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To: Esteban who wrote (11663)	6/12/2006 8:42:59 PM
From: TFF	Respond to of 12617

Nymex relents and allows electronic trade By Kevin Morrison, Commodities Correspondent Published: June 12 2006 03:00 \| Last updated: June 12 2006 03:00 For 23 years the price of oil has largely been determined on the trading floor of the New York Mercantile Exchange, the world's largest commodity exchange. But that may be about to change from today. Until four months ago, Nymex was refusing to join the trend of other commodity, equity and financial derivative exchanges, where trading floors have closed as exchanges realised that a global network of electronic trading screens was able to generate more volume. When Nymex launched the West Texas Intermediate crude oil futures contract in 1983, it succeeded in replacing the oil price setting mechanism of the Organisation of the Petroleum Exporting Countries and in turn made consuming countries the oil price setters. Now that oil is a more important financial asset to the investment community, which prefers to trade electronically, Nymex has been forced to change tack. Nymex executives had said that its customers preferred open outcry. However, when its smaller but faster-growing rival IntercontinentalExchange launched an electronic WTI contract in February and grabbed about a third of WTI trade - Nymex's biggest single market - the New York-based exchange announced plans for electronic trading. The electronic launch, which started yesterday on the Chicago Mercantile Exchange's Globex system, is likely to cause casualties. About 150 of the 800 brokers and traders on the Nymex floor are execution-only brokers, whose functions can be transferred to screens most easily. The introduction of electronic trading is not the only thing that has upset traders. Nymex's planned listing by the end of the year is likely to be a cash bonanza for the exchange's 816 seat owners, who own 90 per cent of its equity, having collectively sold 10 per cent of their interest to General Atlantic, the private equity group, this year. Each seat is worth almost $5m (£3m), giving Nymex a pre-listing value of about $4bn. Two-thirds of the seats are owned by former traders who lease their seats to current traders, which means that most of the people working on the Nymex floor do not hold equity in the exchange. The launch is likely to result in electronic trade becoming the preferred way to trade oil, if the CME is any guide. In 2000, electronic trade accounted for 15 per cent of its volumes: last year it was 70 per cent.