New York Mercantile Exchange (NYMEX)

New York Mercantile Exchange (NYMEX)

What is the New York Mercantile Exchange?

The New York Mercantile Exchange (NYMEX) is the world’s largest physical commodity futures exchange. Today NYMEX is part of the Chicago Mercantile Exchange Group (CME Group). The CME group is the world’s largest and most diversified derivatives market, consisting of four exchanges, CME, Chicago Board of Trade (CBOT), NYMEX and Commodity Exchange, Inc. (COMEX). Each stock exchange offers a wide range of global references in the main asset classes. The CME Group acquired NYMEX in 2008, adding a wide selection of energy products as well as metals and agricultural contracts to the existing product offering.

Understanding the New York Mercantile Exchange

A first version of NYMEX began in 1872 when a group of dairy merchants founded The Butter and Cheese Exchange in New York. In 1994, NYMEX merged with COMEX to become the largest physical commodity exchange at the time. In 2008 NYMEX was unable to survive commercially following the global financial crisis and merged with the Chicago CME group.

Energy and precious metals futures and options have become excellent tools when companies try to manage risk by hedging their positions. The ease with which these instruments are traded is vital to hedging and forward pricing, making NYMEX an essential part of the trading and hedging worlds. The daily trade volume of the CME group is approximately 30 million contracts with NYMEX, which represents approximately 10% of this amount due to the physical goods that are traded on this exchange. Much larger volumes are traded in interest rate futures, options and futures contracts traded at the Chicago Board of Trade (CBOT).

NYMEX is regulated by the Commodity Futures Trading Commission (CFTC), which is an agency independent from the United States government responsible for promoting competitive and efficient futures markets and protecting investors from manipulation, abusive trading practices and fraud.

NYMEX limitations

The NYMEX is an open trading platform, where human traders meet to haggle and agree on a market price for a commodity. Given that the trade in stocks and commodities predates the invention of the telegraph, telephone or computer hundreds of years ago, it is fairly obvious that human face-to-face trade was the usual way of doing business for a long time. Today, open clamor trade is in decline, and NYMEX has introduced more and more e-commerce systems since 2006. Considering the economic benefits of electronic systems and customer preference for them, a very large percentage world trade has already converted to this system. method. At this point, the United States is more or less alone in maintaining open trade.

Leave a Comment

Your email address will not be published. Required fields are marked *