EXCHANGE OVERVIEW

FUTURES & OPTIONS

OPEN OUTCRY TRADING

ELECTRONIC TRADING

CLEARING

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without the need to seek out a particular counterparty.

This is made possible by the liquidity of the Exchange's

markets, the anonymity of the trading process, and the

role of the Exchange clearinghouse which effectively

becomes the counterparty to each trade.

For the last several years, the Exchange has received

and maintained an AA+ long-term counterparty credit

rating from Standard & Poor’s. A list of clearing

members, who represent some of the biggest names

in financial services, can be found at

www.nymex.com.

The first successful energy futures market was

established at the Exchange in 1978 with the launch

of the heating oil futures contract. The core slate of

energy contracts trades on the NYMEX Division and

includes physically delivered futures and options

contracts for light sweet crude oil, gasoline, heating

oil, and natural gas; propane futures; options contracts

on the price differentials, or crack spreads, for

gasoline/crude oil, and heating oil/crude oil; and the

differentials between contract months, or calendar

spreads, for crude oil, gasoline, heating oil, and

natural gas.

Among the metals markets, futures and options for

gold, silver, copper, and aluminum trade on the

COMEX® Division while platinum futures and options

and palladium futures trade on the NYMEX Division.

Commodity PriceRisk Management

The need to manage commodity price risk is well

recognized, particularly after more than three decades

of volatility in the energy and metals markets. Market

transparency, liquidity, and financial integrity is just as

vital now as when the New York Mercantile Exchange,

Inc. (NYMEX®) was founded in 1872 by a group of

dairy merchants endeavoring to bring a sense of order

to the chaotic markets of the day. Today, the Exchange

is the world’s preeminent trading forum for managing

price risk in the markets for energy, precious metals,

and North American copper.

In the effort to offset price risk however, other risks

are incurred that can be even more insidious – such

as market illiquidity and counterparty credit risk. The

failure of major firms on Wall Street and in London in

recent years and the collapse of an iconic energy

trader in Houston shows that counterparty risk is not

limited to smaller trading partners.

Liquidity and VersatilityProvide Integrity

The versatile futures and options contracts offered for

trading on NYMEX stand out as the principal risk

management instruments for the underlying products

which trade in a highly liquid and transparent market-

place that mitigates the risk of counterparty default.

Market participants enter and exit the market at will,

NYMEX EXCHANGE OVERVIEW | 1

VISION IS OUR GREATEST COMMODITYTM

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certain market participants on the trading floor and

brokers in the ring.

This beehive of activity represents a highly liquid,

highly transparent, and efficient marketplace. The

transparency of the market data generated by the

Exchange gives market participants worldwide the

confidence to use the prices determined on the

Exchange as benchmarks for the underlying

commodities because:

• Transaction prices are continuously reported during

the trading day.

• Settlement prices are reported daily.

• Trading volume and open interest are reported daily.

• Physical metals deliveries made in satisfaction of

the futures contracts and metals inventories are

reported daily.

• Energy deliveries made in satisfaction of the futures

contracts are reported monthly.

• Since the metals and core energy contracts are

physical delivery contracts, futures prices must

converge with cash market prices upon the

termination of trading in the spot month contract.

• If cash and futures prices are out of line,

arbitrageurs will quickly bring them into alignment.

NYMEX EXCHANGE OVERVIEW | 3

Exchange TradingDelivers Transparency

The energy and metals markets are available fortrading for 23 1/4 hours a day from Sunday eveningsthrough Friday afternoons. The physically deliveredfutures contracts are traded by open outcry andthrough the CME Globex® electronic trading system.Open outcry is conducted on the trading floor in a fiveto five-and-a-half hour daily session, Mondays throughFridays. Electronic trading takes place side-by-sidewith the floor during open outcry hours, seamlesslycontinuing after the floor closes in the afternoon andas it opens the following morning. Trading on CMEGlobex is conducted through a technology servicesagreement with the Chicago Mercantile Exchange.

While to a layman, an initial view of the trading floor

appears to be a mass of uncoordinated activity, in

reality there is an exquisite order behind the vigorously

gesturing traders, the clerks talking rapidly on the

phones amid tangles of telephone cords, and the price

reporters in their bright yellow jackets continuously

punching numbers into hand-held computers to

immediately transmit price changes to the huge

wallboards, with their constantly changing numbers,

and the outside world. At the same time, large display

screens around the trading floor keep track of the

electronic trading activity as it is conducted by market

participants who can be logged onto the CME Globex

system from almost anywhere in the world, including

The softs and NYMEX iPort indexes can also be

submitted solely for clearing. The final settlement

prices of many of the outright and basis petroleum

and natural gas contracts are based upon the final

settlements of the floor-traded futures contracts.

The integrity of these markets is assured through a

proactive system of trade, market, and financial

surveillance. All market participants, without

exception, post a performance bond called margin.

Market participants are also subject to limitations on

the number of open positions they may hold to ensure

that no entity assumes an obligation that is either

beyond his capability to fulfill or allows him to exert an

undue influence on the market.

For further information, please call 212-299-2301,

e-mail marketing@nymex.com, or visit

www.nymex.com.

The Exchange also lists financially settled contracts on

CME Globex. They include full-sized and fractional

futures for NYMEX crude oil, heating oil, gasoline, and

natural gas; financially settled metals contracts

including COMEX Asian gold; NYMEX® Asian platinum

and palladium; and fractional futures for COMEX gold,

silver, and copper, and COMEX® London aluminum,

copper, and zinc; financially settled NYMEX soft

commodities including coffee, sugar, cocoa, orange

juice, and cotton; and the NYMEX iPort™ index and

portfolio products created from different combinations

of liquid benchmark NYMEX contracts.

Global Market Coverage

The market coverage provided by the Exchange is

nearly continuous. In addition to the trading offered on

CME Globex, the Exchange also lists on the NYMEX

ClearPort® electronic platform from Sunday evenings

to Friday afternoons a slate of approximately 300

energy and related contracts that replicate popular

over-the-counter (OTC) transactions which can be

traded or transacted off of the Exchange and

submitted for clearing. The NYMEX ClearPort slate

covers outright or basis transactions for a wide range

of energy products including refined products in the

United States, Europe, and Asia; crude oil; natural

gas; electricity; coal; emissions credits; and freight

rates for petroleum shipments on principal world

tanker routes.

NYMEX EXCHANGE OVERVIEW | 5

New York

World Financial Center

One North End Avenue

New York, NY

10282-1101

U.S.A.

(212) 299-2301

Houston

1000 Louisiana Street

Suite 1095

Houston, TX

77002-5005

U.S.A.

(713) 658-9292

London

Veritas House

7th Floor

125 Finsbury Pavement

London, EC2A 1NT

U.K.

+44 (0)20 7131-3060

Tokyo

San Marino Shiodome

6th Floor

2-4-1 Higashi Shinbashi

Minato-ku

Tokyo 105-0021

Japan

+81 (0)3 5408-5291

Singapore

Level 31

Six Battery Road

Singapore 049909

+65-6322-8596