Nymex lines up metals trade battle

By Kevin Morrison LONDON TIMES

A new battle is set to emerge in global metals trading with the New York Mercantile Exchange set to launch metals contracts for the US, European and Asian markets that will be traded only electronically.

Nymex will take on the Chicago Board of Trade, the Tokyo Commodities Exchange (Tocom) and the London Metal Exchange with the new contracts in gold, silver, copper, aluminium and zinc to be launched on December 4.

The move comes just two days after Nymex obtained the electronic trading rights to the contracts traded on its metals exchange, Comex.

Nymex said that in the US it would launch side-by-side trading in Comex gold, silver, copper and aluminium futures for the first time, using the Globex electronic trading platform of the Chicago Mercantile Exchange.

The move to the screen will put the Comex gold and silver contracts in direct competition with the CBOT, which launched electronically-traded gold and silver contracts two years ago.

Side-by-side trading lets traders buy and sell futures contracts either in the exchange's open outcry pits or on screen. Nymex put its energy contracts on Globex this summer with great success. Globex now hosts the largest daily volumes in Nymex's flagship crude oil contract, West Texas Intermediate. In Europe, Nymex is launching e-mini contracts in copper, aluminium and zinc on December 4.

On the same day, the LME, the world's largest base metals market, launches its e-minis in the same metals with the contract specifications almost identical but priced in dollars per tonne rather than the traditional Comex contracts priced in cents per pound weight.

One of Nymex's key advantages over its smaller rival is Globex, which has thousands of users, whereas the LME's new contracts will be traded on its LME Select system, which has a few hundred users.

The launch of e-minis is a radical step for the LME, as the contracts are preferred by hedge funds and managed futures funds, rather than the forward date structure of LME benchmark contracts, which makes the LME different to other commodity futures markets.

The launch of LME's e-mini contracts was delayed from its original date of November 20 because of a software upgrade of LME Select.

Nymex will also launch Asian gold, platinum and palladium futures contracts, which will be priced in dollars per gram.

I just wonder how long there will be a physical trading floor at COMEX or anywhere for that matter.

Moreover, what truly represents a "professional" trader anymore?