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Nymex Shares Rise

Some investors expect to see a deal.

Updated from 2:16 p.m.

New York Mercantile Exchange

(NMX)

rose Friday on news that a deal may be near.

Shares of the 135-year-old energy exchange gained as much as 8% on Friday after reports surfaced that the New York-based derivatives exchange was considering merger possibilities with three large exchange players.

According to a

Bloomberg

report, the Nymex is considering a possible deal with

NYSE Euronext

(NYX)

, the

Chicago Mercantile Exchange

(CME) - Get CME Group Inc. Class A Report

and Germany's Deutsche Boerse. A deal could be worth $155 a share, or $14 billion. The report cited two people involved in the discussions.

"Top Nymex executives have met with their counterparts at the three suitors, the people said," Bloomberg reported. "Nymex's board has been informed of the discussions."

Nymex wouldn't confirm that acquisition talks were being held.

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"It's all just rumors -- speculation in the marketplace," says a Nymex spokeswoman.

In a statement issued Friday afternoon, the CME said it isn't talking with Nymex and wants to close its purchase of the

Chicago Board of Trade

(BOT)

.

"The CME is not currently in any discussion with Nymex regarding a merger or acquisition," it said. "We remain focused on completing our merger with CBOT and look forward to our shareholder vote on July 9."

Even so, some observers see robust business and sky-high stock prices in the sector as making a deal probable at some point. Shares of Nymex have more than doubled since the exchange went public in November. They rose $2.25 Friday to $142.18.

The report comes as exchanges everywhere have been joining up in a bid to get scale as investors everywhere trade more and more. This spring, the New York Stock Exchange bought European exchange operator Euronext. The new company, NYSE Euronext, has also said it wants to move more strongly into the derivatives business.

Nasdaq

I:IXIC

has spent the last year trying to bully the London Stock Exchange into a deal. Nasdaq recently agreed to buy Europe's OMX.

Even small exchanges are getting into the merger fever. A Deutsche Boerse affiliate recently agreed to purchase the

International Securities Exchange

(ISE)

, one of the largest U.S. options exchanges.

Nymex might be feeling left out of the merger mania. Its archrival, the Atlanta-based

InterContinental Exchange

(ICE) - Get Intercontinental Exchange, Inc. Report

, is trying to buy the

Chicago Board of Trade

(BOT)

even as the CBOT has agreed to a deal with the

Chicago Mercantile Exchange

(CME) - Get CME Group Inc. Class A Report

.

Some say a deal's no sure thing.

One former Nymex board member said he wasn't aware of any merger talk.

"If they've been talking, they haven't talked to me," the former board member said.

John Lothian, the president of the electronic trading division of Price Futures Group in Chicago, says a Nymex-NYSE Euronext merger might not work too well.

"I don't see the synergies of

NYSE getting into the energy business," Lothian says. "It does give them a clearinghouse, a greater presence in U.S. futures, and they do have the technology to be able to execute the trades, but it doesn't create as many strategic synergies perhaps as other derivatives exchanges might."

Others wonder about the price.

"Nymex has got an uphill battle to sell the company, but it doesn't mean they're not going to try," one trader said.

In addition, a possible hangup for Nymex is its trading relationship with the CME.

The two exchanges agreed in April 2006 to allow the Nymex to trade its products on CME Globex, its electronic trading platform. Nymex had been gradually adding its products to the platform throughout the second half of last year. Nymex clears all of the electronic contracts through its own clearinghouse. A competitor such as the NYSE might be loath to have trading on Nymex move to the CME Globex platform, which Nymex's IPO filing seems to indicate might be necessary.

Meanwhile, Nymex is backing away from affiliate

Optionable

(OPBL)

, a Valhalla, N.Y.-based energy broker.

Nymex had taken a 19% stake in in April and put one of its executives on Optionable's board. But last month, Nymex gave up its seat on the board and said it was reviewing the investment after Optionable's biggest client,

BMO

(BMO) - Get Bank of Montreal Report

, suspended its business with Optionable over a huge natural gas option trade loss.

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