The New York Mercantile Exchange,Inc., a subsidiary of NYMEX Holdings, Inc. (NYSE: NMX), believes that amarket-driven regulatory structure can most efficiently and safely meet theneeds of a broad array of derivatives market users, particularly duringdynamic periods of growth and volatility. The vertically integrated clearingmodel has stood the test of time for more than a century, including more than80 years of federal regulation and Congressional oversight.
In passing into law the landmark Commodity Futures Modernization Act of 2000,Congress once again rejected an approach under which market structure would bedictated by government fiat. By avoiding a "one-size-fits-all" model,Congress has instead provided for substantial flexibility in how companiesmay organize their businesses and still comply with regulatory requirements.
We continue to believe that Congress made the appropriate choice by focusingupon a free market solution that also involves both self-regulation as wellas direct oversight by the Commodity Futures Trading Commission. Our experienced staff has ensured that NYMEX continued to serve its marketusers without incident through periods of major market volatility. Anymandate or fiat that clearing of a given product must occur on numerousclearing organizations would actually increase systemic risk and default riskand also would seriously undermine the ability of a pro-active clearingorganization such as NYMEX to manage market risk.
