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Nymex To Extend Exchange Of Options For Options Transactions In Energy Markets

Date 29/10/2002

The New York Mercantile Exchange, Inc., announced today that it will extend its exchange of options for options (EOO) program in its energy markets for the third time.

The program, which was introduced on July 26, was originally scheduled to expire on October 31 and will be extended through November 27. Any further extension must be approved by the Exchange board.

EOO transactions allow participants to exchange over-the-counter (OTC) options positions for options positions on the Exchange. These transactions are similar to exchange of futures for physical and exchange of futures for swaps transactions. Two parties are allowed to privately negotiate the execution of on- and off-exchange options positions on pricing terms agreed upon by the involved parties. The transactions must involve approximately equal but opposite side-of-market quantities of options exposures in the same or related commodities.

These transactions are permitted to liquidate, initiate, and transfer options market positions between the two parties involved in the transaction. The clearing member representing each party is responsible to notify the Exchange of the amount and type of options contracts involved, the price at which the transaction should be cleared, and the identity of the parties involved.