Mr. Daniel Rappaport, Chairman of the Board
Mr. Christopher K. Bowen, Senior Vice President
and General Counsel

New York Mercantile Exchange
One North End Avenue
World Financial Center
New York, NY 10282-1101

Mr. Neil Citrone, Secretary
Mr. Christopher K. Bowen, Senior Vice President
and General Counsel
NYMEX Holdings, Inc.
One North End Avenue
World Financial Center
New York, NY 10282-1101

Mr. Daniel Rappaport, Chairman of the Board
Mr. Neil Citrone, Secretary
Mr. Christopher K. Bowen, Senior Vice President
and General Counsel
New York Mercantile Exchange, Inc.
One North End Avenue
World Financial Center
New York, NY 10282-1101

Re: Proposed Certificate of Incorporation for New York Mercantile Exchange, Inc., Proposed Extinguishment of NYMEX’s Current Articles of Incorporation, Proposed New Sections to NYMEX Bylaws, Proposed Amendments to Existing NYMEX Bylaws and Rules, and Request to Transfer All Existing Contract Market Designations to New York Mercantile Exchange, Inc., to Implement NYMEX’s Demutualization Plan
(Submission No. 00-16)

Dear Messrs. Rappaport, Bowen and Citrone:

By letters dated May 15, 2000, through July 20, 2000, New York Mercantile Exchange, (“NYMEX”) and New York Mercantile Exchange, Inc. (NYMEX, Inc.”) submitted to the Commodity Futures Trading Commission (“Commission”) proposed new Certificate of Incorporation, proposed extinguishment of NYMEX’s current Certificate of Incorporation, proposed new Bylaws, proposed Bylaws and Rule amendments and a request for the transfer to NYMEX, Inc. of all NYMEX existing contract market designations, pursuant to Sections 4c, 5a(a)(12)(A) and 6 of the Commodity Exchange Act (“Act”), 7 U.S.C. §§ 6c, 7a and 8, and Commission Regulation 1.41(c), to implement NYMEX’s Demutualization Plan. NYMEX’s proposed Demutualization Plan would merge NYMEX, a New York not-for-profit membership corporation, into NYMEX, Inc., a Delaware non-stock corporation, and NYMEX Holdings, Inc. (“NYMEX Holdings”) a Delaware for-profit stock corporation.

The Commission has reviewed the materials submitted by NYMEX, NYMEX Holdings and NYMEX, Inc. Please be advised that on this date the Commission has determined to approve, pursuant to Section 5a(a)(12)(A) of the Act, § 7a(a)(12)(A), and Commission Regulation 1.41(c), the proposed Certificate of Incorporation of NYMEX, Inc., the proposed extinguishment of NYMEX’s current Certificate of Incorporation, proposed new NYMEX, Inc. Bylaws 927, 928, 929, 930, 931, and 932; and the proposed amendments to: (1) Bylaw Sections 100, 102, 103, 106-110, 150, 153-155, 200-206, 300-314, 351-354, 356, 400-405, 407-409, 500, 502-504, 600, 700-703, 800-802, 850-863 and 901-926; and (2) Rules 1.03, 1.08, 1.11, 1.12, 1.16-1.19, 1.22, 2.01, 2.41-2.43, 2.52, 2.53, 2.55, 2.56, 2.61, 2.70, 2.75C, 2.77, 3.00, 3.03, 3.04, 3.10, 3.11, 3.12-3.14, 3.17, 3.20-3.22, 3.24, 3.29, 3.35-3.37, 3.39, 3.41, 3.42, 3.44, 3.45, 5.01, 6.05, 6.21, 6.21B, 6.26, 8.00, 8.01, 8.07, 8.21, 8.24, 8.58, 8.62, 8.69, 8.99, 9.00, 9.02, 9.03A, 9.17, 9.18, 10.02, 10.06, 11.01-11.03, 11.05, 11.06, 11.08-11.08A-2, 11.13, 11.14,11.20 and 11.21; in order to implement NYMEX’s Demutualization Plan. The Commission confirms that the status of each rule of the NYMEX Rulebook, under the Act and the Commission’s regulations, is not affected by the consummation of the Demutualization Plan except as each rule is amended herein. The Commission understands that NYMEX, Inc. will adopt the NYMEX Rulebook, as amended herein.

The Commission also has concurrently issued an Order transferring all of NYMEX’s existing contract market designations from NYMEX to NYMEX, Inc., including the transfer of all existing open interest in all such contracts, and designating NYMEX, Inc. as a contract market for all such contracts. NYMEX has stated that all existing open interest in all NYMEX’s existing non-dormant contracts would be converted to represent open interest in NYMEX, Inc.’s contracts upon consummation of the merger.

The Commission’s approval of the transfer of all existing contract market designations, including the transfer of all existing open interest, is based upon the representations of NYMEX that none of the rule changes under the Demutualization Plan will affect the rights and obligations of any participant with open positions transferred from NYMEX to NYMEX, Inc. The Commission further relies on NYMEX’s representation that the rule changes do not modify the manner in which such contracts are cleared. The Commission understands that market participants have been notified of changes to the NYMEX Rulebook, the concurrent transfer of the contract market designations from NYMEX to NYMEX, Inc. and related transfer of all open interest upon consummation of the merger of NYMEX into NYMEX, Inc. and NYMEX Holdings under the Demutualization Plan.

The Commission’s approval of NYMEX’s proposed Certificate of Incorporation, proposed extinguishment of NYMEX’s current Certificate of Incorporation, proposed new Bylaws, and proposed amendments to NYMEX’s Bylaws and Rules to implement NYMEX’s Demutualization Plan, is based upon the written submissions and the explanations provided by NYMEX, NYMEX Holdings and NYMEX, Inc. describing the Demutualization Plan. The Commission’s approval also is based upon representations of NYMEX, NYMEX Holdings and NYMEX, Inc. that NYMEX, Inc. will, upon the merger, be the legal successor-in-interest to NYMEX, will meet all the requirements for contract market designation, will assume all the assets and liabilities of NYMEX and will comply with all self-regulatory requirements applicable to designated contract markets under the Act and the Commission’s regulations including, but not limited to, the surveillance and enforcement requirements, the governing board and disciplinary committee composition requirements, and the prohibition against conflicts of interest and insider trading. Furthermore, the Commission’s approval is based upon the adoption by NYMEX Holdings, in its Bylaws or Resolutions, of the standards set forth in Commission Regulations 1.59, 1.63, 1.64 and 1.69.

The Commission reminds NYMEX, NYMEX Holdings and NYMEX, Inc. that any subsequent NYMEX Holdings or NYMEX, Inc. rule changes associated with the Demutualization Plan must be submitted for Commission review. The Commission understands that unstapling the trading rights in NYMEX, Inc. from the equity interests in NYMEX Holdings will necessitate rule changes. Accordingly, the Commission reminds NYMEX, NYMEX Holdings and NYMEX, Inc. that subsequent rules changes necessitated by the unstapling, at either NYMEX Holdings or NYMEX, Inc., must be submitted for Commission review. The Commission also reminds NYMEX, and NYMEX, Inc. that rule changes necessitated by the consolidation of the COMEX Clearing Association, Inc. into the NYMEX clearinghouse, whether associated with the Demutualization Plan or not, must be submitted for Commission review. In addition, the Commission reminds NYMEX, Inc. that, as agreed to in its representations, it will remain subject to all self-regulatory responsibilities applicable to a board of trade under the Act and the Commission’s regulations. Furthermore, the Commission reminds NYMEX Holdings that the Act and the Commission’s regulations would apply to NYMEX Holdings, as owner, parent and principal of NYMEX, Inc., a subsidiary of NYMEX Holdings and a designated contract market, to the same extent that the Act and the Commission’s regulations apply to any person that owns, controls or is a principal of another person.

The Commission’s approval of the above-referenced proposed rules and rule changes implementing NYMEX’s Demutualization Plan is subject to the following conditions: (1) The existence of NYMEX, 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 NYMEX Holdings and NYMEX, Inc., simultaneous with the foregoing transfers; (3) the adoption of the NYMEX Rulebook, as amended, by NYMEX, Inc.; and (4) the continuing compliance of NYMEX, Inc. with all applicable provisions of the Act and the Commission’s regulations thereunder.

Sincerely,

Jean A. Webb
Secretary of the Commission