Nymex Holdings Inc., the parent company of the New York Mercantile Exchange Inc. (Nymex), on Friday closed on the previously announced purchase of a 10% equity stake in the Montreal Exchange Inc. (MX), Canada’s financial derivatives exchange. As part of the deal, Nymex and MX also announced the creation of the Canadian Resources Exchange Inc. (Carex), their new joint business venture dedicated to the Canadian energy marketplace.
First announced last month (see Daily GPI, Feb. 15), Nymex said it purchased the equity stake for an aggregate price of approximately $78 million, and the two exchanges jointly funded Carex with approximately $3.5 million.
“We are gratified to move our partnership with the Montreal Exchange to the next step with our equity purchase and the establishment of Carex,” said Nymex Chairman Richard Schaeffer. “We are excited to work with MX to create dynamic and innovative risk management tools to the Canadian commodities industry.”
MX and Nymex said that the joint venture has a two-phase business plan. First, the partners intend to offer clearing services to participants in over-the-counter (OTC) energy markets. The focus will be on both financial and physical contracts based primarily on Canadian energy commodities. In the second phase, the joint venture intends to develop and market on-exchange futures and options contracts for the same underlying commodities. By employing the services of the two partners, the joint venture hopes to benefit from economies of scale and lower operational costs.
MX offers trading in Canadian interest rate, index and equity derivatives. Clearing, settlement and risk management services are provided by an AA-rated clearinghouse, the Canadian Derivatives Clearing Corp., which is owned by MX. The exchange is also a significant owner and the technical operator of the Boston Options Exchange, a U.S. automated equity options market.
In the coming months, Carex, a Canadian corporation with its principal place of business in Calgary, AB, expects to offer trading and clearing services of OTC and on-exchange futures and options contracts for physical and financial settlement relating to Canadian-based energy (including natural gas, crude oil and electricity), metals and soft commodities.
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