NEW YORK, May 7 /PRNewswire-FirstCall/ — NYMEX today issued the following
statement regarding the Consumer-First Energy Act of 2008, a bill introduced
today by Senate Democrats:
NYMEX recognizes that there is broad concern over current crude oil price
levels, and we support the legitimate work that Congress is doing to address
high energy prices and to protect consumers. However, with regard to the
current Senate energy bill, NYMEX believes the subsection dealing with margins
is misguided in at least four respects.
First, in a highly transparent, regulated and competitive market, prices
are affected primarily by fundamental market forces and imposing more onerous
margin levels will not affect price levels. Currently, uncertainty in the
global crude market regarding geopolitical issues, refinery shutdowns and
increasing global usage, as well as devaluation of the U.S. dollar, are now
market fundamentals. Second, in futures markets, margins function as
financial performance bonds and are employed to manage financial risk and
ensure financial integrity, not restrict or manage trading activity.
Third, the data consistently indicates that the percentage of open
interest in NYMEX crude oil futures held by non-commercial participants
(relative to commercial participants) actually decreased over the last year
even at the same time that prices were increasing. Fourth, given the reality
of global competition in energy derivatives, increasing crude oil margins on
futures markets regulated by the U.S. Commodity Futures Trading Commission
inevitably will force trading volume away from regulated and transparent U.S.
exchanges onto dark unregulated venues and onto less transparent overseas
markets.
Finally, over the last several years, NYMEX has worked closely with
Congressional leaders and has provided information and other assistance to the
CFTC on policy initiatives passed by the Senate last December that would add
greater transparency to unregulated derivatives venues. Regrettably, this
proposed margin provision, which would push trading from regulated and
transparent markets to unregulated and nontransparent markets, would
constitute a significant step backward in transparency and market integrity.
About NYMEX Holdings, Inc.
NYMEX Holdings, Inc. (NYSE: NMX) is the parent company of the New York
Mercantile Exchange, Inc., the world’s largest physical commodities exchange,
offering futures and options trading in energy and metals contracts and
clearing services for more than 400 off-exchange contracts. Through a hybrid
model of open outcry floor trading and electronic trading on CME Globex(R) and
NYMEX ClearPort(R), NYMEX offers crude oil, petroleum products, natural gas,
coal, electricity, gold, silver, copper, aluminum, platinum group metals,
emissions, and soft commodities contracts for trading and clearing virtually
24 hours each day. Further information about NYMEX Holdings, Inc. and the New
York Mercantile Exchange, Inc. is available on the NYMEX website at
http://www.nymex.com.
Forward Looking and Cautionary Statements
This press release may contain forward-looking statements within the
meaning of the Private Securities Litigation Reform Act, with respect to our
future performance, operating results, strategy, and other future events. Such
statements generally include words such as could, can, anticipate, believe,
expect, seek, pursue, and similar words and terms, in connection with any
discussion of future results. Forward-looking statements involve a number of
assumptions, risks, and uncertainties, any of which may cause actual results
to differ materially from the anticipated, estimated, or projected results
referenced in forward-looking statements. In particular, the forward-looking
statements of NYMEX Holdings, Inc., and its subsidiaries are subject to the
following risks and uncertainties: the success and timing of new futures
contracts and products; changes in political, economic, or industry
conditions; the unfavorable resolution of material legal proceedings; the
impact and timing of technological changes and the adequacy of intellectual
property protection; the impact of legislative and regulatory actions,
including without limitation, actions by the Commodity Futures Trading
Commission; and terrorist activities and international hostilities, which may
affect the general economy as well as oil and other commodity markets. We
assume no obligation to update or supplement our forward-looking statements.
SOURCE NYMEX Holdings, Inc.
May 8th, 2008 at 12:03 pm
[...] not just bloggers who oppose the Consumer-First Energy Act, the New York Mercantile Exchange (NYMEX) released a statement yesterday decrying the windfall profits title of the bill as “misguided.” According to the statement: “Regrettably, this [...]