Magazine article Modern Trader

Crude Awakening: Changes Afoot at Nymex

Magazine article Modern Trader

Crude Awakening: Changes Afoot at Nymex

Article excerpt

With seats selling for $1.9 million, oil setting volume records, new offices opening in Japan and Singapore and 41 new ClearPort contracts this year, members of The New York Mercantile Exchange Inc. (Nymex), the world's largest energy commodities exchange, should be ecstatic.

But apparently some members are worried. On March 30, Nymex member Mark B. Fisher, CEO of MBF Clearing Corp., called a "town hall meeting" for all members. Items on the agenda included the rise of aggressive competition, a Nymex initial public offering (IPO) and the inclusion of a private equity partner, which could accelerate the process of going public, which many perceive as stalled. Seven days later, Nymex Chairman Mitchell Steinhause formed an exploratory IPO committee.

It wasn't supposed to be this way. Nymex demutualized in November 2000, a move other exchanges since have used to streamline operations and centralize control to act decisively in a competitive environment. Despite demutualization, Nymex continues to face the parochial battles it was supposed to solve, leaving it with a clunky mutual style organization and no cash infusion from an IPO. The Nymex board rejected a $980 million bid by Parthenon Capital LLC for a majority stake in the exchange last spring, which would have forced a board restructuring and layed the groundwork for an IPO.

One Nymex member says the diverse membership agrees Nymex seat value should be monetized, and characterized the board of directors as "creaky" and overly protective of their own interests. "The members are frustrated with the process and the process is a euphemism for the board," he says.

The member says the board is torn in defense of open outcry, high seat values and the lease income that certain shareholders enjoy and cites the example of the CME's IPO. "Seat values collapsed and literally transferred the value of those seats and lease incomes over to equity. …

Search by... Author
Show... All Results Primary Sources Peer-reviewed

Oops!

An unknown error has occurred. Please click the button below to reload the page. If the problem persists, please try again in a little while.