The battle for the over-the-counter (OTC) market entered the courtroom last Wednesday as the New York Mercantile Exchange (Nymex) filed a lawsuit against IntercontinentalExchange (ICE) for copyright violations in its use of Nymex natural gas and crude oil futures settlement prices.

Nymex states that since April ICE has been “copying, reproducing, distributing and preparing” derivatives based on Nymex settlement prices for Henry Hub natural gas futures and WTI (West Texas Intermediate) Cushing light sweet crude oil. Nymex determines its commodity futures and options settlement prices based on trading conducted on the exchange and over its own electronic trading platform, Nymex Access, which offers many of the same products that are offered on ICE.

According to the lawsuit filed in Manhattan federal court, Nymex claims its settlement prices are protected by copyright law. It alleges that ICE has been copying the prices “in order to clear and financially settle trades of derivative contracts for those commodities” on its own exchange, which is in competition with Nymex.

ICE is an electronic trading platform based in Atlanta that offers hundreds of commodity products including precious metals, petroleum, natural gas and power. Its main domestic rival is Nymex, which began offering its own suite of OTC commodities for trading earlier this year. ICE also owns the London-based International Petroleum Exchange. OTC transactions on ICE are cleared through an arrangement with the London Clearing House.

ICE spokeswoman Kelly Loeffler said last week that she hadn’t seen the lawsuit and couldn’t comment. She did, however, indicate that ICE does clear contracts using Nymex futures settlement prices.

Nymex believes it “has lost and will continue to lose substantial revenues and profits” as a result of the alleged copying. The lawsuit seeks a court order barring ICE from copying its settlement prices and making it pay Nymex an unspecified amount in damages.

ICE and Nymex have been rivals for several years but started seriously butting heads in the over-the-counter market this summer. Earlier this month, ICE said about one million natural gas contracts have been cleared through its system since March with a notional value of about $10 billion. Nymex announced last Thursday that a record $1.2 billion in over-the-counter gas and power transactions were cleared Wednesday, breaking the record of $514 million in cleared OTC transactions set on Sept. 26. Since OTC clearing service were launched on May 31, more than $3.4 billion worth of transactions have been cleared through Nov. 20. Both exchanges are attempting to fill the void in the OTC market left by EnronOnline, which became ubswenergy.com after UBS Warburg bought the severely weakened operation last year.

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