QM and others BACK to the CME

Discussion in 'Financial Futures' started by brownsfan019, Apr 7, 2006.

  1. Perhaps the Nymex realized their ClearPort system is crap. Maybe this had something to do with CME's stock move today???



    NYMEX to List Energy Futures Contracts on CME Globex Platform Through 2016

    Establishes Robust Electronic Trading Complement
    to NYMEX’s Open Outcry Platform; CME Globex First Electronic Derivatives Trading Platform With Global Access to All Major Asset Classes

    NEW YORK and CHICAGO, April 6, 2006 -- NYMEX Holdings, Inc., parent company of the preeminent physical futures exchange, and CME, the world’s largest and most diverse financial exchange, announced today that they have signed a definitive technology services agreement under which CME will become the exclusive electronic trading services provider for NYMEX’s energy futures and options contracts. Access to electronic trading of NYMEX products will be available virtually 24 hours a day on the CME Globex® electronic trading platform.

    Initial trading of NYMEX energy products on CME Globex, currently scheduled to begin in the second quarter of 2006, is expected to include side-by-side trading of NYMEX standard-sized and NYMEX miNY™ energy futures contracts for crude oil, natural gas, heating oil and gasoline with NYMEX’s floor-based products during open outcry trading hours and when the NYMEX trading floor is closed. In the third quarter, all products trading on NYMEX ACCESS®, the exchange’s after hours electronic trading platform, are expected to transition to CME Globex. Also under the terms of the agreement, CME Globex will be the exclusive electronic trading platform for metals products currently listed on the COMEX Division, with an anticipated third quarter launch.

    All NYMEX contracts traded on CME Globex will be cleared by the NYMEX clearinghouse. In addition to NYMEX liquidity providers, a specified number of CME market makers will be designated by CME to build electronic liquidity at NYMEX member rates. Additional terms of the agreement were not disclosed.

    “Outsourcing the electronic trading of our energy futures contracts to CME will ensure that we continue to meet the needs of our customers while providing additional liquidity to our open outcry trading platform,” said Mitchell Steinhause, Chairman of NYMEX. “We have had a successful relationship with CME over the years, and we are pleased that we will be able to continue to work together to provide the most efficient and accessible energy futures exchange in the world.”

    “CME is committed to bringing opportunities in energy trading to our customers around the globe,” said CME Chairman Terry Duffy. “Our longstanding relationship with our colleagues at NYMEX and our previous experience in listing their contracts on our platform create a strong foundation for this agreement, which will greatly benefit market participants seeking access to the most liquid energy derivatives in the marketplace. By increasing global distribution of NYMEX products via CME Globex, the world’s leading derivatives trading platform, we will deliver added value to our customers and shareholders.”

    “This agreement establishes the most robust and liquid energy trading model in the world,” said James E. Newsome, President and Chief Executive Officer of NYMEX. “Listing our energy contracts on the CME Globex platform enables us to dramatically increase our distribution much more quickly than we could have by building our own capability. This agreement will complement and enhance our open outcry trading, expand the accessibility of our benchmark energy contracts to investors worldwide and allow us to build on the record electronic trading volumes we have been experiencing.”

    “Providing third-party technology services is a key element of CME's long-term growth strategy," said CME Chief Executive Officer Craig Donohue. "This service agreement will leverage CME's proven electronic trading platform and global distribution network to expand access to NYMEX, the largest and most liquid energy market in the world. The addition of energy contracts on CME Globex further diversifies our product offerings, creating the first electronic platform offering global access to every major asset class - interest rate, stock index, foreign exchange, agricultural and now energy."

    From June 2002 through November 2005, NYMEX miNYTM crude oil and natural gas futures contracts were available on CME Globex as part of a previous service agreement between the two exchanges. Floor trading of NYMEX’s energy contracts has increased 28.3% since 2003. Electronic trading on NYMEX ClearPort® and NYMEX ACCESS® averaged 330,280 contracts per day during the first quarter of 2006, an increase of 128% over the same period in 2005.
  2. highlights of commentary made by john lothian
    on this "deal" ( copied from CME stock message
    boards today , but the source is john lothian )

    -This was the easiest deal for the CME to make, with the lowest amount of risk. In a business all about managing risk, the CME made the lowest risk deal with the highest chance of it being successfull-

    -The industry will benefit from this deal simply by the fact electronic trading will get easier and cheaper to manage and support. Brokerage firms will have one less API connection to connect their systems to, or even write their systems to. Same goes for the Independent Software Vendors. There will be fewer upgrades to worry about. NYMEX was behind the curve with their technology and was prepared to spend lots of money to upgrade it-

    -There was some concern in Chicago on LaSalle Street that Nymex going on to Globex could spell trouble for the CBOT’s growing metals complex. Other than the electronic trading platform changing and Nymex having greater distribution once the metals transfer from ACCESS to Globex, nothing at this point has changed. Comex members still call many of the shots about when and how metals trade. We don’t yet know how this is going to play out. Comex rules prevented Nymex from offering greater distribution of the ACCESS metals markets. Comex members still limited the number of terminals to ACCESS and did not authorize the open API connectivity to ACCESS that was available to energy traders. So Comex members still have some political decisions to hammer out before we know the extent that they will be able to leverage the Globex technology deal to fend off the challenge from the CBOT for their gold and silver markets.-