Upload
others
View
7
Download
0
Embed Size (px)
Citation preview
EXCHANGE OVERVIEW
FUTURES & OPTIONS
OPEN OUTCRY TRADING
ELECTRONIC TRADING
CLEARING
u
without the need to seek out a particular counterparty.
This is made possible by the liquidity of the Exchange's
markets, the anonymity of the trading process, and the
role of the Exchange clearinghouse which effectively
becomes the counterparty to each trade.
For the last several years, the Exchange has received
and maintained an AA+ long-term counterparty credit
rating from Standard & Poor’s. A list of clearing
members, who represent some of the biggest names
in financial services, can be found at
www.nymex.com.
The first successful energy futures market was
established at the Exchange in 1978 with the launch
of the heating oil futures contract. The core slate of
energy contracts trades on the NYMEX Division and
includes physically delivered futures and options
contracts for light sweet crude oil, gasoline, heating
oil, and natural gas; propane futures; options contracts
on the price differentials, or crack spreads, for
gasoline/crude oil, and heating oil/crude oil; and the
differentials between contract months, or calendar
spreads, for crude oil, gasoline, heating oil, and
natural gas.
Among the metals markets, futures and options for
gold, silver, copper, and aluminum trade on the
COMEX® Division while platinum futures and options
and palladium futures trade on the NYMEX Division.
Commodity PriceRisk Management
The need to manage commodity price risk is well
recognized, particularly after more than three decades
of volatility in the energy and metals markets. Market
transparency, liquidity, and financial integrity is just as
vital now as when the New York Mercantile Exchange,
Inc. (NYMEX®) was founded in 1872 by a group of
dairy merchants endeavoring to bring a sense of order
to the chaotic markets of the day. Today, the Exchange
is the world’s preeminent trading forum for managing
price risk in the markets for energy, precious metals,
and North American copper.
In the effort to offset price risk however, other risks
are incurred that can be even more insidious – such
as market illiquidity and counterparty credit risk. The
failure of major firms on Wall Street and in London in
recent years and the collapse of an iconic energy
trader in Houston shows that counterparty risk is not
limited to smaller trading partners.
Liquidity and VersatilityProvide Integrity
The versatile futures and options contracts offered for
trading on NYMEX stand out as the principal risk
management instruments for the underlying products
which trade in a highly liquid and transparent market-
place that mitigates the risk of counterparty default.
Market participants enter and exit the market at will,
NYMEX EXCHANGE OVERVIEW | 1
VISION IS OUR GREATEST COMMODITYTM
u
certain market participants on the trading floor and
brokers in the ring.
This beehive of activity represents a highly liquid,
highly transparent, and efficient marketplace. The
transparency of the market data generated by the
Exchange gives market participants worldwide the
confidence to use the prices determined on the
Exchange as benchmarks for the underlying
commodities because:
• Transaction prices are continuously reported during
the trading day.
• Settlement prices are reported daily.
• Trading volume and open interest are reported daily.
• Physical metals deliveries made in satisfaction of
the futures contracts and metals inventories are
reported daily.
• Energy deliveries made in satisfaction of the futures
contracts are reported monthly.
• Since the metals and core energy contracts are
physical delivery contracts, futures prices must
converge with cash market prices upon the
termination of trading in the spot month contract.
• If cash and futures prices are out of line,
arbitrageurs will quickly bring them into alignment.
NYMEX EXCHANGE OVERVIEW | 3
Exchange TradingDelivers Transparency
The energy and metals markets are available fortrading for 23 1/4 hours a day from Sunday eveningsthrough Friday afternoons. The physically deliveredfutures contracts are traded by open outcry andthrough the CME Globex® electronic trading system.Open outcry is conducted on the trading floor in a fiveto five-and-a-half hour daily session, Mondays throughFridays. Electronic trading takes place side-by-sidewith the floor during open outcry hours, seamlesslycontinuing after the floor closes in the afternoon andas it opens the following morning. Trading on CMEGlobex is conducted through a technology servicesagreement with the Chicago Mercantile Exchange.
While to a layman, an initial view of the trading floor
appears to be a mass of uncoordinated activity, in
reality there is an exquisite order behind the vigorously
gesturing traders, the clerks talking rapidly on the
phones amid tangles of telephone cords, and the price
reporters in their bright yellow jackets continuously
punching numbers into hand-held computers to
immediately transmit price changes to the huge
wallboards, with their constantly changing numbers,
and the outside world. At the same time, large display
screens around the trading floor keep track of the
electronic trading activity as it is conducted by market
participants who can be logged onto the CME Globex
system from almost anywhere in the world, including
The softs and NYMEX iPort indexes can also be
submitted solely for clearing. The final settlement
prices of many of the outright and basis petroleum
and natural gas contracts are based upon the final
settlements of the floor-traded futures contracts.
The integrity of these markets is assured through a
proactive system of trade, market, and financial
surveillance. All market participants, without
exception, post a performance bond called margin.
Market participants are also subject to limitations on
the number of open positions they may hold to ensure
that no entity assumes an obligation that is either
beyond his capability to fulfill or allows him to exert an
undue influence on the market.
For further information, please call 212-299-2301,
e-mail [email protected], or visit
www.nymex.com.
The Exchange also lists financially settled contracts on
CME Globex. They include full-sized and fractional
futures for NYMEX crude oil, heating oil, gasoline, and
natural gas; financially settled metals contracts
including COMEX Asian gold; NYMEX® Asian platinum
and palladium; and fractional futures for COMEX gold,
silver, and copper, and COMEX® London aluminum,
copper, and zinc; financially settled NYMEX soft
commodities including coffee, sugar, cocoa, orange
juice, and cotton; and the NYMEX iPort™ index and
portfolio products created from different combinations
of liquid benchmark NYMEX contracts.
Global Market Coverage
The market coverage provided by the Exchange is
nearly continuous. In addition to the trading offered on
CME Globex, the Exchange also lists on the NYMEX
ClearPort® electronic platform from Sunday evenings
to Friday afternoons a slate of approximately 300
energy and related contracts that replicate popular
over-the-counter (OTC) transactions which can be
traded or transacted off of the Exchange and
submitted for clearing. The NYMEX ClearPort slate
covers outright or basis transactions for a wide range
of energy products including refined products in the
United States, Europe, and Asia; crude oil; natural
gas; electricity; coal; emissions credits; and freight
rates for petroleum shipments on principal world
tanker routes.
NYMEX EXCHANGE OVERVIEW | 5
New York
World Financial Center
One North End Avenue
New York, NY
10282-1101
U.S.A.
(212) 299-2301
Houston
1000 Louisiana Street
Suite 1095
Houston, TX
77002-5005
U.S.A.
(713) 658-9292
London
Veritas House
7th Floor
125 Finsbury Pavement
London, EC2A 1NT
U.K.
+44 (0)20 7131-3060
Tokyo
San Marino Shiodome
6th Floor
2-4-1 Higashi Shinbashi
Minato-ku
Tokyo 105-0021
Japan
+81 (0)3 5408-5291
Singapore
Level 31
Six Battery Road
Singapore 049909
+65-6322-8596