Amadeusz Juskowiak

Nymex will expand offhour trading april one

The New York Mercantile Exchange set April one for the debut of a new procedure in the energy complex that will increase the use of energy futures worldwide

On April one NYMEX will allow oil traders that do not hold a futures position to initiate after the exchange closes a transaction that can subsequently be hedged in the futures market according to an exchange spokeswoman

This will change the way oil is transacted in the real world said said Thomas McKiernan McKiernan and Co chairman

Foreign traders will be able to hedge trades against NYMEX prices before the exchange opens and negotiate prices at a differential to NYMEX prices McKiernan explained

The expanded program will serve the industry because the oil market does not close when NYMEX does said Frank Capozza secretary of Century Resources Inc

The rule change which has already taken effect for platinum futures on NYMEX is expected to increase the open interest and liquidity in US energy futures according to traders and analysts

Currently at least one trader in this transaction called an exchange for physical or EFP must hold a futures position before entering into the transaction

Under the new arrangement neither party has to hold a futures position before entering into an EFP and one or both parties can offset their cash transaction with a futures contract the next day according to exchange officials

When NYMEX announced its proposed rule change in December NYMEX President Rosemary McFadden said Expansion of the EFP provision will add to globalization of the energy markets by providing for in effect 24hour trading

The Commodity Futures Trading Commission approved the rule change in February according to a CFTC spokeswoman