www.ft.com -Nymex board resists offers- Published: September 8 2005 -Nymex directors and shareholders are resisting proposals by private equity groups to buy a 20 per cent stake in the world's biggest energy exchange. The New York Mercantile Exchange is wary of any threat to pit trading, which accounts for half its volumes. The private equity suitors are understood to favour an eventual move to all-electronic trading....-
I heard they were working on a deal that would keep open outcry for ten years. They own the market. They're holding out, like any trader.
You know whats funny...I was watching cnbc this moring and they were interviewing some pit trader (guy with slicked back hair, on cnbc often) about speculation, price of gas and wether they should be some kind of regulation. He said "there are speculaters in the building but outside the building (electronic) the speculation is 10X fold, maybe they should regulate that" I've never seen such blatent self interest
The Nymex membership are all well aware of tremendous edge they have in maintaining their closed marketplace which allows them to continue to profit prodigiously at the expense of the energy trading public. I find their commitment to open outcry extremely short sighted because it is only a matter of time before some other exchange decides to compete head to head with the Nymex's product line. Remember how Liffe lost the Bund to Eurex? Huge mistake. If the IPE were to 1. offer a West Texas crude product, 2. put an IPE terminal on every major energy trading desk, and 3. develop a more robust trading system; they would take all Nymex's business in a matter of weeks.
We should get a direct indication of how open outcry vs all electronic trading in commodities will fare this month. Nymex open their Nymex Europe open outcry floor in London this month offering clone brent crude and gas futures in direct competition to the IPE's already electronic contracts. Watch the volumes and see who wins?
old habits are to break. dinosaurs like nyse's open auction and nymex's open outcry are doomed just like segregation laws of the south.