Release: #4427-00
For Release:†††† July 28, 2000

Commission Approves New York Mercantile Exchange Demutualization Proposal

Washington -- On July 26, 2000, the Commodity Futures Trading Commission approved New York Mercantile Exchange ("NYMEX") rules and procedures implementing NYMEX's demutualization proposal. Under the proposal, NYMEX would convert from a New York not-for-profit membership corporation into a Delaware membership company, New York Mercantile Exchange, Inc., that would be a subsidiary of a Delaware for-profit stock corporation, NYMEX Holdings, Inc. The COMEX Division of NYMEX, a wholly-owned subsidiary of NYMEX, would become a wholly-owned subsidiary of NYMEX, Inc. The corporate structure of COMEX would remain the same. NYMEX's proposal had been approved by its members on June 20, 2000. Concurrent with its approval letter, the Commission issued an order transferring all of NYMEXís current contract market designations to the new exchange.

NYMEXís proposal is the second demutualization plan of an existing exchange that the Commission has approved. In reviewing the proposal, the Commission analyzed the potential impact of the plan on current NYMEX activities and, in particular, focused upon the ability of the new exchange, as a subsidiary of a for-profit parent, to continue to perform its self-regulatory responsibilities effectively.

The Commissionís approval and its issuance of the order transferring contract market designations are based upon fulfillment of certain specified conditions as well as certain representations of NYMEX, New York Mercantile Exchange, Inc. and NYMEX Holdings, Inc. The conditions, which are intended to assure that the new exchange will satisfy the Commodity Exchange Act and the Commission's regulations, are:

  1. the existence of New York Mercantile Exchange, Inc. as a corporation duly authorized and validly organized under the General Corporation Law of Delaware;
  2. the consummation of the merger of NYMEX into New York Mercantile Exchange, Inc. and NYMEX Holdings, Inc., simultaneous with the foregoing transfers;
  3. the adoption of the NYMEX Rulebook, as amended, by New York Mercantile Exchange, Inc.; and
  4. the continuing compliance of New York Mercantile Exchange, Inc. with all applicable provisions of the Act and the Commissionís regulations thereunder.

Before the demutualization plan can be implemented, the Internal Revenue Service must take certain action requested by the NYMEX.

Copies of the Commissionís Letter and Order are available by accessing the Commissionís website. For more information, see the Division of Trading and Markets' Memorandum recommending approval of NYMEXís demutualization plan and transfer of all contract market designations from NYMEX to New York Mercantile Exchange, Inc.