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New York Mercantile Exchange Definition
The New York Mercantile Exchange (NYMEX) is the world’s largest exchange, trading physical commodity futures. It was founded in 1872 and is currently owned by the Chicago Mercantile Exchange Group (CME).
The other three exchanges operated under the Chicago Mercantile Group are; the Chicago Mercantile Exchange (CME), Chicago Board of Trade (CBOT) and Commodity Exchange, Inc. (COMEX).
A Little More on What is the New York Mercantile Exchange
The NYMEX was acquired by the Chicago Mercantile Group in 2008 for $11.2 billion in cash and stock. The headquarters of the NYMEX is located in Manhattan, New York City, and its other offices are in Washington, Boston, San Francisco, Atlanta, London, Tokyo, and Dubai.
Billions of dollars’ worth of metals, energy carriers, and other commodities are traded on the floor, as well as on the overnight electronic trading computer systems for future delivery. The energy futures and options contracts including contracts of crude oil, heating oil, natural gas, gasoline palladium, platinum, gold, and others are traded on the NYMEX.
The earliest version of the NYMEX was formed in 1872, as a group of Manhattan dairy merchants founded the Butter and Cheese Exchange of New York. After a few days, the trading of the egg was included in it and the name was changed to Butter, Cheese, and Egg Exchange. The name New York Mercantile Exchange was first used in 1882 when the dried fruits, poultry, and canned goods were added to the list. During the economic crisis of 2008, the NYMEX was acquired by the Chicago Mercantile Exchange Group as it became difficult for the exchange to survive commercially. After this acquisition, a number of energy products, as well as metals and agricultural contracts, were added to the list of trading by the NYMEX.
NYMEX is regulated by the Commodity Futures Trading Commission (CFTC), an independent market watchdog under the federal government of the United States. The NYMEX plays a vital role in trading and hedging, as it enables the companies to manage their risk by using futures and options on energy and precious metals. The total volume of the daily exchange of the CME group is about 30 million contract and 10% of it is traded on the NYMEX.
The companies trading on the NYMEX send their independent brokers to participate in the open outcry. The employees at the NYMEX record the transaction, while the independent brokers trade on behalf of the large companies.
References for the New York Mercantile Exchange
Academic Research on New York Mercantile Exchange
The death of copyright protection in individual price valuations, a flawed merger doctrine, and financial market manipulation: New York Mercantile Exchange v …, Murray, J. V. (2009). Buff. L. Rev., 57, 279. According to this paper, the death of the copyright protection which explains the valuation in the individual price of the commodity was explained. This valuation is however termed as a flawed merger doctrine and financial market manipulation. In a nutshell, this paper explains the York Mercantile exchange valuation.
New York Mercantile Exchange Egg Prices and Urner Barry Egg Quotations, Darrah, L. B., Forker, O. D., & Miller, R. L. (1968). According to this research paper, the New York Mercantile Exchange egg prices and the Urner Barry egg were explained and the correlation between these two markets was as well sated in this research paper.
Control on the New York Mercantile Exchange: Seat Ownership, Membership, and Voting Rights, Faber, A. E. (1996). Hofstra L. Rev., 25, 639. This paper explains the control measures imposed on the New York Mercantile Exchange rate via the seat ownership, membership and voting right.
Uses Maine Potato Growers Make of the New York Mercantile Exchange, Merchant, C. H. (1957). According to this academic research paper, Maine potato growers were used as an example to explain the New York Mercantile Exchange policies that take place in the futures market especially in the agricultural sector.
Experience of the New York Mercantile Exchange, Seetin, M., & Palmer-Huggins, D. (1999). This paper explains the experiences of the new/reformed New York Mercantile Exchange and also the ways in which these new improvements have helped to control the activities in the agricultural commodity and product market.
Can the New York Mercantile Exchange make coal a tradable commodity?, McFall, K. (2002). This paper asked the question of how the New York Mercantile Exchange can give rise to a tradable commodity. This question, however, was answered in this paper and the result was recorded.
Cost and benefits for using NYMEX (New York Mercantile Exchange) crude oil futures, Deaves, R., & Krinsky, I. (1991). According to this paper, the crisis in the Persian Gulf industry in the 1990-91 has shown how germane it is for end users of the petroleum industry to be able to reduce the risk of unexpected change in price. This paper explains the nature of these costs and benefits are discussed and explained and related analysis of this data gotten from the York Mercantile Exchange (NYMEX) crude oil futures market was explained. Although, the market appears to be effective and efficient when the past basis and returns are used as an explanatory variable and there is some evidence that the future return may be predicted using variables from macroeconomics.
New York Mercantile Exchange (NYMEX), Inglis-Taylor, A. (1995). In Dictionary of Derivatives (pp. 409-428). Palgrave Macmillan, London. This paper explains in full the meaning and the process by which the New York Mercantile Exchange affects the futures markets.