What an exchange. They just keep getting bigger and bigger. Here’s a bit from a story by Liz Moyer
The Merc has agreed to be the exclusive electronic-trading post for Nymex’s key oil, gas and gasoline contracts and, eventually, for the metals futures traded in Nymex’s Comex division through 2016. But the ten-year pact between the two falls short of a merger at a time of frenzied consolidation in the markets.
It does give Nymex, which is planning on an initial public offering later this year, a critical boost in electronic trading to complement its traditional open-outcry floor-trading model. Its small electronic-distribution system has allowed upstarts like the Atlanta-based IntercontinentalExchange (nyse: ICE – news – people ), an electronic energy-trading network, to whittle away at Nymex’s market dominance in the sector. ICE has grabbed 19% of the market for Nymex’s benchmark oil future contract, for example.
In commodities, Nymex has also lost ground to electronic exchanges. Two years ago, the Chicago Board of Trade (nyse: BOT – news – people ) introduced an electronic gold futures contract and has parlayed it into a 19% share of the trading in gold futures.
Energy and commodities trading has attracted the attention of hedge funds and Wall Street firms, which are eager to hitch a ride on the explosive growth in both markets. Part of the attraction is the raw materials themselves: Gold topped $600 per ounce Thursday–a 25-year high–while oil is trading above $68 per barrel. The Futures Industry Association notes that trading volume in energy futures and options rose 13% last year.
To read more go here.