Comex to Try Automation to Eliminate Bottlenecks

The Commodity Exchange in New York is changing its clearing operation in hopes of eliminating the bottlenecks that forced it to close early three days this month.

The exchange board of governors voted Thursday to accept staff recommendations that would make the recording and matching of trades more automated and bypass a step that can clog the system on busy days.

The volume in precious metals trading was as much as three times normal when the exchange was forced to close early.

The changes to the clearing system will be phased in during the coming weeks and months, the exchange said.

“We do not have a timetable, but we do have a sense of urgency,” said Comex spokesman Peter F. Cullum.

Under the present system, a floor trader records a trade on a card, which is given to a clerk, who then physically checks the trade with the opposite trader’s clerk. The information is then transferred to a brokerage sheet and delivered to an exchange employee who punches the information into the Comex computer system.

The new system will eliminate the work done by the clerks. Instead, trade data will go directly to a clearing member firm, which will enter it into the computer system. The clearing members, which process trades for exchange customers, also will guarantee that all traders make good on their trades.

Another recommendation by the exchange staff, still under study by the board of governors, bears on the relationship between traders and clearing members.

As it is now, traders can have their own floor booths to receive orders by telephone. The staff recommended that this be changed to put all booths under the control of clearing members.