Nymex targets small players in new plan.
(Image: nymex.jpg )
The New York Mercantile Exchange aims to boost liquidity of its benchmark WTI crude contract during Asian hours by attracting small and medium players, a Nymex official said.
Nymex is competing with the Intercontinental Exchange Inc (ICE), which has captured a growing share of the sliver of futures trade that takes place while European and US dealers sleep. "It's not unrealistic to expect that we will deliver double-digit (year-on-year) growth over the next five years on (Asian liquidity on the WTI). That should be easily achievable," George Ng, senior director of Nymex Asia Marketing, told Reuters. "We are starting with growing the volume among small and medium investors, making sure they understand our products and encouraging them to trade during Asian hours." Ng said the volume had already grown from less than 1,000 lots a day in Asian trade a year ago to roughly 10,000 now. Some 4,000 lots of the front-month US crude had changed hands, around which time European trade usually kicks in. That compares with a total 258,100 lots traded earlier, Reuters data show. Ng spoke as CME Group, the world's largest derivatives exchange, is wrapping up its roughly $8 billion takeover of energy and metals trading market Nymex Holdings. "We have to make sure there are market makers in Asia for products we care about, so that traders have the security they can go in and out of the contract in Asian hours." Nymex took on the competition from ICE with the launch of the Globex system in 2006, which replaced its electronic Access platform, with an eye on Asian traders. ICE has been aided by its robust electronic platform, a new US crude contract, growing risk management demand in Asia and a bond between its Brent futures and Asian markets. As commodity markets and prices rapidly grow with the influx of investors and hedge funds, more players are executing orders during Asian hours, a traditionally quiet period despite the rise of nearly 24-hour electronic oil trade over a decade ago. Ng said that rather than hurting the exchange, Nymex was benefiting from the credit crunch in over-the-counter (OTC) cleared swaps. "Trading conditions are extremely good for us, now that everyone is concerned about counterparty risks," he said. "We don't only have growth in our screen products, such as WTI and gold, but also in the OTC cleared swaps, which is Clearport, and that has been growing very well."
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