The New York Mercantile Exchange, Inc., a subsidiary of NYMEX Holdings, Inc. (NYSE: NMX), believes that a market-driven regulatory structure can most efficiently and safely meet the needs of a broad array of derivatives market users, particularly during dynamic periods of growth and volatility. The vertically integrated clearing model has stood the test of time for more than a century, including more than 80 years of federal regulation and Congressional oversight.
In passing into law the landmark Commodity Futures Modernization Act of 2000, Congress once again rejected an approach under which market structure would be dictated by government fiat. By avoiding a "one-size-fits-all" model, Congress has instead provided for substantial flexibility in how companies may organize their businesses and still comply with regulatory requirements. We continue to believe that Congress made the appropriate choice by focusing upon a free market solution that also involves both self-regulation as well as direct oversight by the Commodity Futures Trading Commission.
Our experienced staff has ensured that NYMEX continued to serve its market users without incident through periods of major market volatility. Any mandate or fiat that clearing of a given product must occur on numerous clearing organizations would actually increase systemic risk and default risk and also would seriously undermine the ability of a pro-active clearing organization such as NYMEX to manage market risk.
