New York Mercantile Exchange (Nymex)'s decision to perform
an IPO could hinder any future transition to trade fully
electronically if, as suggested by a number of sources, the
majority of the limited initial equity offering were to be
snapped up by existing members.
Nymex said in its provisional Securities and Exchange
Commission (SEC) filing that it was proposing to offer stock to
the value of $250m, which sources told FO Week was
understood to be around 10% of Nymex's overall value.
With a relatively small initial placement, it has been
suggested that Nymex's current members would be the most likely
investors; the same members who have consistently opposed the
exchange becoming electronically focused.
Potential investors in Nymex could be limited at first with
a noticeable absence of funds getting involved, one market
"Will some of the funds start throwing their weight around
and make investments into Nymex? I'm not too sure they will,"
he said. "A lot of them might look at it as being too small an
investment. I think it more likely that the cash-rich members
will become investors and shareholders."
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