The New York Mercantile Exchange, or NYMEX, is the biggest physical commodity futures exchange out there. It’s now part of the CME Group, which is the top player in the derivatives market. The CME Group includes four exchanges: the Chicago Mercantile Exchange (CME), the Chicago Board of Trade (CBOT), NYMEX, and the Commodity Exchange, Inc. (COMEX). Each of these exchanges offers a variety of futures products, commodities, and global benchmarks across different asset classes.
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In 1872, a group of dairy merchants kicked off what would become NYMEX by establishing the Butter and Cheese Exchange of New York. Fast forward to 1994, and NYMEX joined forces with COMEX, making it the biggest physical commodity exchange at that time. However, by 2008, the global financial crisis hit hard, and NYMEX couldn’t stand alone anymore, leading to its merger with the CME Group in Chicago. This partnership expanded the CME Group’s offerings to include a variety of energy, precious metals, and agricultural products.
Futures and options related to energy, precious metals, and agricultural goods are often used for speculation, but they also serve as essential tools for businesses, farmers, and various industries looking to hedge against risks. The ability to trade these instruments easily on the exchanges is crucial for creating protective positions and assessing futures prices, making NYMEX a key player in the trading and hedging landscape.
The CME Group sees a daily trading volume of about 30 million contracts, with NYMEX accounting for roughly 10% of that due to the physical commodities it handles. In comparison, much larger volumes are seen in interest rate futures, options, and forward contracts traded on the Chicago Board of Trade (CBOT).
NYMEX operates under the oversight of the Commodity Futures Trading Commission (CFTC), an independent U.S. government agency dedicated to fostering competitive and efficient futures markets while safeguarding investors from manipulation, abusive trading practices, and fraud.
Conclusion
The New York Mercantile Exchange, part of the CME Group’s four exchanges, focuses on trading commodities and futures. NYMEX is particularly known for its expertise in energy, precious metals, and agricultural products.