The New York Mercantile Exchange (Nymex) has extended its energy market dominance into the over-the-counter (OTC) market by clearing $1.5 billion in OTC instruments since starting OTC clearing at the end of May. As of Nov. 1, Nymex has cleared 441.1 trillion Btus of gas and 152,800 MWh of power.

Open interest as of the end of the day on Nov. 1 was valued at $838 million and was equivalent to 262.3 trillion Btus of natural gas and 34,400 MWh of electricity, Nymex said. It covered natural gas transactions at the Henry Hub and seven principal basis pricing points in the United States – Chicago Citygate, Houston Ship Channel, Northwest Pipeline Rockies, Panhandle Eastern Pipe Line Co. Texas-Oklahoma mainline, San Juan Basin, Southern California, and Transco Zone 6 New York, as well as electricity transactions at the Pennsylvania-New Jersey-Maryland regional power hub (PJM Interconnection).

“The rapid and continued growth of cleared OTC transactions, its growing open interest, and the widening geographic scope of that business is an affirmation of the financial integrity of the exchange clearinghouse which serves as a shield against the risk of counterparty default,” said Exchange President J. Robert Collins Jr. He added that OTC clearing allows energy market participants the flexibility of negotiating their own deals and submitting them to the exchange. The exchange also nets the positions of cleared OTC and exchange transactions to determine margin rates, reducing costs and improving cash flow.

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