"The CME-CheMatch benzene futures contract will bring new opportunities for risk management and price discovery to the chemicals industry," said CME Chairman Scott Gordon.
"This is a very important step in the implementation of our strategic alliance with CME. The benzene contract will be the template for other futures products, and it is proof that CheMatch is aggressively moving ahead with our strategic vision of creating futures and options contracts for the chemical industry. This is a significant part of our strategy to develop a site where the industry can trade physical product, over-the-counter (OTC) derivatives and regulated futures all from one independent neutral platform," stated Carl McCutcheon, CheMatch’s Chairman and Chief Executive Officer.
"With the launch of benzene futures as our first joint product with CheMatch, CME will contribute to the B2B value proposition by offering not only supply chain efficiency but also important risk management capability with the transparency and liquidity of our markets," CME President and CEO Jim McNulty said.
Benzene is used in the production of such popular products as plastics, fabrics, pharmaceuticals, adhesives, detergents, dyes, paints and disinfectants. Trace amounts of benzene occur naturally in crude oil, and benzene can be synthesized from other petroleum-based chemicals as well as from coal or natural gas. Most benzene is produced in conjunction with the gasoline refining process. Because benzene prices can be volatile and because it is used in so many products, a futures contract on benzene is expected to have broad appeal within many industries.
Each CME-CheMatch benzene contract represents 42,000 gallons of benzene and will be cash settled to an index of monthly contract prices compiled and calculated by DeWitt & Company, the leading international petrochemical and consulting firm based in Houston.
CME and CheMatch last fall signed an exclusive agreement to jointly develop and market a co-branded complex of certain chemical futures and options products that will trade on CME’s GLOBEX®2 electronic trading system. The agreement, which formalized CME’s entry into the B2B arena, represents the first joint development project between a futures exchange and a B2B marketplace to create risk management products targeted to a specific industry.
Leveraging CheMatch’s leadership role in the Internet-based bulk commodity chemicals business and CME’s global electronic trading system, the venture will create a new group of derivative products that chemical companies, traders and financial institutions can utilize to improve operational efficiencies and to implement their risk management strategies. Members and customers of CME can use the products to take a position in the chemicals market.
Linked via the Internet, CheMatch.com’s secure, neutral trading platform and the GLOBEX2 system will provide seamless transitions between the two sites and offer chemical companies, traders and financial institutions the ability to trade both physical and derivative products. Members of the CheMatch.com Global Trading Networksm will be able to enter trades on GLOBEX2 through the CheMatch.com platform at www.chematch.com. The new products will trade exclusively electronically on GLOBEX2 and clear with CME clearing firms through CME’s state-of-the-art CLEARING 21® clearing system.
Chicago Mercantile Exchange Inc. (www.cme.com) is an international marketplace that brings together buyers and sellers on its trading floors and GLOBEX2 around-the-clock electronic trading system. CME offers futures contracts and options on futures primarily in four product areas: interest rates, stock indexes, foreign currencies and agricultural commodities. On Nov. 13, 2000, CME finalized its transformation into a for-profit, shareholder-owned corporation as it became the first U.S. financial exchange to demutualize by converting its membership interests into shares of common stock that can trade separately from exchange trading privileges. The exchange moves about $1 billion per day in settlement payments, manages $25 billion in collateral deposits and administers more than $1 billion of letters of credit.
CheMatch.com - The Global Trading Network is a business-to-business, Internet-based marketplace for purchasers and sellers of bulk commodity chemicals, plastics and fuel products. The marketplace incorporates a real-time, interactive trading exchange where members can trade 24 hours a day, seven days a week. Since inception of the CheMatch.com Global Trading Network, more than 1.5 million metric tons of product has been transacted, representing a cumulative notional value of more than half a billion dollars. Strategic and financial investors include Battery Ventures, Bayer AG (NYSE:BAYZY; FSE:BAYG.F), Computer Sciences Corporation (NYSE:CSC), DeWitt & Company Incorporated, E.I. DuPont de Nemours and Company (NYSE:DD), GE (NYSE:GE), Methanex (Nasdaq:MEOH; TSE:MX), Millennium Chemicals (NYSE:MCH), H. Muehlstein & Co., Inc., Reed Elsevier, Sprout Group, Stolt-Nielsen S.A. (Nasdaq:STLTF; Nasdaq:STLBY; Oslo Stock Exchange:SNIB) and YourEnergySource.com. Headquartered in Houston, CheMatch.com has international offices in Brussels, Germany, Hong Kong, Manchester (United Kingdom), Sao Paulo, Singapore, Tokyo and Zurich.
