Posts Tagged ‘Nymex’

CME makes comeback

Wednesday, June 18th, 2008

When CME Group stock gapped up more than $16 on Tuesday there was little doubt it had to do with the exchange securing approval from the Department of Justice for its proposed purchase of the New York Mercantile Exchange (Nymex). The announcement came out just as the markets closed on Monday.

It was somewhat of a surprise because although the DOJ has caused CME some grief with its comment letter to Treasury regarding clearing structure, few suspected that they would raise an objection to a merger with Nymex. While there may have been an element of buyers remorse with the DOJ regarding its decision to “approve” (DOJ does not actually approve M&As, they either object or leave it alone) the CME/Chicago Board of Trade merger, CME Group’s proposed purchase of Nymex should have raised fewer issues than the CBOT deal that already had been allowed.

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Bad day

Wednesday, May 28th, 2008

CME Group stock settled at $437.20 on Wednesday, a 21-month low close dating back to August 30, 2006. At first glance it would be easy to assume that the underperformance is due to recent reports that New York Mercantile Exchange (Nymex) members are threatening to reject the definitive agreement the Nymex board signed with CME for CME to purchase Nymex but another, perhaps more ominous, factor may be at play.

On May 20 the U.S. Senate Committee on Homeland Security and Governmental Affairs held a hearing entitled “Financial Speculation in Commodity Markets: Are Institutional Investors and Hedge Funds Contributing to Food and Energy Price Inflation?”

The hearing included several speakers who felt that index funds are responsible in great part for the rise in commodity prices. The Commodity Futures Trading Commission (CFTC) maintains, however, that other factors related to traditional supply and demand are at play.

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Seller’s remorse 2

Wednesday, May 14th, 2008

Yesterday we noted how opposition to the purchase of the New York Mercantile Exchange (Nymex) by CME Group has been building among Nymex members. One member told Bloomberg News that exchange Chairman Richard Schaeffer had confided that he didn’t support the current price for the deal.

While Nymex and Schaeffer have not officially denied the report, the Form 8K filing on March 20 by Nymex noted that Schaeffer along with President and CEO James Newsome and several large corporate shareholders had signed a “Voting and Support Agreement” with the CME in connection to the merger.

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Nymex: The Simple things you see are all complicated…

Thursday, April 17th, 2008

The Financial Times is reporting that Nymex has set a June 3 date for a member meeting to discuss Nymex bylaw 311-G, which in effect says that that should Nymex end floor trading for a listed product, or Nymex list it only for electronic trading, or if 90% of the volume is traded electronically, members would be entitled, in perpetuity, or until the exchange no longer lists the product to trade electronically, to whatever is greater: 10% of the gross revenue or 100% of the additional fees or surcharges.

As a thought experiment, substitute “no longer exists.” for “no longer lists…”

See page 18 of the bylaws.

And another thing…

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CME/Nymex – It ain't over…

Friday, April 11th, 2008

A definitive proxy statement may not be your idea of a great read, but the one Nymex filed on Tuesday is full of interesting surprises, not the least of which is the $60 million door prize awarded to senior management under a change in control situations (turn to Change in Control Plan, page 24).

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Suit filed against MF Global

Tuesday, March 18th, 2008

Hot on the heels of the rogue trader incident that cost the firm $141 million a couple weeks ago, MF Global shares declined to $6 per share on Monday, March 17 from $17 on Friday, March 14. The loss prompted the company to issue a press release yesterday stating that its counterparty relationships are sound, that it is not experiencing any difficulty with its repo lines and has no exposure to subprime mortgage backed securities. And Joe Lewis, the Bermuda based football team owner who lost a billion dollars in the Bear Sterns debacle, he’s not a client. The CME Group, New York Mercantile Exchange and the Intercontinental Exchange issued releases stating that the company continues to meet its obligations to their clearing houses, and even the Commodity Futures Trading Commission stood up and said the firm continues to meet its regulatory requirements.

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CME CEO mum on Nymex talks

Monday, January 28th, 2008

CME Group announced today it has successfully migrated e-cbot interest rate futures and options on futures to its CME Globex electronic trading platform. The bigger news of the day, however, was preliminary acquisition discussions between CME Group and Nymex. CME Group confirmed that the two organizations have agreed to a 30-day exclusive negotiating period. Under the terms being discussed, shareholders of Nymex would receive $36 in cash and 0.1323 of a share of CME Group’s common stock (the exchange ratio), in exchange for each Nymex share.CME Group and Nasdaq held a panel discussion today on global trading trends, but did not mention the Nymex talks at the panel. Panelists, including CME CEO Craig Donohue, Nasdaq CEO Bob Greifeld, Matt Andresen, co-head of Citadel, and Kevin Davis, CEO of MF Global, instead discussed various economic issues, including the falling dollar, the importance of speed in electronic trading in their respective organizations and the growth of business in the BRIC region (Brazil, Russia, India, and China). Davis touted MF Global’s growth in China and India in particular, while Donohue mentioned CME’s recent agreement to acquire a 10% stake in the Brazilian exchange. After the panel discussion, journalists mobbed Donohue for information on the possible Nymex deal, but he had no comment beyond CME’s previously released statement.

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News or snooze?

Wednesday, December 19th, 2007

The Commodity Futures Trading Commission (CFTC)’s reauthorization dance continues with the Senate approval of the CFTC Reauthorization Act of 2007. We’ve seen this all before, though, as the CFTC has been in regulatory limbo for a few years, with various reauthorization moves passed by lawmakers always stalling somewhere along the way. The New York Mercantile Exchange (Nymex) for its part voiced approval for the latest reauthorization act, especially as it pertains to energy markets. Nymex CEO James Newsome said in a press statement that Nymex “strongly supports the approach the Senate has taken on oversight of the energy markets. We believe this legislation would…implement reform in a focused and thoughtful manner.”

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Oil slick

Wednesday, December 5th, 2007

Mixed government inventory reports caused a drop in energy futures Wednesday, and an announcement by the Organization of Petroleum Exporting Countries (OPEC) did little to change the situation. OPEC decided to leave production levels steady at its meeting in Abu Dhabi, but investors shrugged off OPEC’s decision, according to the Associated Press. The Energy Department’s Energy Information Administration (EIA) reported a larger than expected decline in crude supplies and increases in heating oil and gasoline inventories.

“OPEC’s not adding production in the market was expected,” Eric Wittenauer, energy analyst at AG Edwards, says. He called the market oversold in the near term and said he remains bearish on the market overall.

According to the Associated Press, light, sweet crude for January delivery fell 83 cents to settle at $87.49 a barrel on the New York Mercantile Exchange, oil’s lowest close since Oct. 24. Prices drifted lower in after-hours trading, dipping below $87, the AP said.

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Shot guns, rifles and a new regulatory environment

Wednesday, September 19th, 2007

After listening to the CFTC hearing yesterday, I thought it might be useful to offer up a quick overview of the positions taken during the testimony yesterday in the hearing to examine trading on regulated exchanges and exempt commercial markets.

First, Jeffrey C. Sprecher, chairman and CEO of the Intercontinental Exchange (ICE), who arguably has the most to lose if exempt commercial markets (ECM) become subject to the same level of regulatory scrutiny as designated contract markets (DCM), seems willing to accept that outcome as an eventuality for commodities like natural gas, which have specific analogs in the regulated futures markets. He argues for a highly targeted approach.

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