Increasing the margin requirements for traders on Nymex would not dampen oil and gas price volatility, as some Congressmen have suggested, and in fact, might drive some market participants away, says James E. Newsome, Nymex president and chief executive. Nor does he like the idea of instituting commodity-price caps. "I'm a free-market economist." He made his remarks while in Houston recently to brief the media on the June 12 launch of energy-futures trading on CME Globex, the electronic, screen-based, 24-hour platform operated by the Chicago Mercantile Exchange. Nymex will adopt CME Globex e-trading hours. Both cash-settled and physical contracts will be offered. "We expect more volume, but we don't think that means more price volatility. The industry is very excited [about this new way to trade]," he said. Traders can now deal in the energy-futures complex in a variety of ways: open outcry, screen-based format, the cash (spot) markets and over-the-counter markets, 24 hours a day, creating more price transparency. This is not the only change under way at Nymex, which in the past two years has introduced 150 new trading products-most are derivatives of existing energy contracts. Nymex is responding to customer demand and to increased competition from other exchanges, primarily the Intercontinental Exchange (ICE), based in Atlanta and in London, which is 100% screen-based or electronic. Recently, Nymex sold a minority interest to New York investment management firm General Atlantic Partners and reduced its board from 25 to 15 members. "The board has more of a business tone now," Newsome said. Separately, Nymex will launch crude-oil trading in the Middle East, on the new Dubai Mercantile Exchange using Oman crude oil, to begin in the fourth quarter. In the European marketplace, Nymex is talking with the Russian government about trading Russian export crude out of Nymex's London facility. The oil would trade in London, be cleared through Globex and be listed on Nymex. "We are globalizing the Nymex franchise, as Nymex undergoes structural and cultural changes," he said. "We are constantly looking at business opportunities around the world, and at ways we can leverage our relationship with CME. "Our goal is to uncover the true price of the commodity in a transparent way, regardless of how uncomfortable that price might be."

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