Nymex got final approval for its demutualization plan from theInternal Revenue Service, which said there would be no taxconsequences for the organization or its members. The plan, whichcalls for the equity in the exchange to remain with the seat-ownersof its Nymex Division, will make the exchange the first in New Yorkto convert from a not-for-profit membership structure to afor-profit organization.

The approval is the “final step in repositioning the exchangeas a 21st century business enterprise that will create and pursueprofitable new opportunities, react rapidly and decisively in anincreasingly competitive marketplace, and explore interest byoutside investors,” said Chairman Daniel Rappaport.

Nymex launched the plan last December. It was approved earlier thisyear by the Securities and Exchange Commission, the Commodity FuturesTrading Commission, and a 97.5% majority of the Exchange members (seeDaily GPI, May 5).

Once demutualization is effective, the exchange, anot-for-profit membership corporation under New York law, will bereorganized as a for-profit membership corporation under Delawarelaw and will be renamed New York Mercantile Exchange, Inc. A newstock-holding company named Nymex Holdings Inc., will be formed toown all of the economic interests and most of the voting control inthe for-profit membership corporation. Each existing Nymex Divisionmembership will be converted into one share of common stock inNymex Holdings, representing equity in the overall organization,and one membership in the exchange representing trading privileges.The common stock and trading privileges will not be separable untila majority of stockholders vote to permit separate trading of thecommon stock and trading rights.

Nymex is the largest physical commodity exchange in the world,with volume reaching close to 110 million contracts in 1999. Onaverage, $14 billion worth of transactions occur on the exchangeevery day.

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