New York Mercantile Exchange

New York Mercantile Exchange
Company type	Subsidiary
Industry	Commodity futures exchange
Founded	1882
Headquarters	New York City, United States
Area served	International
Owner	CME Group
Parent	CME Group

The New York Mercantile Exchange (NYMEX) operates as a commodity futures exchange under the ownership of the CME Group, headquartered in Chicago. Its main office is situated at One North End Avenue within Brookfield Place, located in Battery Park City, Manhattan, New York City.

NYMEX comprises two principal branches: the New York Mercantile Exchange itself and Commodity Exchange, Inc (COMEX), which were previously independent entities. Founded in 1882, NYMEX began as a member-owned organization. The parent company, NYMEX Holdings, Inc., overseeing both exchanges, launched its initial public offering on the New York Stock Exchange on November 17, 2006, trading under the symbol NMX. Subsequently, on March 17, 2008, CME Group reached an agreement to acquire NYMEX Holdings for $11.2 billion through a combination of cash and stock, finalizing the acquisition by August 2008. Presently, NYMEX and COMEX function as designated contract markets (DCMs) within the CME Group framework, alongside the Chicago Mercantile Exchange and the Chicago Board of Trade.

Through its trading floor and electronic platforms, NYMEX manages transactions worth billions involving oil, energy carriers, metals, and other commodities for future delivery. The prices established on this exchange serve as international benchmarks across various commodity markets.

Oversight of the exchange floor is provided by the Commodity Futures Trading Commission, a regulatory body of the U.S. government. Trading companies are required to employ their own brokers since exchange personnel solely document trades without engaging in transactions themselves.

While electronic trading has dominated since 2006, NYMEX preserved a limited "pit" for open outcry trading until December 30, 2016, when it was discontinued due to diminishing activity.

Early history

Commodity exchanges originated during the mid-19th century as venues designed to streamline commodity trading by implementing quality standards and business protocols. By the late 1800s, approximately 1,600 such markets operated at ports and railroad hubs. In 1872, dairy merchants in Manhattan established the Butter and Cheese Exchange of New York to organize their trade. The exchange soon expanded to include egg trading and was renamed the Butter, Cheese, and Egg Exchange before adopting the name New York Mercantile Exchange (NYMEX) in 1882 as it broadened its scope to dried fruits, canned goods, and poultry.

The early 20th century saw the emergence of centralized warehouses in major hubs like New York and Chicago, which contributed to the decline of smaller regional exchanges and consolidated trading activities at larger venues such as NYMEX. In 1933, COMEX was created through the merger of four smaller exchanges: National Metal Exchange, Rubber Exchange of New York, National Raw Silk Exchange, and New York Hide Exchange. Throughout much of the late 20th century, COMEX and NYMEX operated jointly on a shared trading floor located in 4 World Trade Center.

Goods

Historically, NYMEX traded futures contracts on Maine potato crops but encountered significant issues with market manipulation during the 1970s. A prominent case involved Idaho potato entrepreneur J.R. Simplot allegedly engaging in large short positions that left numerous contracts unsettled upon expiration. This controversy sparked public backlash and hearings by the Commodity Futures Trading Commission (CFTC). As a result, NYMEX was prohibited from continuing potato futures trading and barred from entering new commodity markets it had not previously engaged with. This episode severely impacted NYMEX’s standing; as future chairman Michel Marks remarked, "The essence of an exchange is the sanctity of its contract."

Despite this setback, markets for platinum, palladium, and heating oil remained unaffected. To regain trust and pursue new avenues for growth, then-president Richard Leone appointed John Elting Treat—a former White House energy advisor—to spearhead initiatives. Treat advocated for launching a West Texas Intermediate (WTI) crude oil futures contract with delivery centered in Cushing, Oklahoma—successfully persuading both board members and stakeholders to back this strategic move into petroleum derivatives.

Treat also encouraged cooperation with Robin Woodhead from London’s International Petroleum Exchange (IPE), supporting development of Brent crude contracts internationally. Under Treat’s guidance, NYMEX introduced gasoline futures and options contracts despite initial resistance rooted in traders’ limited quantitative skills; incentives were used to attract options traders from the American Stock Exchange. Research efforts began focusing on natural gas and electricity futures markets—prioritizing natural gas despite complexities in determining delivery locations.

Marketing campaigns targeted leading U.S. and British oil corporations before expanding outreach to Middle Eastern producers such as Venezuela. OPEC initially resisted these efforts strongly; rumors circulated that Arab producers used gold futures as a surrogate for oil price hedging.

Following the ban on potato futures—which had been central to NYMEX’s portfolio—chairman Michel Marks together with economist Arnold Safer revitalized operations by overhauling heating oil futures after deregulation by government authorities. Trading commenced modestly in 1978 with participation from smaller suppliers concentrated in northern U.S. regions.

NYMEX’s transparent pricing mechanism for heating oil—and subsequently crude oil, gasoline, and natural gas—posed a challenge to entrenched interests including major oil companies and OPEC itself. Standardized futures contracts for West Texas Intermediate light sweet crude delivered at Cushing solidified NYMEX’s role as a pivotal force within global energy commodity markets.

Expansion

NYMEX's swift growth was largely driven by its energy trading operations. The open outcry trading floor evolved into a dynamic environment where traders from outside the conventional Wall Street sphere found avenues for significant financial success. Goodman's account emphasizes influential figures who played pivotal roles during this period of expansion.

COMEX (Commodity Exchange, Inc), once a neighbor at 4 World Trade Center and traditionally dismissive of NYMEX due to its smaller scale and earlier failures, was eventually overtaken as NYMEX's energy trading surge boosted its size and profitability. On August 3, 1994, NYMEX and COMEX merged, continuing under the NYMEX banner. By the late 1990s, demand for trading space exceeded availability, prompting NYMEX to move in 1997 to a new facility within Manhattan’s World Financial Center. In 2014, these buildings were rebranded as Brookfield Place.

Impact of September 11, 2001 Attacks

The terrorist attacks on September 11, 2001 destroyed the original headquarters and trading floor of the New York Board of Trade (NYBOT) located at the World Trade Center. Several NYMEX employees lost their lives, although the newer NYMEX building remained mostly undamaged. Despite widespread destruction in Lower Manhattan, management rapidly restored exchange operations.

The art gallery situated within the WTC/WFC NYMEX building continued showcasing global and community artworks until 2012, concluding with a solo exhibition by actualist artist Terry Ward.

On February 26, 2003, the New York Board of Trade (NYBOT) secured leased space within NYMEX’s World Financial Center location. In response to the attacks, NYMEX invested $12 million to establish a backup trading floor outside New York City, equipped with 700 trader stations, 2,000 telephones, and a redundant computer system designed to maintain operational resilience against future disruptions.

Transition to Electronic Trading

Although NYMEX had long dominated "open market" oil futures trading, the early 2000s saw electronic platforms begin to erode this dominance. Enron’s online energy marketplace and Jeff Sprecher’s Intercontinental Exchange (ICE) launched electronic oil contracts closely resembling those offered by NYMEX, quickly capturing market share.

While pit traders at NYMEX resisted electronic trading due to concerns about income and lifestyle impacts, company leadership acknowledged its necessity for remaining competitive. In 2006, NYMEX collaborated with the Chicago Mercantile Exchange to implement Globex, resulting in a decline in pit trading as banks, hedge funds, and major oil firms increasingly engaged in direct electronic transactions.

During this era, NYMEX also contributed to founding the Dubai Mercantile Exchange in the United Arab Emirates. This initiative is chronicled in Ben Mezrich's bestselling book Rigged, which has been optioned for cinematic adaptation by Summit Entertainment.

Divestiture

In 2006, NYMEX completed an initial public offering (IPO) on the New York Stock Exchange, allowing executives and seat-owning members to realize significant financial returns. However, many pit traders who leased seats did not share in these benefits. Subsequent sales of assets transferred ownership stakes to private equity firms and the Chicago Mercantile Exchange (CME). CME acquired physical properties, gradually retired the NYMEX brand from these assets, and shuttered the NYMEX museum. By 2011, open outcry trading on NYMEX had diminished substantially, limited primarily to a small group engaged in options trading.

In 2009, holders of COMEX gold futures contracts reported complications with delivery processes, including delays and receipt of bars that did not match expected serial numbers or weights. These issues prompted concerns about whether COMEX’s gold reserves were adequate relative to outstanding warehouse receipts.

Trading Platforms

Open outcry system (Pit)
Electronic trading via Globex

Traded Commodities

NYMEX Sector

COMEX Sector

References

Notes

Bibliography

External Links