The Energy Business Awards 2004, now in their third year, have been designed
to reward excellence in a number of key energy business disciplines – to
those companies who are making a significant mark on the way energy business is
conducted, trading risks mitigated, precious energy resources utilised, energy
systems developed, environmental degradation curtailed, energy technology advanced,
and energy production and consumption distributed more efficiently and ethically.
Thus, these Awards are intended to reward those who are making a positive impact
on energy business developments and the understanding of energy markets.
Nymex received the following awards for 2004:
Energy Exchange of the Year Awarded to: NYMEX
THE RANGE OF futures contracts available at the NYMEX for either trading or submission
solely for clearing has grown to more than 100 this year. Approximately 530 companies
are registered to clear trades. These cover an expanded universe of outright and
basis transactions in natural gas, crude oil, refined petroleum products, electricity,
and coal. NYMEX cleared-only volumes through the end of October were 116% ahead
of the same period a year ago.
The settlement prices of many of the NYMEX ClearPortsm contracts represent a convergence
with the benchmark Exchange-traded energy futures markets. And many of the NYMEX
ClearPortsm contracts are settled in whole or in part on the settlements of the
core energy futures contracts, increasing market transparency. Thus, the Exchange
has provided an innovative and successful solution to effectively managing the
credit risk and financial risk that has beset the merchant energy trading sector.
NYMEX also has a new President in James Newsome who, since joining in the summer,
has overseen the expansion of its global franchise. Extraordinary efforts were
made to successfully execute the unprecedented accomplishment of launching an
exchange in two weeks in Dublin (where NYMEX now trades Brent futures via open-outcry)
in what Mitchell Steinhause, NYMEX Chairman, describes as, ”... a solid
commitment to open-outcry trading to retain the strong element of human relationships
that are important to energy trading and facilitate the overall efficiency of
the market.” This entailed resolving issues ranging from integrating the
Dublin floor technology with the clearinghouse in New York, to working out the
regulatory and legal issues under US and Irish law, to the issues of trader eligibility
and recruitment. The Exchange has put considerable investment into technology
and offers more than 100 contracts solely electronically. Its commitment is to
ensuring that its customers and the marketplace are provided with a choice of
the most efficient environments for trading, both electronically and via open-outcry.
“In the case of the Brent futures, both the oil industry and the trading
community have been vociferous in their desire to be able to continue to utilise
the liquidity that the trading floor can uniquely provide. It is the role of an
Exchange to respond to that market demand,” say NYMEX
Excellence in Risk Management GOLD Award: NYMEX
THE NEW YORK MERCANTILE EXCHANGE ClearPortsm clearing website is one
of the major success stories of 2004. The risks inherent in doing one-on-one transactions
off-exchange became a major concern to the industry after the revelation of financial
weakness throughout the merchant energy sector. The unwillingness – or inability
– of market participants to assume counterparty credit risk, essentially
brought transactions to a halt. The Exchange internally developed an Internet-based
system to clear off-exchange transactions using a slate of standardised futures
contracts that replicate popular OTC transactions and are posted to the Exchange
as an exchange of futures for physicals or exchange of futures for swaps transaction.
The ability to submit these transactions to the Exchange through ClearPortsm
has enabled market participants to overcome the bottleneck of counterparty creditworthiness,
and helped restore market liquidity. Cleared volume to the beginning of November
totalled nearly 11 million contracts for crude oil, refined petroleum products,
natural gas, electricity, and coal compared with 6 million contracts during the
entire 2003.
NYMEX is also going global. It has embarked on an ambitious campaign to establish
subsidiary exchanges in Europe, the Middle East and Asia, accelerating the spread
of the NYMEXbrand under the guidance of James Newsome in the summer. A Brent contract
(see page 42) has just been launched in Dublin – and in record time. The
Exchange also obtained access for its electronic trading system in Japan and Singapore
– the two most active markets in Asia for energy products
The Energy Business Awards, 2004 were adjudicated by Commodities Now magazine
in conjunction with Jeremy Wilcox. John Sodergreen of Scudder Publishing, adjudicated
on the Corporate Governance Award. Any correspondence associated with these awards
should be addressed to Guy Isherwood, Editor, Commodities Now magazine.
For details of the 2005 Energy Business Awards call:
T: +44 (0) 20 7402 9222,
E: gish@commodities–now.com
www.energy–business.com
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