Enron Mail

To:andy.zipper@enron.com, louise.kitchen@enron.com, greg.whalley@enron.com
Subject:11/10 09:26 NYMEX needs e-trade partner, says ex-chairman Marks
Date:Fri, 10 Nov 2000 08:47:00 -0800 (PST)

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

((--Bruce Kamich, New York Commodity Desk, 212 859 1643,