Nymex To Introduce Exchange Of Options Temporarily For Options Transactions In Energy Markets

The New York Mercantile Exchange, Inc., will introduce a trial program beginning on Monday that will allow participants in its energy markets to exchange over-the-counter (OTC) options positions for options positions on the Exchange (EOO).

This program will have a fixed 30-day time limit and may be renewed by the board of directors as appropriate.

EOO transactions will work similarly 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 will be permitted to liquidate, initiate, and transfer options market positions between the two parties involved in the transaction. The clearing member representing each party will be responsible for notifying 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.