By the OGJ Online Staff
LONDON, Feb. 21�New York Mercantile Exchange Executive Vice-Pres. Neal Wolkoff Wednesday said the exchange's new electronic commodity trading and clearing system, enymex, was in the final stages of integration testing and would be ready to go live in early May.
He told the Institute of Petroleum's IP Week conference testing of the components of the enymex system is complete, but a firm launch date would not be announced until integration testing was "further along."
Wolkoff said the electronic trading system would be "oriented, initially, completely toward energy" based on the suite of most commonly traded domestic products already traded over the counter at NYMEX. It would begin with a suite of 16 energy products, including a West Texas Intermediate crude oil calendar swap and a Henry Hub natural gas swap.
"Nymex has decided to take the terms and conditions as the industry currently trades them and to put them online," said Wolkoff, adding that it would use NYMEX and Platts price references on enymex, except in domestic natural gas trading.
Enymex will not start as a 24 hr/day, 7 day/week operation when its goes live, he said. Instead the exchange aims follow a "conservative" rollout strategy in order to "play off the liquidity in the benchmarks."
He said, "That liquidity exists during regular trading hours as far as the NYMEX base domestic contracts go. And the products we are going to offer will, by and large, entirely depend upon the liquidity of the benchmarks for their success. (Enymex) is intended to be complimentary to regular trading day."
He acknowledged that someday enymex might become what he described as an "all-the-time, global reach for everything" commodity trading system.
Earlier announced plans for a Dubai crude oil calendar swap will wait for the addition of an overseas slate of energy products, which will likely be tied in to enymex "within several months" of the system's launch.
Products to be launched on "day two," said Wolkoff, would include a full slate of electricity instruments.
Wolkoff underscored that enymex would be distinguished from the "proliferation of other (energy trading) systems" by its being market and price neutral. "Market neutral is different from being a marketing channel," he stressed. "We are not there as a proprietary buyer or seller of the NYMEX commodities. We don't have an interest in what is being bought our sold because we are price neutral. We manage the market.
"Nymex also offers a multilateral trade execution facility," Wolkoff added. "It is not bilateral. You are not establishing who you can trade with and how much you can trade with that counterparty. NYMEX is fully cleared. The NYMEX clearing house has the backing of all the clearing firms of the exchange."
By extending the reach of the NYMEX clearing mechanism to products be launched on enymex in May, he noted, the new system would allow trading to take place "transparently and relatively quickly because you won't need to be concerned with the credit quality or performance standards of the counterparty.
"Everyone will have the same fair, secure access to the marketplace," he said. "With our providers, vendors, partners we are going to create a platform that is not a one-stop shop, but that will tie a lot of trading and information and risk management together in one place.
"This is not NYMEX getting into an e-commerce venture," Wolkoff stressed, noting that NYMEX has had online trading since 1993 via the NYMEX Active system, which trades outside of traditional trading hours.