Nymex Might Eliminate Floor Trade 5 Yrs After Comex Deal
LONDON (Dow Jones)--The New York Mercantile Exchange could end open outcry floor trading in around five years if it is no longer barred from dealing electronically in metals traded on its Comex division, parent Nymex Holdings, Inc (NYM.Xx) says in a filing with the U.S. Securities and Exchange Commission late Thursday.
The filing comes as Comex members and Nymex stakeholders vote soon on a proposal to permit Nymex to expand its electronic metals trading in November. Nymex holders vote Tuesday on the proposal. But it isn't clear when the Comex vote takes place.
If the change goes ahead, Nymex "may eliminate, suspend or restrict open outcry trading after five years," the filing said. "Nymex cannot reduce floor space for three years. But in years four and five, it can reduce floor space pursuant to a formula," the filing added.
If open outcry exists after five years, Nymex must maintain the current or comparable facility and provide reasonable financial support, the terms of the filing noted.
Currently, Comex revenues represent around 13% of Nymex Holdings, Inc's revenues.
Nymex is hoping to secure approval to launch after-hours trading and side-by-side electronic trading of Comex contracts through the CME Globex electronic trading platform, owned by the Chicago Mercantile Exchange. CME Globex operates nearly 24 hours each trading day.
And it plans to list a new electronically traded product slate for metals that will include new London Metal Exchange and Asian mini contracts.
Their launch will go further towards opening up Comex's electronic trading platform for metals to outsiders as competition from the soon-to-merge Chicago Board of Trade and the Chicago Mercantile Exchange hots up.
There's been speculation the planned merger could mean a further shift of metals trading to Chicago. CBOT currently trades its own gold and silver futures contract on its all-electronic e-CBOT platform. In the filing, Nymex said it needs to secure approval for its deal with Comex in order to prevent the loss of metals market share to its competitors. Nymex needs to list its metals products on CME Globex to prevent that from happening, the filing said.
Without the Comex deal, Nymex is "limited in ability to launch competitive products and other new metals products, and (will) have limited distribution."
It's also "limited from entering into meaningful alliances with other metals exchanges," the filing said. Nymex would have an "uncertain ability to launch metals Nymex ClearPort products, the filing added.
If the deal goes ahead, the rights of Comex division members set forth in the 1994 merger agreement will be terminated. In exchange, new rights will be established through the Comex Transaction Agreement. Each Comex member will receive 8,400 shares of Nymex common stock.
Source: Andrea Hotter, Dow Jones Newswires; +44 (0)20 7842 9413; andrea.hotter@dowjones.com |
