Nymex Electronic Trade Outdoes Floor
Friday October 27, 6:01 pm ET
Electronic Trade Surpassing Floor Trade at Nymex
NEW YORK (AP) -- The New York Mercantile Exchange's foray into electronic crude oil trading continues to power ahead, with screen volume on the 134-year-old exchange beating open outcry, or floor trading, for nine of the past 10 sessions.
The strong screen volume bodes well for Nymex Holding's coming initial public offering but has some who work in the Nymex pits, where orders are shouted by traders in colored jackets, worried their livelihood is at risk.
Screen trading, conducted through the Chicago Mercantile Exchange's Globex platform, made up 62 percent of Nymex's total crude volume on Thursday, its biggest slice of trade since Sep. 5, when electronic trading was extended to include Nymex floor hours. Electronic volume has averaged 49 percent of daily crude volume this month to Thursday, according to calculations made using Nymex data. Friday's volumes weren't yet available.
Nymex introduced simultaneous screen trade to combat aggressive expansion in electronic trading by IntercontinentalExchange Inc. amid surging fund hunger for opportunities to trade energy. Hedge funds and other speculators have shown a leaning toward screen trade, where they can execute the trade themselves, rather than through a floor broker, and at the same time stay anonymous.
Nymex could end open outcry floor trading on its Comex division -- which trades metals -- in around five years, if it is no longer barred from dealing electronically in metals traded on Comex, parent company Nymex Holdings, Inc. said 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. It isn't clear when the Comex vote takes place.
Nymex spokeswoman Anu Ahluwahlia said the five-year period referred to trading on the Comex division floor, not the Nymex floor. "It's saying the Comex floor will stay open for at least five years," she said.
Currently, Comex revenue represent around 13 percent of Nymex Holdings's revenue. |
