New York Mercantile Exchange
is seizing on the global consolidation of exchanges by linking up with the Montreal Exchange.
Nymex is purchasing a 10% stake in the Canadian derivatives exchange. Through a joint venture agreement, the exchanges will also form a new company -- headquartered in Calgary -- that will provide exchange-traded and over-the-counter crude oil, natural gas and electricity products to the Canadian markets.
Nymex is one of the two U.S. energy futures and commodities exchanges, along with the
The Montreal Exchange offers financial derivatives products including Canadian interest rate, index and equity derivatives. It is also a significant owner of the Boston Options Exchange and is invested in a joint venture with the Chicago Climate Exchange to own the Montreal Climate Exchange.
The exchange also clears its trades through its subsidiary, the Canadian Derivatives Clearing Corp.
Financial terms of the deal, which is expected to be completed next month, were not disclosed.
Nymex is using a portion of the proceeds from its November IPO, in which it raised $384 million, to expand into the ever-growing exchange sector. (Shares of Nymex rose 125% on its first day of trading, the biggest IPO gainer in 2006.)
Last month, Nymex agreed to purchase a 19% stake in
, a provider of natural gas and other energy derivatives brokerage services. The deal also calls for the two companies to cooperate on technology. Nymex will also have the ability to increase its stake in the Valhalla, N.Y., firm through the issuance of warrants.
"Canada is a major center in the global energy markets, and we intend to fill the risk management gap that currently exists with the introduction of Canadian energy contracts," says Richard Schaeffer, Nymex's chairman.
Shares rose $2.48, or 2%, to $128.45.