Magazine article Modern Trader

Clearing New Front in ICE/Nymex Feud. (Cleared for Takeoff)

Magazine article Modern Trader

Clearing New Front in ICE/Nymex Feud. (Cleared for Takeoff)

Article excerpt

Enron's debacle has affected the world of energy trading in many different ways, and those ripples have placed the New York Mercantile Exchange (Nymex) and Intercontinental Exchange (ICE) on a collision course. The fall of Enron's and other energy traders' electronic OTC trading platforms pushed many traders back to Nymex's regulated markers and created a market for cleared OTC trading.

Both ICE and Nymex have rushed to serve that market and have managed to step on each other's toes. The most recent salvo in this battle is Nymex's Clearport electronic trading system. Clearport offers 34 OTC look-alike futures contracts, first offered at the end of 2002, including Henry Hub natural gas swaps and West Texas Intermediate crude calendar swaps.

The new electronic swap futures contracts are completely standardized futures, traded multilaterally as opposed to bilateral OTC trading and are modeled after the most common OTC contracts, says a Nymex spokesman.

Clearport comes amid a legal tussle between the two exchanges.

Nymex has a lawsuit against ICE for copyright infringement stemming from ICE's use of Nymex settlement prices on its electronic trading platform. ICE has filed a counter suit claiming Nymex operates a monopoly and is attempting to expand that monopoly into the OTC market by preventing ICE from using publicly available settlement information and through other alleged anti-competitive practices.

ICE attorney David Gelberg says that Nymex has only recently sought copyright protection for its settlement prices and had in the past encouraged other markets to use those settlements as a benchmark for energy prices. …

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