New York Mercantile Exchange (NYMEX), home of energy contracts

The New York Mercantile Exchange (NYMEX) made its debut in 1872 as the Butter and Cheese Exchange of New York but did not get its current name until 10 years later when it diversified its contracts to add fruits and poultry.

Founded by a group of dairy merchants who sought better storage and trading for their perishable commodities, Nymex today is the world’s largest physical commodity futures exchange. Nymex has achieved this status in large part due to its energy-related futures, which it launched in 1978 with a heating oil contract.

Success in the commodity futures exchange business does not come easily. It may be hard to believe, but there were more than 1,000 U.S. commodity exchanges in the 19th century, operating mostly as marketplaces where sellers displayed local produces and goods.

But the small exchanges could not long compete against their larger rivals in Chicago and New York, which operated centralized warehouses needed to support trading in physical commodities. The “bazaars” quickly made way for the organized exchanges where contracts can change hands many times before maturation. Physical delivery is fully handled outside the exchange, from specifically designated warehouses.

A crucial step for Nymex was its acquisition of COMEX in 1994. Comex—which first stood for Commodity Exchange—itself resulted from the 1933 fusion of the National Metal Exchange, the Rubber Exchange of New York, the National Raw Silk Exchange and the New York Hide Exchange.

NYMEX today trades energy products, including electricity, precious and rare metals, copper and aluminum as well as some stock index futures, such as the FTSE Eurotop contracts. Trading is mostly conducted via open-outcry on NYMEX, but the exchange’s futures contracts are electronically available on NYMEX ACCESS, a platform launched in 1993, after the close.

With volatile production and geopolitical conditions, crude oil is the most actively traded commodity in the world and has contributed to NYMEX’s expansion. Britain’s Brent is a light, sweet North Sea crude oil, which is an industry benchmark and trades as a differential to NYMEX bellwether light sweet crude futures contract.

E-miNY futures contracts, which are half the size of a standard crude futures contract, are in great demand among portfolio managers. They are electronically traded on the Chicago Mercantile Exchange’s Globex platform but cleared via NYMEX clearinghouse.

Also in the Big Apple, the New York Board of Trade (NYBOT) is another futures market that resulted from the 1998 merger of smaller markets—the Coffee, Sugar and Cocoa Exchange and the New York Cotton Exchange.