TABLE OF CONTENTS (Cont'd) E. ATTACHMENTS OF COMEX CLEARING ASSOCIATION, INC. Attachment A Original margin rates for silver effective on and after September 10, 1979. Attachment B Original margin rates for silver effective on and after September 21, 1979. Attachment E Original margin rates for silver effective on and after January 7, 1980. Attachment F Extract from minutes of Board Meeting of January 27, 1980. Attachment G List of Officers and Directors of 8 Attachment H List of Clearing Members A. INTRODUCTION This document contains statements prepared by Commodity Exchange, Inc. ("Comex") and Comex Clearing Association, Inc. ("Association") which summarize and then particularize certain activities at Comex and the Association during the period from September 1979 through March 1980. The activities described relate to the silver market and will furnish the reader not only with an understanding of events during that period but also with an understanding of some the internal mechanisms at Comex and the Association. STATEMENT OF COMMODITY EXCHANGE, INC. B. I. Scope of Statement This statement contains a summary description of the silver market on Commodity Exchange, Inc. ("Comex" or "Exchange") and a particularized description of events and activities at Comex relating to the silver market from September 1, 1979 through March 28, 1980. The discussion of events and activities at Comex during that period will deal with the activities of the Board of Governors of Comex ("Comex") the Control Committee of Comex ("Control Committee") the Special Silver Committee of Comex ("Silver Committee") the Special Margin Committee of Comex ("Margin Committee") the activities of the Staff of Comex, particularly the activities of the Market Surveillance Department, the Compliance Department and certain Executive Officers of the Exchange. During this period Comex worked extremely closely with the Association. It should be noted that the Association is comprised of firms ("Clearing Members") that are among the larger members of Comex which enjoy clearing privileges by having satisfied the strenuous financial requirements of the Association. The activities of the Association are documented in Section D of this state ment. Comex believes it will be evident from this statement that self-regulation by contract markets in the futures industry is the most effective and meaningful method of regulating futures markets. Although various media reports have suggested that a disaster occurred in the futures markets, Comex believes that from September 1979 through March 1980, the Exchange was effectively able to defuse potentially explosive situations and avoid that disaster. Despite potential squeezes and corners during the first part of that period, none occurred; despite potential financial disaster for at least one major brokerage firm during the latter part of that period, none occurred; despite the threat to the silver market presented during the entire period, the market did not close and continues to function as the world's largest and pre-eminent silver market. The unusual phenomena that occurred in the silver market during the period in question awakened some persons from their complacency, furnished others with a new insight into potential uses and misuses of the futures markets, and provided still others with an education that can be utilized in the future to improve our commodities markets. The vigilance and dedication of Comex, the Association and the Commodity Futures Trading Commission demonstrated on the following pages should silence all critics of the futures industry. II. General Description of Comex Silver Market The silver futures market on Comex has for many years been viewed by the silver industry as the principal world marketplace for hedging and price discovery. As evidence of the extensive and broad based use of the Comex silver market, it is interesting to note that the number of silver futures contracts traded on Comex in each of the last five years is as follows: Each silver futures contract traded on Comex represents 5,000 troy ounces of silver (plus or minus 6%) of at least .999 fineness. Six depositories licensed by Comex are authorized to store silver for delivery against Comex futures contracts and to issue warehouse receipts representing such silver. Those depositories are Chase Manhattan Bank, Citibank, Iron Mountain Depository, Irving Trust Company, Republic National Bank and Swiss Bank Corporation. There |