New York Mercantile Exchange (NYMEX) is a commodity futures exchange owned and operated by the Chicago Mercantile Exchange Group. The Chicago Mercantile Exchange Group consists of four exchanges. They are the Chicago Mercantile Exchange (CME), the Chicago Board of Trade (CBOT), NYMEX, and the Commodity Exchange (COMEX).

What It Does

NYMEX handles billions of dollars worth of trades being made both on the trading floor and electronically for trading commodities for future delivery. They trade various commodities such as energy, oil, precious metals, and agricultural products and are the world’s largest physical commodities futures exchange.

What Are Futures?

Futures are financial contracts where a seller and a buyer agree to exchange a product at a predetermined future price and date. The seller must sell and the buyer must buy on the contract’s expiration date regardless of the current market price. Investors speculate by conducting these financial transactions knowing the options have a substantial risk of losing value. They do so because the possibility for significant gain is also present. Futures options are tools for managing risk by hedging positions by effectively locking in the price of a commodity even if it won’t be bought or sold in physical form until sometime in the future.

Commodities Futures Trading Commission

NYMEX is regulated by the Commodity Futures Trading Commission. They are an independent agency of the United States Government whose job is to oversee the futures market and promote competitiveness and efficiency. Additionally, their focus is to protect investors from suffering manipulative practices, abusive trade practices, and fraud.

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