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Strategies & Market Trends : The Final Frontier - Online Remote Trading
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From: TFF2/8/2006 3:07:06 PM
   of 12617
 
Nymex to offer electronic trades
By David Litterick in New York (Filed: 08/02/2006)

The New York Mercantile Exchange is expected to bow to modern technology and offer electronic trading for the first time within the next month.

Nymex is one of the last bastions of open outcry trading - known for its traders with colourful jackets, loud voices and seemingly impenetrable hand signals - but the move has been forced by its rivals, who have embraced electronic trading.

The plan, likely to be endorsed at a board meeting this week, comes as its major rival, the InterContinental Exchange, embarked on a turf war by launching its own electronic version of Nymex's key West Texas Intermediate crude futures contract. The ICE, which operates London's energy futures exchange, saw its volumes leap nearly 20pc when it switched to electronic trading.

Nymex runs the largest energy markets in the world but has seen an increasing number of competitors trying to muscle in on its territory. The Chicago Mercantile Exchange has plans to begin offering energy contracts.

However, Nymex, which said the plan was a result of demand from its seatholders who say electronic trading would improve liquidity, has also moved into fresh markets as the battle of the exchanges continues.

Last year it opened a trading floor in London to trade the ICE's benchmark crude contract.

Nymex is planning to float this year and is considering moving its electronic trading platform to London, where there are less stringent regulations than in the US.

The picture has become even murkier due to a lawsuit filed against the ICE by MBF Clearing Corp, a clearing broker for futures transactions on Nymex. It seeks "millions of dollars in damages" for "anti-competitive conduct". It alleges that the ICE maintains a monopoly in the market for electronically traded futures contracts in Brent crude.

The ICE denied it was in violation of anti-trust laws and said it intended to "vigorously defend" itself.
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