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Enron Mail |
11/10 09:26 NYMEX needs e-trade partner, says ex-chairman Marks
NEW YORK, Nov 10 (Reuters) - The New York Mercantile Exchange needs a Web partner to ensure it capitalizes on its assets and becomes competitive in the Internet era of electronic futures trade, former NYMEX chairman Michel Marks said. NYMEX, the world's largest physical commodity exchange, is due to launch enymex, its e-commerce venture for trading and clearing standardized physical commodity contracts, in early 2001. But this solo approach may not be the most expedient path, Marks said in an exclusive interview at his Red Bank, New Jersey. residence. "NYMEX has a lot of assets," Marks told Reuters. "They have risk capital from the floor, systems, staffing, clearing, a brand name. In my opinion, they need to partner through a transition phase." The challenge for the NYMEX, as for any exchange, is to re-engineer itself in the face of vested interests and an ingrained tradition of open outcry trading. "It takes leadership and a vision to re-engineer those assets," Marks said. Futures in crude oil, natural gas, electricity, propane, gold, silver platinum, palladium, copper and aluminum are traded at the exchange's NYMEX and COMEX divisions. With the many seats he owns, Marks still has a significant vested interest in the health and future of the exchanges and in ensuring they do not become obsolete as electronic trading transforms the global marketplace. "What's the difference between AT&T and NYMEX? Xerox?" he asked. "All these businesses are sunset industries." Although Marks retired from the floor in 1987, he leases out his and his family's many seats and closely follows the industry. After leaving the floor, he eventually started what he called a "pre-Internet venture." "It was a Web site for the futures industry," he said. "I spent three years in it and I realized that no one would ever, ever make any money at it." Like all successful traders, Marks took his losses and got out quickly. "I understand the electronic world and the pit," he said. After becoming acting chairman in late 1977 at age 28 in what he called "a quirk of fate" when the chairman at the time had a heart attack, Marks relaunched NYMEX's heating oil and residual oil contracts with a New York harbor delivery and made over the management of the exchange, turning it into a very successful, global marketplace. Recently he has been researching the various front-end systems that were created by companies like Trading Technologies and are at the cutting edge of electronic trade. "Business is moving to EnronOnline, HoustonStreet and ICE, and there are another dozen-plus energy-only electronic exchanges out there already," said Marks, referring to the host of business-to-business (B2B) exchanges to trade power, crude oil and natural gas. The Intercontinental Exchange, or ICE, started live Internet trading of energy products on Oct 12. The Atlanta-based exchange is a partnership of seven major banks and oil companies. EnronOnline was established last November by Houston-based Enron <ENE.N<, North America's biggest buyer and seller of natural gas and electricity. HoustonStreetExchange of Portsmouth, New Hampshire, is the first fully web-based trading portal and a majority-owned subsidiary of BayCorp Holdings, Ltd. <MWH.A<. Marks said the market will make a pragmatic choice about whether to move to electronic exchanges, continue to trade open outcry, or a use a side-by-side combination based on how easily business can get done. "The fact of the matter is, the most important thing is liquidity," he said. "Performance counts." ((--Bruce Kamich, New York Commodity Desk, 212 859 1643, bruce.kamich@reuters.com))
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