The New York Mercantile Exchange (Nymex) and brokerage firm Icap are to launch an over-the-counter (OTC) market in same-day options on crude oil and natural gas on July 18.Nymex and Icap launched weekly auctions on oil inventory and natural gas storage last year. In the new market, Nymex will clear and settle the options, Icap will be responsible for order entry and Goldman Sachs will act as liquidity provider. The auctions will run from 0830 to 0900 (crude oil) and 0845 to 0915 (natural gas) daily from next week.
Dennis Crum, chief executive of Icap Energy, said: "Combining the Exchange's clearing capability and expertise with ICAP Energy's distribution will create a deep liquidity pool for daily settlement derivatives and attract a global audience."
Nymex says that the options' prices will be based solely on relative demand, and will increase the potential for efficient order filling. Investors will be able to hedge or take risk associated with daily changes in energy prices, the exchange says.
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