New York Mercantile Exchange (NYMEX)
What Is the New York Mercantile Exchange (NYMEX)?
The New York Mercantile Exchange (NYMEX) is the world's largest physical commodity futures exchange and is today part of the Chicago Mercantile Exchange Group (CME Group), which is the world's leading and most assorted derivatives marketplace. CME Group comprises of four exchanges: Chicago Mercantile Exchange (CME), Chicago Board of Trade (CBOT), NYMEX, and the Commodity Exchange, Inc. (COMEX). Each exchange records many futures products, commodities, and global benchmarks across major asset classes.
Grasping the New York Mercantile Exchange (NYMEX)
An early form of NYMEX began in 1872 when a group of dairy dealers established the Butter and Cheese Exchange of New York. In 1994, NYMEX merged with COMEX to turn into the largest physical commodity exchange around then. By 2008, NYMEX couldn't economically make due on its own in the wake of the global financial crisis and merged with the CME Group of Chicago. The merger brought a rundown of energy, precious metal, and agricultural products to the CME Group of exchanges.
Futures and options on energy, precious metals, and agricultural commodities are at times used to speculate, but on the other hand are instruments for companies, farmers, and different industries that need to oversee risk by hedging positions. The straightforwardness with which these instruments are traded on the exchanges is indispensable to making protective positions (supports) and checking futures prices, making NYMEX an important part of the trading and hedging universes.
Daily exchange volume of the CME Group is around 30 million contracts with NYMEX making up around 10% of that amount due to the physical commodities that are traded on that exchange. A lot larger volumes are traded in interest rate futures, options, and forward contracts that trade on the Chicago Board of Trade (CBOT).
NYMEX is regulated by the Commodity Futures Trading Commission (CFTC), which is an autonomous agency of the United States government entrusted with the promotion of competitive and efficient futures markets as well as the protection of investors against manipulation, abusive trade practices, and fraud.
Limitations of the NYMEX
NYMEX is a open-outcry trading platform, where traders meet to haggle and settle on a market price for a commodity. Given that stock and commodity trading originates before the creation of the message, the telephone, or the computer by many years, it is genuinely clear that up close and personal human endlessly trading pits were the standard approach to carrying on with work for quite a while.
Today, nonetheless, open-clamor trading is on the decline, and the number of trading pits has dwindled. NYMEX has progressively presented electronic trading systems starting around 2006. As a matter of fact, given the cost benefits of the electronic systems and investor preference for fast order execution, a substantial percentage of the world's exchanges have previously changed over completely to electronic organizations. Right now, the United States is pretty much alone in keeping up with open-clamor exchanges.
The Bottom Line
The New York Mercantile Exchange is one of four exchanges owned and managed by the CME Group. The exchange manages trades revolved around commodities and futures. NYMEX spends significant time in energy, precious metals, and agricultural commodities.
Features
- NYMEX's contribution to the CME group from the acquisition was a substantial selection of energy products, metal contracts, and agricultural contracts.
- NYMEX trading is a large percentage of the total trading done by CME.
- The exchange records futures and options on different metals, energy, and agricultural commodities.
- NYMEX was once an open-objection market with trading pits, yet like most exchanges today, it has become progressively electronic.
- NYMEX is a commodities trading exchange that began in 1872 and was acquired by CME Group in 2008.
FAQ
What Is a Mercantile Exchange?
The word reference definition of a mercantile exchange is "a market for trading commodities."These types of markets are legal elements that decide and implement rules for trading standardized commodity contracts and related investment products. These types of markets trade trillions of dollars each day and are done as a rule by electronic trading.
What Gets Traded on the NY Mercantile Exchange?
Trading on the NYMEX incorporates a wide assortment of trading options like oil futures, metals futures, energy futures, and different commodities like agricultural products and others. Not at all like other market types, NYMEX doesn't trade in options or equities.
What Is the Difference Between CME and CBOT?
CME is the Chicago Mercantile Exchange and trades in much the same way to the NYMEX, in other words, that it trades in commodities and futures and incorporates energy, metals, and so on. CBOT is the Chicago Board of Trade and keeping in mind that it is presently under the CME umbrella, before the merger in 2006 the CBOT utilized tremendously various rules, regulations, trading motors, and traded with various offerings.
