New York and Philadelphia — June 22, 2005 — The New York
Mercantile Exchange (NYMEX) and the Philadelphia Stock Exchange (PHLX)
announced today the publication by the U.S. Patent & Trademark
Office of a patent application for a Method and System for Securitizing
Contracts Valued on an Index. The application, jointly developed by
the two exchanges, will create an innovative structured financial product
that will allow investors, for the first time in the U.S. markets,
to trade securities linked to the value of a commodity index. The provisional
patent application was filed July 3, 2002.
The product structure, which shares certain characteristics with an
exchange traded fund (ETF) differs in several respects from the recent
series of commodity ETFs that are currently in the regulatory approval
processes, or are being listed on exchanges. For example, in the NYMEX/PHLX
product structure, an investor can participate in the price changes
in the price movement of a wide range of financial, non-financial and
physical commodities, such as crude oil and soybeans without having
to actually participate in the physical market itself. This key feature
limits the individual investor’s exposure to the amount of their
initial investment. A further benefit is the product’s tax efficient
structure. Based on the exchanges’ collaborative research and
work, the partners are confident that this proprietary method of securitizing
a broad range of commodities is the best and only approach available
under the current securities and commodities market structure.
“This new product is the culmination of four years of work and
it will expand the opportunities for investors and offers several advantages
over the increasing number of ETF products in the markets,” said
Meyer “Sandy” Frucher, chairman and CEO of the PHLX. “Our
joint venture with NYMEX represents the initial thrust of a more
extensive new product development effort we are launching in Philadelphia,
which
we will build on in the coming months, leveraging our existing intellectual
property and debuting totally new financial vehicles for the investing
public.”
NYMEX Chairman Mitchell Steinhause said: “The design and approval
process for this product has been a substantial investment for NYMEX
and PHLX, and we are pleased that a patent application for protecting
our proprietary innovations is now in the examination process by
the Patent Office.”
The published patent application can be found on the Patent Office
web site at http://portal.uspto.gov/external/portal/pair.
About the PHLX
The Philadelphia Stock Exchange was founded in 1790. The PHLX trades
2,000 stocks, 1,703 equity options, 22 sectors index options and currency
options and futures. For more information about the PHLX and its products,
visit www.phlx.com.
About the New York Mercantile Exchange
The New York Mercantile Exchange is the largest physical commodity
exchange in the world, offering futures and options trading in energy
and metals contracts and clearing services for off-exchange energy
transactions. Through a combination of open outcry floor trading and
the NYMEX ACCESS(r) and NYMEX ClearPort(r) electronic trading platforms,
a wide range of crude oil, petroleum product, natural gas, coal, electricity,
gold, silver, copper, aluminum, and platinum group metals markets are
available virtually 24 hours each day.
