New York Mercantile Exchange Changes Guaranty Fund To Provide Greater Financial Safeguards

The New York Mercantile Exchange, Inc., announced today that effective May 1, it will increase the value of its guaranty fund to $200 million. The fund, which may be used by the Exchange in the event that a clearing member fails to discharge its obligations, is currently valued at approximately $130 million.

Clearing member contribution requirements to the fund, currently a function of a firm's working capital, will be based on a hybrid formula of risk and volume. A minimum contribution of $2 million will be required of each clearing member. Acceptable deposits to the fund will now include shares of approved money market mutual funds in addition to U.S. Dollars and U.S. Treasuries.

The Exchange currently holds approximately $16.5 billion of liquid margin deposits on behalf of its clearing members and maintains a $100 million face value default insurance policy. It also has assessments powers over its clearing members of almost $1 billion.

NYMEX President James E. Newsome said, "These enhancements will provide the Exchange with additional resources to help support our financial safeguard system which is continually reviewed to ensure the integrity of our marketplace."