Subject: E Nymex: Market Forces - Problems in cyberspace.
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Date: Fri, 8 Jun 2001 06:46:35 -0700 (PDT)

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From: 	[email-masked]@ENRON [mailto:[email-masked]] 
Sent:	Friday, June 08, 2001 4:46 AM
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Subject:	E Nymex: Market Forces - Problems in cyberspace.

Market Forces - Problems in cyberspace.

06/08/2001
Energy Compass
(c) 2001 Energy Intelligence Group. All rights reserved

When the New York Mercantile Exchange (Nymex) announced last May it was
building an electronic trading platform, it said its eNymex trading system
would be up and running by the autumn. The aim was to steal some of the
thunder from the launch of the Big Oil-backed IntercontinentalExchange (ICE),
which was set to start up around the same time.

In the event, ICE launched on time last October and has since built up trading
volumes and attracted new participants. It has also won support for its offer
to buy London's International Petroleum Exchange (IPE), giving it more
firepower in the e-trading sector.
Nymex, meanwhile, continues to struggle, and has repeatedly pushed back its
launch date. More recently, the exchange's problems have been legal. It has
filed a breach-of-contract lawsuit against one of the partners that was
helping build the eNymex trading system, prompting some observers to speculate
that the electronic trading platform will suffer more delays.

A big piece of eNymex was being developed by GlobalView Software. The
Chicago-based firm was picked to build the software connection between the
trading engine, designed by start-up technology company Kiodex, and the web
page layout, developed by Fry Multimedia. Nymex said in a filing with the US
Securities and Exchange Commission that it terminated the relationship with
GlobalView because of performance issues under the contract. Shortly after
kicking GlobalView off the project, Nymex filed the suit in the New York State
Supreme Court. GlobalView is now preparing a countersuit in New York.

Although GlobalView was announced as an eNymex partner in March, the company
had begun work back in December. GlobalView chief executive Jon Olson says
that "almost immediately there were issues." He adds: "Our view is they were
financial issues." With GlobalView gone, Nymex is reviewing its options, which
include choosing another software provider.

Nymex has also dismissed consulting firm Accenture (formerly Andersen
Consulting), which had helped manage the New York exchange's transition to an
electronic trading platform from the early days. A Nymex spokeswoman says that
Accenture's work was complete. One observer, however, characterizes Nymex's
recent actions as cost-cutting moves.

Despite the setbacks, Nymex continues to say that testing of the system will
be complete this summer, with a full-scale rollout planned soon after. With
eNymex, none of the exchange's existing futures contracts will be switched to
the new platform. Instead, eNymex will focus on derivatives, new territory for
the New York exchange. Some smaller oil futures contracts will also be put
online. Nymex has fired early shots at the ICE/IPE duo, recently announcing
plans to launch a Brent futures contract that will compete with the IPE's
flagship product (EC May 4, p3).

Although Nymex's electronic trading system has yet to launch, the platform has
already been picked by US technology consultants Forrester Research as one of
the few energy e-trade winners. But one executive at a rival exchange wonders
how Forrester can say that eNymex will succeed when the system has yet to be
tested in the market.

By Jeff Gosmano, Houston.

Folder Name: E Nymex
Relevance Score on Scale of 100: 97

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