaboration-additional

5026
span
5028
Same-Unit

5027
span
5028
Same-Unit

5028
multinuc
5038
span

5029
span
5030
span

5030
span
5031
span

5031
span
5036
span

5032
span
39
elaboration-object-attribute-e

5033
span
5034
Same-Unit

5034
multinuc
5035
span

5035
span
5031
elaboration-additional

5036
span
5037
span

5037
span
5028
elaboration-additional

5038
span
29
evidence

5039
span
5024
span

5040
span
5019
elaboration-additional

5041
span
5073
span

5042
span
5043
Same-Unit

5043
multinuc
5044
span

5044
span
5050
span

5045
span
5046
result

5046
span
5047
span

5047
span
5048
span

5048
span
5049
List

5049
multinuc
5044
explanation-argumentative

5050
span
5072
span

5051
span
55
elaboration-general-specific

5052
span
5053
span

5053
span
5070
span

5054
span
5058
attribution

5055
span
5057
Same-Unit

5056
span
5057
Same-Unit

5057
multinuc
5058
span

5058
span
5059
span

5059
span
5060
span

5060
span
5061
summary-n

5061
span
5069
span

5062
multinuc
5068
span

5063
span
74
purpose

5064
span
5065
span

5065
span
5066
Same-Unit

5066
multinuc
5067
span

5067
span
5062
elaboration-general-specific

5068
span
5071
Problem-Solution

5069
span
5053
elaboration-additional

5070
span
5071
Problem-Solution

5071
multinuc
5050
elaboration-additional

5072
span
5041
elaboration-additional

5073
span
5115
span

5074
span
5075
span

5075
span
5076
span

5076
span
5079
background

5077
span
5078
Same-Unit

5078
multinuc
5079
span

5079
span
5080
span

5080
span
5085
span

5081
span
5083
problem-solution-n

5082
span
87
elaboration-object-attribute-e

5083
span
5084
span

5084
span
5080
explanation-argumentative

5085
span
5099
span

5086
span
5087
span

5087
span
5098
span

5088
span
93
elaboration-object-attribute-e

5089
span
5097
span

5090
span
5091
enablement

5091
span
5092
span

5092
span
5095
span

5093
span
100
manner

5094
span
5092
elaboration-additional

5095
span
5096
span

5096
span
5089
example

5097
span
5087
example

5098
span
5085
elaboration-additional

5099
span
5114
span

5100
span
104
elaboration-object-attribute-e

5101
span
5107
span

5102
span
107
elaboration-object-attribute-e

5103
span
5105
antithesis

5104
span



5105
span
5106
span

5106
span
5101
elaboration-general-specific

5107
span
5112
problem-solution-n

5108
span
5112
span

5109
span
116
elaboration-additional-e

5110
span
115
elaboration-object-attribute-e

5111
span
5108
evidence

5112
span
5113
span

5113
span
5099
antithesis

5114
span
5073
elaboration-additional

5115
span
5011
elaboration-additional

5116
span
1
summary-n

5117
span
5195
Topic-Shift

5118
span
5119
span

5119
span
5121
span

5120
multinuc
5119
interpretation-s

5121
span
5128
span

5122
span
5123
span

5123
span
5124
span

5124
span
5126
antithesis

5125
multinuc
5126
span

5126
span
5127
span

5127
span
5121
evaluation-s

5128
span
5131
span

5129
span
5130
span

5130
span
5128
elaboration-additional

5131
span
5145
List

5132
span



5133
span
5135
span

5134
span
5133
elaboration-additional

5135
span
5140
span

5136
span
144
consequence-s-e

5137
span
5144
span

5138
multinuc
5135
elaboration-additional

5139
span
5133
span

5140
span
5145
List

5141
span
5142
span

5142
span
5143
span

5143
span
5137
elaboration-additional

5144
span
5138
Same-Unit

5145
multinuc
5146
TextualOrganization
SectionText
5146
multinuc
5193
List

5147
span
5149
span

5148
span
5147
consequence-s

5149
span
5151
span

5150
span
5149
interpretation-s

5151
span
5154
span

5152
span
5153
span

5153
span
5151
elaboration-additional

5154
span
5173
List

5155
span
5156
span

5156
span
5158
span

5157
span
5156
hypothetical

5158
span
5172
span

5159
span
5160
Same-Unit

5160
multinuc
165
reason

5161
span
5162
span

5162
span
5169
span

5163
span
5168
span

5164
multinuc
5165
means

5165
span
5166
span

5166
span
171
antithesis

5167
span
5163
elaboration-additional

5168
span
5162
elaboration-additional

5169
span
5171
span

5170
span
5169
elaboration-additional

5171
span
5158
antithesis

5172
span
5173
List

5173
multinuc
5174
TextualOrganization
SectionText
5174
multinuc
5193
List

5175
span
5176
span

5176
span
5179
span

5177
span
5178
span

5178
span
5176
elaboration-additional

5179
span
5180
span

5180
span
179
elaboration-additional

5181
span
5183
span

5182
span
5181
elaboration-additional

5183
span
5191
span

5184
span
5190
span

5185
multinuc
193
elaboration-object-attribute-e

5186
span
5187
span

5187
span
5188
List

5188
multinuc
5189
span

5189
span
5184
elaboration-additional

5190
span
5183
elaboration-additional

5191
span
5192
TextualOrganization
SectionText
5192
multinuc
5193
List

5193
multinuc
119
elaboration-set-member

5194
span
5195
Topic-Shift

5195
multinuc



5196
span
5105
span

5197
span
5136
span

