NYMEX HOLDINGS INC, S-4, 2000-02-14

NYMEX HOLDINGS INC
S-4, 2000-02-14

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<PAGE> 1

AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON FEBRUARY 14, 2000

REGISTRATION NO. 333-
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------

FORM S-4
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
------------------------

NYMEX HOLDINGS, INC.
(Exact name of registrant as specified in its charter)

<TABLE>
<S> <C> <C>
DELAWARE 6231 [APPLIED FOR]
(State or other jurisdiction of (Primary Standard (I.R.S. Employer
incorporation or organization) Industrial Classification Identification Number)
Code Number)
</TABLE>

ONE NORTH END AVENUE
WORLD FINANCIAL CENTER
NEW YORK, NEW YORK 10282-1101
(212) 299-2000
(Address, including zip code, and telephone number, including area code, of
registrant's principal executive offices)

DANIEL RAPPAPORT
CHAIRMAN OF THE BOARD
NEW YORK MERCANTILE EXCHANGE
ONE NORTH END AVENUE
WORLD FINANCIAL CENTER
NEW YORK, NEW YORK 10282-1101
(212) 299-2000
(Name, address, including zip code, and telephone number, including area code,
of agent for service)
COPY TO:
JOHN A. HEALY, ESQ.
KATHLEEN L. WERNER, ESQ.
CLIFFORD CHANCE ROGERS & WELLS LLP
200 PARK AVENUE
NEW YORK, NEW YORK 10166
(212) 878-8000
------------------------
Approximate date of commencement of the proposed sale to the public: As
soon as practicable after this Registration Statement becomes effective and
after all other conditions to the demutualization described herein have been
satisfied or waived.

If the securities being registered on this form are being offered in
connection with the formation of a holding company and there is compliance with
General Instruction G, check the following box. [ ]

If this form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act of 1933, as amended, check the
following box and list the Securities Act registration statement number of the
earlier effective registration statement for the same offering. [ ]

If this form is a post-effective amendment filed pursuant to Rule 462(d)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ]
------------------------
CALCULATION OF REGISTRATION FEE
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- --------------------------------------------------------------------------------

PROPOSED PROPOSED
MAXIMUM MAXIMUM
TITLE OF EACH CLASS OF AMOUNT TO BE OFFERING PRICE AGGREGATE
SECURITIES TO BE REGISTERED REGISTERED PER SHARE(1) OFFERING PRICE(1)
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Common Stock $.01 par value...... 816 $800,000 $652,800,000
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<S> <C>
TITLE OF EACH CLASS OF AMOUNT OF
SECURITIES TO BE REGISTERED REGISTRATION FEE
- ------------------------------------------------------------------------------------
Common Stock $.01 par value...... $172,339
- -------------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------------
</TABLE>

(1) Estimated solely for the purposes of calculating the registration fee under
Rule 457(f)(1). The securities being registered are to be offered in
connection with the demutualization described in this Registration Statement
in which common stock would be issued in exchange for existing NYMEX
Division memberships. Those memberships have an aggregate market value equal
to $652,800,000; determined as provided by Rule 457(c) based upon the
average of the bid and asked price for a NYMEX Division seat as of February
7, 2000. No additional consideration is receivable upon such exchange.
------------------------
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT THAT SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(a) OF
THE SECURITIES ACT OR UNTIL THIS REGISTRATION STATEMENT SHALL BECOME EFFECTIVE
ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(a), MAY
DETERMINE.

- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE> 2

THE INFORMATION IN THIS PROXY STATEMENT AND PROSPECTUS IS NOT COMPLETE
AND MAY BE CHANGED. WE MAY NOT ISSUE THESE SECURITIES UNTIL WE FILE THE
REGISTRATION STATEMENT, OF WHICH THIS PROXY STATEMENT AND PROSPECTUS
FORMS A PART, WITH THE SECURITIES AND EXCHANGE COMMISSION AND THE
REGISTRATION STATEMENT BECOMES EFFECTIVE.

SUBJECT TO COMPLETION, DATED FEBRUARY 14, 2000

NEW YORK MERCANTILE EXCHANGE
One North End Avenue
World Financial Center
New York, New York 10282-1101

Dear NYMEX Member:

You are being asked to vote on a proposed plan of demutualization of the
New York Mercantile Exchange. This plan was unanimously approved by your board
of directors at a meeting held on January 5, 2000. The plan approved by the
board is the first step in reorganizing NYMEX as a for-profit organization
better positioned to respond to challenges and opportunities in the marketplace
and dedicated to maximizing value for its owners. NYMEX members will have the
opportunity to realize this value through the separation of their trading rights
from their equity ownership of the organization.

It is important to point out that the demutualization is only a first step.
While we have no immediate plans to complete an initial public offering or to
sell any part of the exchange to an outside investor group, the proposed
demutualization will facilitate these types of transactions. No such additional
transaction will be able to occur without the affirmative majority vote of the
stockholders.

The accompanying proxy statement and prospectus provides you with detailed
information about the proposed demutualization. We encourage you to read it
carefully. You may obtain additional information about the demutualization from
the registration statement containing the proxy statement and prospectus that
has been filed with the Securities and Exchange Commission. To find out how to
obtain these documents, see "Where You Can Find More Information" on page 5.

It is important that as many of our members as possible be present or
represented by proxy at our special meeting of members to be held on [date],
2000 to consider and approve the demutualization. I look forward to seeing all
of you who attend in person.
Sincerely,
Daniel Rappaport
Chairman

NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
COMMISSION HAS APPROVED OR DISAPPROVED OF THE SECURITIES TO BE ISSUED IN THE
DEMUTUALIZATION OR DETERMINED IF THE ACCOMPANYING PROXY STATEMENT AND PROSPECTUS
IS ACCURATE OR ADEQUATE. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL
OFFENSE.

This proxy statement and prospectus is dated [date], 2000, and was first mailed
to members of NYMEX on or about [date], 2000.
<PAGE> 3

SUBJECT TO COMPLETION, DATED FEBRUARY 14, 2000
One North End Avenue
World Financial Center
New York, New York 10282-1101
------------------------

NOTICE OF A SPECIAL MEETING OF MEMBERS OF THE NYMEX DIVISION OF THE

NEW YORK MERCANTILE EXCHANGE
TO BE HELD ON [DATE], 2000
------------------------

This is a notice of a special meeting of members of the NYMEX Division of
the New York Mercantile Exchange that is scheduled to be held at NYMEX's offices
located at One North End Avenue, World Financial Center, New York, New York
10282-1101, at [time], local time, on [date], 2000. The board of directors asks
you to attend this meeting (in person or by proxy) to consider and approve a
plan to demutualize NYMEX. In particular, you are being asked to consider and
approve:

1. The merger of NYMEX with and into New York Mercantile Exchange, Inc., a
newly-formed, non-stock corporation organized as a for-profit corporation under
the laws of Delaware. New York Mercantile Exchange, Inc. will be the surviving
company of this merger.

2. A second merger in which New York Mercantile Exchange, Inc. will merge
with a subsidiary of a newly-formed corporation formed solely for the purpose of
completing the merger that is wholly-owned by NYMEX Holdings, Inc. New York
Mercantile Exchange, Inc. will survive this merger and become a wholly-owned
subsidiary of NYMEX Holdings, Inc., thereby creating a holding company
structure. This merger will occur as soon as possible after the first merger.

We will not transact any other business at the special meeting.

The close of business on [date], 2000 has been fixed as the record date for
determining those members entitled to vote at the special meeting and any
adjournments or postponements of the meeting. Members of the COMEX Division of
the New York Mercantile Exchange and lessees of NYMEX Division trading
privileges are not entitled to vote at the special meeting. A list of eligible
members of record as of the close of business on the record date will be
available at the special meeting for examination by any member or the member's
attorney or agent. Please note that by delivering a proxy to vote at the special
meeting, you are also granting a proxy voting in favor of any adjournments of
the special meeting.

We invite you to attend the special meeting because it is important that
your membership be represented at the meeting. Whether or not you plan to attend
the special meeting, please sign, date and return the enclosed proxy card in the
accompanying postage-paid envelope. If you attend the meeting, you may vote in
person, which will revoke any signed proxy you have already submitted. You may
also revoke your proxy at any time before the meeting either in writing or by
notifying us.

NYMEX must receive your proxy card by [time], [date], 2000.
By Order of the Board of Directors

Neil Citrone
Secretary
[date], 2000
New York, New York
YOUR VOTE IS VERY IMPORTANT.

THE BOARD OF DIRECTORS OF NYMEX UNANIMOUSLY RECOMMENDS THAT MEMBERS VOTE
FOR APPROVAL OF THE DEMUTUALIZATION PLAN.
<PAGE> 4

SUBJECT TO COMPLETION, DATED FEBRUARY 14, 2000

PROXY STATEMENT AND PROSPECTUS
FOR A SPECIAL MEETING OF MEMBERS OF THE
NEW YORK MERCANTILE EXCHANGE
------------------------

This proxy statement and prospectus relates to a proposed demutualization
of NYMEX. When we refer to NYMEX members or simply members throughout this
document, we are referring to owners of memberships in the NYMEX Division of the
New York Mercantile Exchange, as opposed to members of the COMEX Division or
lessees of NYMEX Division memberships. The consequences of the demutualization
for COMEX Division members and lessees of NYMEX Division memberships are
discussed separately in this document.

The demutualization will technically involve a two-step merger.

First Merger

- In the first merger, NYMEX will merge into a newly-formed, non-stock
corporation organized under Delaware law. The surviving company of this
merger will be named New York Mercantile Exchange, Inc., which we refer
to throughout this document as NYMEX Exchange.

- In the first merger, each NYMEX member will receive one Class A
membership and one Class B membership in NYMEX Exchange for each NYMEX
Division membership that the member owns. The Class A membership
represents the trading privileges associated with a NYMEX Division
membership. The Class B membership represents an economic interest in
NYMEX Exchange (i.e., a right to dividends and liquidation proceeds).

Second Merger

- Immediately after the first merger is completed, NYMEX Exchange will
merge with a subsidiary of a newly-formed, stock holding company also
organized under Delaware law that will be named NYMEX Holdings, Inc.,
which we refer to throughout this document as NYMEX Holdings. NYMEX
Exchange will survive this merger and become a subsidiary of NYMEX
Holdings.

- In the second merger, each member's Class B membership will be exchanged
for one share of common stock in NYMEX Holdings. NYMEX Holdings' interest
in its subsidiary will be converted into the sole outstanding Class B
membership in NYMEX Exchange.

Result

- As a result of the two-step merger, (1) each pre-merger member of NYMEX
will own one Class A membership in NYMEX Exchange and one share of common
stock of NYMEX Holdings for each NYMEX Division membership that the
member owned immediately prior to the transaction; (2) NYMEX Holdings
will hold the sole outstanding Class B membership in NYMEX Exchange; (3)
NYMEX Exchange will be a subsidiary of NYMEX Holdings; and (4) both NYMEX
Exchange and NYMEX Holdings will be organized under Delaware law.
<PAGE> 5

The board of directors of NYMEX has unanimously approved the
demutualization. The demutualization plan requires the approval of at least
66 2/3% of the members of NYMEX who cast votes at the special meeting (whether
in person or by proxy), so long as at least 150 members vote in favor of the
demutualization. Members of the COMEX Division of NYMEX and lessees of NYMEX
Division memberships will not be entitled to vote at the special meeting and no
vote on their part is required for the demutualization to be effected.

We have no current plans to list the common stock of NYMEX Holdings on any
national securities exchange or to include the common stock for quotation on any
automated quotation system or electronic communications network. The common
stock of NYMEX Holdings may not be transferred separately from the Class A
memberships of NYMEX Exchange.

See "Risk Factors" beginning on page 9 to read about factors associated
with the proposed demutualization and ownership of the common stock and the
Class A memberships of NYMEX Exchange.

NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY OTHER STATE
SECURITIES COMMISSION HAS APPROVED OR DISAPPROVED OF THE COMMON STOCK OF NYMEX
HOLDINGS OR DETERMINED IF THIS PROXY STATEMENT AND PROSPECTUS IS TRUTHFUL OR
COMPLETE. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.

------------------------

Proxy Statement and Prospectus dated , 2000
and first mailed to members
of NYMEX on , 2000
<PAGE> 6

TABLE OF CONTENTS

<TABLE>
<CAPTION>
PAGE
----
<S> <C>
QUESTIONS AND ANSWERS ABOUT THE DEMUTUALIZATION............. 1
WHERE YOU CAN FIND MORE INFORMATION......................... 5
SUMMARY..................................................... 6
RISK FACTORS................................................ 9
CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING
INFORMATION............................................... 12
NYMEX SPECIAL MEETING....................................... 13
THE DEMUTUALIZATION......................................... 15
NYMEX....................................................... 18
NYMEX'S BUSINESS............................................ 19
SELECTED FINANCIAL INFORMATION.............................. 37
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS................................. 39
CAPITALIZATION.............................................. 46
MANAGEMENT.................................................. 47
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.............. 56
DESCRIPTION OF CAPITAL STOCK OF NYMEX HOLDINGS.............. 57
DESCRIPTION OF MEMBERSHIPS OF NYMEX EXCHANGE................ 58
CERTIFICATE OF INCORPORATION AND BYLAW PROVISIONS OF NYMEX
HOLDINGS, INC. AND NYMEX EXCHANGE......................... 65
COMPARISON OF RIGHTS OF NYMEX MEMBERS BEFORE AND AFTER THE
DEMUTUALIZATION........................................... 67
FEDERAL INCOME TAX CONSEQUENCES OF THE DEMUTUALIZATION...... 73
LEGAL MATTERS............................................... 75
EXPERTS..................................................... 75
INDEX TO FINANCIAL STATEMENTS AND PRO FORMA FINANCIAL
INFORMATION............................................... F-1

Annex A -- THE FIRST MERGER AGREEMENT
Annex B -- THE SECOND MERGER AGREEMENT
Annex C -- CERTIFICATE OF INCORPORATION OF NYMEX HOLDINGS
Annex D -- BYLAWS OF NYMEX HOLDINGS
Annex E -- CERTIFICATE OF INCORPORATION OF NYMEX EXCHANGE
Annex F -- BYLAWS OF NYMEX EXCHANGE
</TABLE>

------------------------

You should rely only on the information contained in this proxy statement
and prospectus or to which we have referred you. We have not authorized anyone
to provide you with information that is different. Information on our Web site
is not part of this document. This proxy statement and prospectus may be used
only where it is legal to issue these securities. The information in this proxy
statement and prospectus may be accurate only on the date of this proxy
statement and prospectus.
<PAGE> 7

QUESTIONS AND ANSWERS ABOUT THE DEMUTUALIZATION

1. Q: WHAT IS THE DEMUTUALIZATION?

A: The demutualization refers to the process by which NYMEX will convert
from a New York not-for-profit membership organization into a Delaware
for-profit entity that will be organized as a stock holding company with a
subsidiary membership company. Diagrams showing the ownership structure of
NYMEX before and after the demutualization can be found on page 7.

2. Q: WHAT WILL HAPPEN TO MY NYMEX MEMBERSHIP IN THE DEMUTUALIZATION?

A: In the demutualization, each NYMEX Division membership will be converted
into two pieces - one Class A membership in NYMEX Exchange (representing
trading privileges on NYMEX Exchange) and one share of common stock of NYMEX
Holdings (representing an equity interest in NYMEX Holdings). The
demutualization will create a different legal structure for NYMEX in which
the voting and economic rights that NYMEX members have today will be changed
only in very limited respects, including that lessees will not have any
voting rights after the demutualization. For a comparison of the rights of
members before and after the demutualization, see the table beginning on
page 67.

3. Q: WHAT IS THE PURPOSE OF THE DEMUTUALIZATION? HOW WILL I BENEFIT FROM THE
DEMUTUALIZATION?

A: The demutualization will potentially unlock the equity value of NYMEX
memberships while ensuring that initial ownership and control of NYMEX stay
in the hands of the NYMEX members until they decide to issue stock to
outside investors or in connection with strategic transactions. The
demutualization will position NYMEX to complete a public or private offering
of stock or a strategic transaction should the stockholders of NYMEX
Holdings approve such a transaction, and to do so more quickly since the
initial step of creating a for-profit entity will have been completed in the
demutualization.

Moving to a for-profit structure in the demutualization will also enable
NYMEX Holdings to pay dividends to its stockholders. As a not-for-profit
organization, NYMEX is currently prohibited from paying dividends to its
members, subject to limited exceptions. After the demutualization, NYMEX
Holdings will be able to pay cash dividends and dividends in kind to its
stockholders.

4. Q: WHAT TYPE OF TRANSACTION WOULD POTENTIALLY UNLOCK THE EQUITY VALUE OF
NYMEX MEMBERSHIPS AFTER THE DEMUTUALIZATION?

A: After the demutualization is completed, the board of NYMEX Holdings will
actively explore opportunities to enhance shareholder value. These
opportunities could take a number of forms, including an initial public
offering of shares of common stock of NYMEX Holdings; a strategic business
combination with another exchange; a private sale of equity interests in
NYMEX Holdings to one or more investors; or the formation of subsidiary
exchanges designed to exploit discrete lines of business, particularly
through electronic trading, which could ultimately be transferred to
stockholders of NYMEX Holdings through a spin-off in the form of a stock
dividend. These are only some examples of the types of transactions which
could occur in the future and it is also possible that no such transaction
will occur. However, the demutualization will enhance the flexibility of
NYMEX to pursue these opportunities in order to enable members to realize
value from their equity investment in NYMEX.

1
<PAGE> 8

5. Q: WHY IS NYMEX BEING REORGANIZED AS A TWO-TIERED HOLDING COMPANY?

A: The board concluded that a holding company structure would give NYMEX the
advantages of a corporation while maintaining the flexibility in governing
the operations of an exchange provided by a membership organization. The
holding company will be the primary vehicle for capital raising and
strategic transactions. As a holding company, NYMEX Holdings will be able to
develop and market different products and business lines through separate
subsidiaries when it makes sense to do so for regulatory or other purposes.
Purely exchange matters, such as trading and non-over-the-counter clearing,
will be concentrated at the NYMEX Exchange level. One important aspect of
maintaining NYMEX Exchange's status as a membership organization, as opposed
to a stock corporation, is that membership interests, unlike stock, can be
subject to assessment. NYMEX has the authority to assess members to recoup
financial losses and NYMEX Exchange will have similar authority. This
assessment power is an important risk management tool for the operations of
an exchange.

In addition, as NYMEX inevitably will continue to face competitive
challenges from the electronic marketplace, NYMEX may choose to develop
business opportunities in the relatively unregulated over-the-counter
marketplace. The holding company structure will permit NYMEX to conduct both
regulated and unregulated activities from within one organization.

Furthermore, as NYMEX continues to develop business opportunities overseas,
it needs to have a form of corporate structure that is flexible enough to
allow for the development of business opportunities outside the jurisdiction
of federal regulatory agencies. For example, had NYMEX completed a merger
with the International Petroleum Exchange, NYMEX would have been required to
form a holding company to ensure that the non-U.S. entity that would have
survived the merger would not be regulated by U.S. regulatory authorities.

6. Q: WHY ARE NYMEX HOLDINGS AND NYMEX EXCHANGE ORGANIZED UNDER DELAWARE
LAW INSTEAD OF NEW YORK LAW?

A: Delaware is the most common choice for the organization of corporations
because Delaware is generally considered to have the most well-developed
body of state corporate law, particularly in the areas of mergers and
acquisitions. Many other states have modeled their corporation statutes on
the Delaware General Corporation Law and most state courts look to the
judicial decisions of Delaware's courts for guidance in disputes involving
corporate law principles.

7. Q: WHY WILL THE CLASS A MEMBERSHIPS AND THE COMMON STOCK BE STAPLED?

A: The organizational documents of NYMEX Exchange and NYMEX Holdings provide
that the common stock of NYMEX Holdings and the Class A memberships of NYMEX
Exchange cannot be transferred separately; they must be transferred as a
single unit. This is often referred to as a "stapling" of the two interests.
The staple feature will assure that control of NYMEX stays in the hands of
its members unless and until they decide otherwise because Class A
memberships can only be owned by persons with membership privileges. The
rules for the qualification of members of NYMEX Exchange are the same as the
rules for the qualification of members of NYMEX.

2
<PAGE> 9

8. Q: HOW MAY THE CLASS A MEMBERSHIPS AND THE COMMON STOCK BE UNSTAPLED?

A: The Class A memberships and common stock will only be unstapled upon the
vote of holders of a majority of the common stock of NYMEX Holdings.
Unstapling will allow members to sell all or a portion of their common stock
of NYMEX Holdings, thereby monetizing their investment, while maintaining
their trading privileges in the form of Class A memberships.

9. Q. WHEN WILL THE CLASS A MEMBERSHIPS AND COMMON STOCK BE UNSTAPLED?

A: NYMEX Holdings would likely seek the unstapling of the common stock in
order to issue common stock in connection with raising capital from
non-members, such as in an initial public offering, or in connection with a
strategic transaction such as an acquisition of or merger with a
non-member-owned organization.

10. Q: WILL I CONTINUE TO HAVE VOTING RIGHTS?

A: Yes. As a stockholder of NYMEX Holdings, you will be able to vote on all
matters submitted to the stockholders for a vote, including the election of
the board of directors; extraordinary transactions such as a merger,
consolidation, sale of all or substantially all of the assets or dissolution
of NYMEX Holdings; changes to the bylaws of NYMEX Holdings; and the
unstapling of the common stock and Class A memberships. Each share of common
stock will be entitled to one vote. As a holder of a Class A membership in
NYMEX Exchange, you will also be able to vote on proposed changes to the
bylaws of NYMEX Exchange. These bylaws are substantially identical to the
current bylaws of NYMEX except for changes made to reflect the
demutualization and to comply with Delaware law. Each Class A membership
will be entitled to one vote on changes to NYMEX Exchange bylaws. This
represents a change from existing NYMEX voting rights, under which each
member is entitled to only one vote, regardless of the number of memberships
owned by the member. For a comparison of the rights of members before and
after the demutualization, see the table beginning on page 67.

11. Q: WILL THE DEMUTUALIZATION AFFECT CURRENT MEMBER FEES AND/OR MEMBER
BENEFITS?

A: The demutualization will not in and of itself change member fees or any
member benefits including fee rebate plans and member retention plans. You
should note however, that the board of directors of NYMEX Exchange will
continue to have the authority to set member fees, dues, assessments and
benefits in its discretion. The board does not currently have any plans to
change any fees, dues, assessments or benefits.

12. Q: WILL I RETAIN THE RIGHT TO LEASE MY TRADING PRIVILEGES ON THE EXCHANGE?

A: Yes. Members will continue to be able to act as lessors of their trading
privileges and lessees will continue to be able to act as lessees of their
trading privileges after the demutualization; however, lessees will have no
voting rights in NYMEX Exchange or NYMEX Holdings.

13. Q: WILL I RETAIN THE RIGHT TO SELL MY TRADING PRIVILEGES ON THE EXCHANGE?

A: Yes. Members will continue to be able to sell their trading privileges,
in the form of Class A memberships, to qualified members after the
demutualization. However, transfers of Class A memberships must be
accompanied by transfers of an equal number of shares of common stock of
NYMEX Holdings unless and until the stockholders of NYMEX Holdings determine
otherwise.

3
<PAGE> 10

14. Q: WILL I BE ALLOWED TO SELL MY SHARES OF NYMEX HOLDINGS?

A: Shares of NYMEX Holdings may be sold to qualified members of NYMEX
Exchange. Transfers of shares must be accompanied by transfers of an equal
number of Class A memberships in NYMEX Exchange unless and until the
stockholders of NYMEX Holdings determine otherwise.

15. Q: HOW WILL THE DEMUTUALIZATION AFFECT THE VOTING RIGHTS OF LESSEES?

A: If the demutualization is consummated, then lessees will have no voting
rights. If the demutualization is not consummated, then lessee voting
rights will remain the same as they are today. Lessees will not be eligible
to vote on the demutualization.

16. Q: WHEN WILL THE DEMUTUALIZATION BE COMPLETED?

A: If members approve the demutualization at the special meeting of members
to be held later this year (hopefully, in the second or third quarter) and
if the conditions to demutualization, including designation of NYMEX
Exchange as a "contract market" from the Commodity Futures Trading
Commission and receipt of a favorable tax ruling from the Internal Revenue
Service are satisfied, then the demutualization will be completed shortly
after the meeting of members.

17. Q: WHAT ARE THE TAX CONSEQUENCES OF THE DEMUTUALIZATION?

A: We have structured the demutualization with the intention that neither
NYMEX nor our existing members will recognize any gain or loss for federal
income tax purposes. Because of the novelty of the demutualization, NYMEX
has asked the Internal Revenue Service to issue a ruling on key aspects of
the demutualization. We expect to receive a response from the IRS in the
second or third quarter of 2000.

18. Q: WHAT WILL HAPPEN TO THE MEMBERS OF THE COMEX DIVISION OF NYMEX IN THE
DEMUTUALIZATION?

A: COMEX, which is currently a wholly-owned subsidiary of NYMEX, will be a
subsidiary of NYMEX Exchange after the demutualization. Members of the
COMEX Division will continue to have the same trading privileges on COMEX
as they have today and any other rights and obligations which a COMEX
Division member has will be unaffected by the demutualization. COMEX
Division members have no right to vote on the demutualization and will not
receive common stock of NYMEX Holdings or Class A memberships in NYMEX
Exchange in the demutualization.

19. Q: WHO CAN HELP ANSWER MY QUESTIONS?

A: If you have more questions about the demutualization you should contact:

New York Mercantile Exchange
One North End Avenue
World Financial Center
New York, New York 10282-1101
Attention: Christopher Bowen
Telephone: 212-299-2200
Fax: 212-299-2299

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<PAGE> 11

WHERE YOU CAN FIND MORE INFORMATION

NYMEX Holdings has filed with the Securities and Exchange Commission a
registration statement on Form S-4 under the Securities Act of 1933 with respect
to the shares of common stock of NYMEX Holdings being offered in the
demutualization. This proxy statement and prospectus, which constitutes a part
of the registration statement, does not contain all the information set forth in
the registration statement. Some items of information are contained in exhibits
to the registration statement, as permitted by the rules and regulations of the
Securities and Exchange Commission. Statements made in this proxy statement and
prospectus as to the content of any contract, agreement or other document filed
or incorporated by reference as an exhibit to the registration statement are not
necessarily complete. With respect to such statements, you should refer to the
corresponding exhibit for a more complete description of the matter involved and
read all statements in this proxy statement and prospectus in light of that
exhibit.

Following consummation of the demutualization, NYMEX Holdings will be
required to file reports and other information with the SEC. We intend to
furnish holders of the common stock of NYMEX Holdings with annual reports
containing audited financial statements with a report thereon by NYMEX Holdings'
independent certified public accountants.

You may read and copy any materials NYMEX Holdings files with the
Securities and Exchange Commission at the SEC's public reference rooms in
Washington, D.C., New York, New York and Chicago, Illinois. Please call the SEC
at 1-800-SEC-0330 for further information on the public reference rooms. NYMEX
Holdings filings are also available to the public at the SEC's web site at
http://www.sec.gov.

5
<PAGE> 12

SUMMARY

This summary highlights information contained elsewhere in this proxy
statement and prospectus. This summary is not complete and does not contain all
of the information you should consider with regard to the transactions described
in this proxy statement and prospectus. You should read this entire proxy
statement and prospectus, including our financial statements and the notes to
those statements, carefully.

NYMEX

NYMEX exists principally to provide facilities for buying and selling
commodities for future delivery under rules intended to protect the interests of
all market participants. NYMEX itself does not own any commodities, trade
futures and options contracts for its own account or otherwise engage in market
activities. NYMEX provides the physical facilities necessary to conduct an
open-outcry auction market and electronic trading systems and systems for the
matching and clearing of all trades executed on NYMEX. Futures and options
markets, such as NYMEX, facilitate price discovery and provide financial risk
management instruments to a broad array of market participants including
commercial entities that produce, consume, trade or have other interests in
underlying commodities. NYMEX believes that market participants choose to trade
on centralized markets such as NYMEX because of the liquidity those markets help
to provide and because those markets perform an important price discovery
function by publishing the prices at which each trade occurs. The liquidity that
NYMEX and other centralized markets offer is achieved because the traded
contracts have standardized terms and the exchanges' clearinghouses help
minimize counterparty performance risk.

For these reasons, in general the more liquidity a commodities market
offers, the more attractive it is to market users. Conversely, if liquidity
declines, a market becomes less attractive. Market participants generally view
liquidity as having two elements - trading volume and open interest. A key
factor in the decision by NYMEX's board to recommend demutualization is the
board's belief that NYMEX must ensure it is able to respond promptly and
effectively to competitive and technological developments that could reduce
NYMEX's ability to offer trading volume and open interest and thereby its
ability to offer liquidity to market participants and that NYMEX must position
itself to enter into transactions that could enhance its ability to offer
liquidity to market participants.
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<PAGE> 13

DEMUTUALIZATION OF NYMEX

As described on the cover page of this proxy statement the demutualization
will involve a two-step merger. In the demutualization, each NYMEX Division
membership will be converted into two pieces - one Class A membership in NYMEX
Exchange (representing trading privileges on NYMEX Exchange) and one share of
common stock of NYMEX Holdings (representing an equity interest in NYMEX
Holdings). The diagrams below show the ownership structure of NYMEX both before
and after the demutualization.

[Demutualization Chart]

BENEFITS OF DEMUTUALIZATION

We believe that demutualization will provide the following benefits to our
members:

- EXPANDS THE CHOICES AVAILABLE TO NYMEX.

- Enhances the ability of NYMEX to maintain industry leadership by
providing NYMEX with greater flexibility to enter into strategic
transactions and to raise capital to fund technological innovations and
other projects.

- Provides the opportunity to maximize stockholder value by separating
trading rights from equity ownership.

- Allows NYMEX to enter more easily into transactions with
non-member-owned entities by providing NYMEX with a currency - the
common stock of NYMEX Holdings - for acquisitions and the ability to
issue stock to outside investors in public or private offerings. Any
such transaction would require the approval of the stockholders of
NYMEX Holdings.

- PERMITS NYMEX TO BETTER SERVE ITS OWNERS.

- Facilitates move to for-profit business model and payment of dividends.
NYMEX is currently prohibited from paying dividends to its members
under the New York not-for-profit law, subject to limited exceptions.
NYMEX Holdings and NYMEX Exchange will not be subject to this
prohibition because they are organized as a for-profit corporation.
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<PAGE> 14

- Enhances NYMEX's ability to retain and attract professional management
by providing NYMEX with the ability to implement stock-based incentive
plans.

- PLACES NYMEX IN THE BEST POSSIBLE COMPETITIVE POSITION.

- The trading environment is becoming increasingly competitive.

- New competitors are emerging from new directions, such as Internet
exchanges.

- NYMEX must be able to react quickly and decisively to strategic
initiatives and challenges.

TRANSFERS OF COMMON STOCK AND CLASS A MEMBERSHIPS

The organizational documents of NYMEX Exchange and NYMEX Holdings provide
that the common stock of NYMEX Holdings and the Class A memberships of NYMEX
Exchange cannot be transferred separately; they must be transferred as a unit.
This is often referred to as a "stapling" of the two interests. NYMEX's board of
directors determined that the common stock and Class A memberships should be
stapled in order to ensure that NYMEX Holdings and NYMEX Exchange remain owned
and controlled by NYMEX members until those members vote, in their capacity as
stockholders of NYMEX Holdings, to unstaple the interests, most likely in
connection with an initial public offering or a strategic transaction. An
unstapling of the common stock and Class A memberships must be approved by the
holders of at least a majority of the shares of common stock of NYMEX Holdings.

BOARDS OF DIRECTORS OF NYMEX HOLDINGS AND NYMEX EXCHANGE

The directors and executive officers of NYMEX Holdings after the
demutualization will be the same as the directors and executive officers of
NYMEX before the demutualization. The certificate of incorporation of NYMEX
Exchange requires NYMEX Holdings, as the sole Class B member, to elect the
directors of NYMEX Holdings to serve as the directors of NYMEX Exchange. NYMEX
Holdings will have a 22 person board consisting of 20 directors who meet the
qualifications of floor broker, futures commission merchant, local, trade, at
large and public directors in the same proportions as provided in NYMEX's
current bylaws. The Chairman and Vice Chairman of the NYMEX Holdings board will
be designated directly by stockholders from among the members of the board
representing the at-large category. The board of NYMEX Holdings will be divided
into three classes serving staggered three-year terms. Directors for each class
will be elected at the annual meeting of stockholders held in the year in which
the term for such class expires.

RISK FACTORS

You should carefully consider all of the information provided in this proxy
statement and prospectus and, in particular, you should evaluate the specific
factors described under "Risk Factors" on page 9 for a description of the risks
associated with the demutualization.

RECOMMENDATION OF THE NYMEX BOARD

THE BOARD OF DIRECTORS OF NYMEX UNANIMOUSLY RECOMMENDS THAT MEMBERS VOTE
FOR APPROVAL OF THE DEMUTUALIZATION PLAN.
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<PAGE> 15

RISK FACTORS

This section discusses the material risks associated with the
demutualization which you should consider when deciding whether to vote in favor
of the demutualization. This section does not discuss risks associated with the
business of NYMEX Holdings and NYMEX Exchange because unless and until the
common stock and Class A memberships are unstapled, no one other than a member
of NYMEX Exchange will be able to own common stock of NYMEX Holdings.

WE HAVE OPERATED AS A NOT-FOR-PROFIT CORPORATION IN THE PAST AND HAVE NO
OPERATING HISTORY AS A FOR-PROFIT ENTERPRISE.

NYMEX has historically operated as a not-for-profit corporation. As a
result, we have no operating history as a for-profit business by which you can
evaluate our management decisions and financial results. It is possible that we
may incur operating losses in the future and that we may never achieve or
sustain profitability.

THERE IS NO ACTIVE TRADING MARKET FOR OUR SHARES AND AN ACTIVE TRADING MARKET
FOR OUR SHARES MAY NEVER DEVELOP.

Shares of our common stock are new securities that are subject to
significant transfer restrictions and for which there is currently no active
trading market. The shares are transferable only to qualified members of NYMEX
Exchange and any transfer of shares must be accompanied by a transfer of an
equal number of Class A memberships. Although we may seek the unstapling of our
common stock in the future, we cannot assure you that our shares will become
freely tradable, that our shares will be listed on any national securities
exchange or included in any automated quotation system or electronic
communications network or that an active trading market will develop for our
shares.

THE DEMUTUALIZATION WILL FACILITATE PUBLIC AND PRIVATE EQUITY OFFERINGS AND
STRATEGIC TRANSACTIONS WHICH MAY REDUCE THE INFLUENCE OF MEMBERS.

One of the purposes of the demutualization is to position NYMEX to engage
in future capital raising activities and strategic transactions such as mergers
and acquisitions. Transactions of this type would likely involve issuing or
selling equity interests in NYMEX Holdings or its subsidiaries to non-members.
While any transaction of this type would have to be approved by at least a
majority of the shares of common stock of NYMEX Holdings because it would
necessitate an unstapling of the common stock and Class A memberships, the
result of such a transaction would be that non-members of NYMEX Exchange would
become equity holders of NYMEX Holdings. It is impossible to predict at this
time what the terms of any such transaction would be or how much of a role in
governance and decision making any non-members would acquire in such a
transaction.

ELIMINATING THE VOTING RIGHTS OF LESSEES MAY ADVERSELY AFFECT THE ABILITY OF
MEMBERS TO LEASE THEIR SEATS.

Under the rules of NYMEX Exchange, lessees of Class A memberships will have
no voting rights with respect to their leased memberships. It is possible that
potential lessees will be unwilling to lease Class A memberships or will pay
less to lease Class A memberships because the rules of NYMEX Exchange will not
provide them with voting rights.

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<PAGE> 16

THE DEMUTUALIZATION WILL CHANGE CERTAIN ASPECTS OF NYMEX'S GOVERNANCE.

While one of the guiding principles in creating the holding company
structure and preparing the organizational documents of NYMEX Holdings and NYMEX
Exchange was to make as few changes as possible to the governance mechanics of
NYMEX unless and until the members vote to unstaple the common stock and Class A
memberships, certain things will change, primarily due to the fact that NYMEX
Holdings and NYMEX Exchange are organized under Delaware law, as opposed to New
York law. The material changes include the following:

<TABLE>
<CAPTION>
PRE-DEMUTUALIZATION POST-DEMUTUALIZATION
------------------- --------------------
<S> <C>
- - Members vote on the basis of one member - - Common stockholders vote on the basis of
one vote, regardless of the number of one vote per share of common stock
memberships owned. (representing one NYMEX membership);
holders of Class A memberships vote on
the basis of one membership - one vote.
- - Extraordinary transactions, such as - Extraordinary transactions, such as
mergers and sales of all or substantially mergers and sales of all or substantially
all of NYMEX's assets, must be approved all of the assets of NYMEX Holdings, must
by at least 66 2/3% of members who cast be approved by at least a majority of the
votes at a meeting held to approve such a outstanding shares of common stock of
transaction, provided that at least 150 NYMEX Holdings at a meeting held to
members vote in favor of the transaction. approve such a transaction.
- - The board of NYMEX is divided into two
classes - member directors serve terms of - The board of NYMEX Holdings is divided
three years each, while public directors into three classes - each director serves a
as well as the chairman and vice chairman term of three years. The board of NYMEX
of NYMEX serve terms of two years each. Exchange must mirror the board of NYMEX
Holdings.
- - The quorum requirement for meetings of
the board is six.
- The quorum requirement for meetings of
the board of NYMEX Holdings and NYMEX
Exchange is eight (i.e., at least
- - NYMEX cannot pay dividends except in one-third of the total number of
certain limited circumstances. directors, which is 22).
- NYMEX Holdings and NYMEX Exchange may pay
dividends when, as and if declared by
their respective boards of directors.
</TABLE>

THE IRS MAY, IN THE FUTURE, CHALLENGE OUR CHARACTERIZATION OF THE
DEMUTUALIZATION AND DETERMINE THAT THE DEMUTUALIZATION IS A TAXABLE TRANSACTION
TO NYMEX AND ITS MEMBERS.

We have structured the demutualization with the intention that neither
NYMEX nor its existing members will recognize any gain or loss for federal
income tax purposes. Based on customary representations by NYMEX, supported by
an opinion of its counsel Clifford Chance Rogers & Wells LLP, the IRS is
expected to issue a ruling that neither NYMEX nor NYMEX members will recognize
gain or loss as a result of either the first merger or the second merger.

We filed a request for the foregoing ruling with the IRS on January 31,
2000. There is limited authority for the tax treatment of the demutualization
and it is not certain that the IRS will issue the requested rulings or that it
will issue them by the third quarter of 2000.

10
<PAGE> 17

If the first merger does not qualify as a reorganization within the meaning
of Section 368(a) of the Code, the demutualization would be treated as a taxable
exchange for federal income tax purposes. In that event, each member likely
would be required to recognize gain or loss equal to the difference between (1)
the sum of the fair market value of the NYMEX Holdings stock and Class A
memberships received by the member and (2) the adjusted tax basis of the NYMEX
membership held by the member immediately before the demutualization, and NYMEX
would be required to recognize taxable gain in an amount equal to the excess of
(1) the sum of the aggregate fair market value of its assets and the amount of
liabilities of NYMEX assumed by NYMEX Exchange in the demutualization, over (2)
the aggregate adjusted tax basis of NYMEX's assets. If the first merger
qualifies as a reorganization but the second merger does not qualify as a tax
free exchange, each member likely would be required to recognize gain in an
amount described above in this paragraph.

WE MAY NOT RECEIVE APPROVALS FROM THE CFTC.

NYMEX Exchange must receive designation as a "contract market" by the CFTC
before the demutualization. In addition, we will have to obtain CFTC approval
for transactions that would potentially unlock the equity value of NYMEX
memberships such as an initial public offering of shares of NYMEX Holdings or a
strategic business transaction with another exchange. If CFTC approval cannot be
obtained, we may not be able to complete these transactions and members may not
be able to realize the full benefits of the demutualization. No assurance can be
given that we will receive any approvals or designations from the CFTC.

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<PAGE> 18

CAUTIONARY STATEMENT REGARDING
FORWARD-LOOKING INFORMATION

In this proxy statement and prospectus we make "forward-looking statements"
within the meaning of Section 27A of the Securities Act and Section 21E of the
Exchange Act of 1934, which are usually identified by the use of words such as
"will," "anticipates," "believes," "estimates," "expects," "projects," "plans,"
"intends," "should" or similar expressions. NYMEX, NYMEX Exchange and NYMEX
Holdings intend those forward-looking statements to be covered by the safe
harbor provisions for forward-looking statements contained in the Private
Securities Reform Act of 1995 and are including this statement for purposes of
complying with these safe harbor provisions.

These forward-looking statements reflect our current views about NYMEX
Holdings' plans, strategies and prospects, which are based on the information
currently available to us and on assumptions we have made.

Although we believe that our plans, intentions and expectations as
reflected in or suggested by those forward-looking statements are reasonable, we
can give no assurance that the plans, intentions or expectations will be
achieved. We have listed below and have discussed elsewhere in this proxy
statement and prospectus some important risks, uncertainties and contingencies
that could cause NYMEX Holdings' actual results, performance or achievements to
be materially different from the forward-looking statements we make in this
joint proxy statement and prospectus. These risks, uncertainties and
contingencies include, but are not limited to, the following:

- our ability to adapt to a for-profit business model;

- our ability to realize fully the benefits of the demutualization through
the unstapling of the common stock and Class A memberships;

- the success or failure of our efforts to implement our business strategy;

- national and international economic and political conditions generally
and in the financial and trading markets specifically including currency
values, the level and volatility of interest rates, fluctuation in the
volume and price levels in commodity markets and the perception of
stability in the commodity and financial markets;

- broad trends in business and finance including increased competition
resulting from the unprecedented growth of both regulated and unregulated
electronic (including Internet-based) trading systems;

- the actions of our competitors and our ability to respond to those
actions;

- changes in legislation, governmental regulations, tax rates and similar
matters; and

- other factors discussed under the heading "Risk Factors" and elsewhere in
this proxy statement and prospectus.

We assume no obligation to update publicly any forward-looking statements,
whether as a result of new information, future events or otherwise. In
evaluating forward-looking statements, you should consider these risks and
uncertainties, together with the other risks described from time to time in any
reports and documents filed with the SEC, and you should not place undue
reliance on these statements.

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<PAGE> 19

NYMEX SPECIAL MEETING

GENERAL

This proxy statement and prospectus is furnished in connection with the
solicitation of proxies from the members of record of NYMEX as of the close of
business on [date], 2000 by the board of directors of NYMEX for use at NYMEX's
special meeting of members. This proxy statement and prospectus and accompanying
form of proxy are first being mailed to the respective members of NYMEX on or
about [date], 2000.

TIME AND PLACE; PURPOSES

The NYMEX special meeting will be held at NYMEX's offices located at One
North End Avenue, World Financial Center, New York, New York 10282-1101, at
[time], local time, on [date], 2000. At the NYMEX special meeting, the members
of NYMEX will be asked to approve a two-step merger that will effect the
demutualization of NYMEX. In particular, the members of NYMEX will be asked:

1. To consider and approve the merger of NYMEX with and into NYMEX
Exchange and the related merger agreement (see page 15).

2. To consider and approve the merger of NYMEX Merger Sub, Inc., a
wholly-owned subsidiary of NYMEX Holdings, with and into NYMEX
Exchange and the related merger agreement (see page 15).

We will not transact any other business at the special meeting.

VOTING RIGHTS; VOTES REQUIRED FOR APPROVAL

The NYMEX board has fixed the close of business on [date], 2000, as the
record date for the determination of NYMEX members entitled to notice of and to
vote at the NYMEX special meeting. On [record date], 2000, there were [612]
members entitled to notice of and to vote at the special meeting. NYMEX
directors are entitled to exercise [17] votes representing [2.6]% of the votes
entitled to be cast on the demutualization. The demutualization requires the
affirmative vote of 66 2/3% of the votes cast at the NYMEX special meeting, so
long as at least 150 members (which represents the quorum requirement contained
in NYMEX's bylaws) vote in favor of the demutualization.

The presence, either in person or by proxy, of 150 members of NYMEX will
constitute a quorum at the NYMEX special meeting. Owners of record of NYMEX
memberships are entitled to one vote per member, regardless of the number of
memberships such member may own, at the NYMEX special meeting. No member is
entitled to vote on any matter while any dues, assessments, fees or fines remain
unpaid or during any period of suspension of membership. Members of the COMEX
Division of NYMEX and lessees of NYMEX memberships will not be entitled to vote
at the special meeting and no vote on their part is required for the
demutualization to be effected.

If a member attends the NYMEX special meeting, that member may vote by
ballot. However, since many members may be unable to attend the NYMEX special
meeting, those members can ensure that their votes are cast at the meeting by
signing and dating the enclosed proxy and returning it in the envelope provided.
When a proxy card is returned properly signed and dated, the vote of the NYMEX
member will be cast in accordance with the instructions on the proxy card. If a
member does not return a signed proxy card, no vote will be cast on behalf of
that member.

13
<PAGE> 20

Members are urged to mark the box on the proxy card to indicate how their
vote is to be cast. If a member returns a signed proxy card but does not
indicate how they wish to vote, the vote represented by the proxy card will be
cast "FOR" the proposals.

Any NYMEX member who executes and returns a proxy card may revoke the proxy
at any time before it is voted by:

- notifying in writing M. Dawn Lowe of NYMEX at One North End Avenue, World
Financial Center, New York, New York 10282-1101;

- granting a subsequent proxy; or

- appearing in person and voting at the NYMEX special meeting.

Attendance at the NYMEX special meeting will not in and of itself
constitute revocation of a proxy.

SOLICITATION OF PROXIES

NYMEX will bear the costs of solicitation of proxies, including the cost of
preparing, printing and mailing this proxy statement and prospectus. In addition
to the solicitation of proxies by use of the mails, proxies may be solicited
from NYMEX members by directors, officers and employees of NYMEX in person or by
telephone, facsimile or other appropriate means of communication. No additional
compensation, except for reimbursement of reasonable out-of-pocket expenses,
will be paid to these directors, officers and employees of NYMEX in connection
with the solicitation. Any questions or requests for assistance regarding this
proxy statement and prospectus and related proxy materials may be directed to:

New York Mercantile Exchange
One North End Avenue
World Financial Center
New York, New York 10282-1101
Attention: M. Dawn Lowe
Telephone: 212-299-2370
Fax: 212-301-4612

OTHER MATTERS

Pursuant to the current bylaws of NYMEX, no other business or matter other
than the demutualization transactions indicated above may be properly presented
at the NYMEX special meeting. Copies of NYMEX's bylaws are available to members
free of charge upon request to NYMEX.

14
<PAGE> 21

THE DEMUTUALIZATION

The following is a brief summary of the terms of the demutualization,
including the significant provisions of the merger agreements for the two-step
merger. Copies of the merger agreements are attached as Annexes A and B and are
incorporated by reference into this proxy statement and prospectus. WE ENCOURAGE
YOU TO READ THE MERGER AGREEMENTS CAREFULLY AND IN THEIR ENTIRETY.

GENERAL

There are two merger agreements that together will effectuate the
demutualization of NYMEX. Pursuant to the first merger agreement, NYMEX, which
is currently organized as a New York not-for-profit corporation, will merge into
a newly formed Delaware non-stock corporation. Pursuant to the second merger
agreement, a wholly-owned subsidiary of a newly-formed Delaware corporation will
merge with and into the surviving entity of the first merger in order to create
a holding company structure.

Both merger agreements are governed by Delaware law except to the extent
that the merger agreement for the first merger is required to be governed by New
York law.

First Merger

- In the first merger, NYMEX will merge into a newly-formed, non-stock
corporation organized under Delaware law. The surviving company of this
merger will be NYMEX Exchange.

- In the first merger, each NYMEX member will receive one Class A
membership and one Class B membership in NYMEX Exchange for each NYMEX
Division membership which the member owns. The Class A membership
represents the trading privileges associated with a NYMEX Division
membership. The Class B membership represents an economic interest in
NYMEX Exchange (i.e., a right to dividends and liquidation proceeds).

Second Merger

- Immediately after the first merger is completed, NYMEX Exchange will
merge with a subsidiary of NYMEX Holdings. NYMEX Exchange will survive
this merger as a subsidiary of NYMEX Holdings.

Result

- As a result of the two-step merger, (1) each pre-merger member of NYMEX
will own one Class A membership in NYMEX Exchange and one share of common
stock of NYMEX Holdings for each NYMEX Division membership which the
member owned immediately prior to the transaction; (2) NYMEX Holdings
will hold the sole outstanding Class B membership in NYMEX Exchange; (3)
NYMEX Exchange will become a subsidiary of NYMEX Holdings; and (4) both
NYMEX Exchange and NYMEX Holdings will be organized under Delaware law.

15
<PAGE> 22

Each of NYMEX Holdings, its subsidiary and NYMEX Exchange was formed solely
for the purpose of effecting the demutualization. None of them has any present
assets, any business operations, or cash flows other than the activities
associated with preparing for the demutualization.

EFFECTIVE TIME OF THE MERGERS

The merger between NYMEX and NYMEX Exchange will take effect upon the
acceptance for filing of a certificate of merger by the Secretary of State of
Delaware and the Department of State of the State of New York. The merger
between NYMEX Exchange and the subsidiary of NYMEX Holdings will take effect
immediately following the first merger upon the acceptance of a certificate of
merger with the Secretary of State of the State of Delaware. The board
anticipates that the mergers will take effect shortly after the approval of the
demutualization by the members of NYMEX, assuming the conditions to the mergers
have been satisfied.

EXCHANGE OF MEMBERSHIPS

Once the two mergers are complete, each membership in NYMEX will have
automatically converted into one Class A membership in NYMEX Exchange and one
share of common stock of NYMEX Holdings. No exchange or other transfer of any
certificates representing memberships will be necessary to effectuate the
conversion.

CONDITIONS TO THE MERGERS

The mergers will not be consummated unless approved by the requisite vote
of NYMEX members. In addition, NYMEX Exchange must receive designation as a
"contract market" from the Commodity Futures Trading Commission and a favorable
ruling from the Internal Revenue Service regarding certain federal income tax
aspects of the demutualization. See "Federal Income Tax Consequences of the
Demutualization."

TERMINATION

The merger agreements may each be terminated at any time prior to the
effectiveness of the mergers by the board of directors of NYMEX, whether before
or after approval by the members of NYMEX.

RECOMMENDATION OF THE BOARD

NYMEX's board of directors has unanimously approved the plan of
demutualization. The board believes that it is in the best interests of NYMEX,
its members to effectuate the transactions described in this proxy statement and
prospectus. Accordingly, the board recommends that members vote "FOR" adoption
of the two-step merger and merger agreements. If the demutualization is not
consummated for any reason, the board presently intends to continue to operate
NYMEX in its current form.

TAX TREATMENT

We have structured the demutualization with the intention that neither
NYMEX nor its members will recognize any gain or loss for federal income tax
purposes. Because of the novelty of the demutualization, NYMEX has asked the
Internal Revenue Service to issue a ruling on key aspects of the
demutualization. Please see "Federal Income Tax Consequences of the
Demutualization" for a discussion of important tax matters.

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<PAGE> 23

ACCOUNTING TREATMENT

We expect the demutualization will be treated in a manner similar to a
"pooling of interests" transaction under generally accepted accounting
principles. This means that, for accounting and financial reporting purposes, no
gain or loss will be recognized at the time of the demutualization and the book
value of the assets and liabilities of NYMEX at the time of the demutualization
will carry over to NYMEX Exchange. After the demutualization, all the assets and
liabilities of NYMEX Exchange will be consolidated into the parent company,
NYMEX Holdings.

REGULATORY APPROVALS

Federal commodities law requires that each commodity futures and option
exchange obtains approval from the CFTC for each of its commodity markets. This
process is known as contract market designation. NYMEX is so designated in
respect of each of the markets it operates. It will be necessary for NYMEX
either to obtain approval before the demutualization from the CFTC either to
transfer those designations to NYMEX Exchange or to obtain new designations for
each of the NYMEX markets.

ABSENCE OF APPRAISAL OR DISSENTERS' RIGHTS

Members who object to the demutualization will have no appraisal or
dissenters' rights under applicable law. Appraisal or dissenters' rights would,
if applicable, constitute the right to receive, instead of Class A membership
interests in NYMEX Exchange and shares of common stock of NYMEX Holdings, an
amount in cash that a court decides is the fair value of their membership in
NYMEX.

FEDERAL SECURITIES LAW CONSEQUENCES

Under United States federal securities laws, common stock of NYMEX Holdings
received in the demutualization by persons who are not "affiliates" under the
Securities Act may be resold immediately, except that these sales must be
accompanied by sales of Class A memberships of NYMEX Exchange for so long as the
common stock and Class A memberships are stapled. Common stock (and, therefore,
Class A memberships) received in the demutualization by "affiliates" of NYMEX
Holdings may be resold only pursuant to further registration under the
Securities Act or in transactions that are exempt from registration under the
Securities Act. These restrictions are expected to apply to the directors of
NYMEX.

This document cannot be used in connection with resales of common stock
received in the demutualization by any person who may be deemed to be an
affiliate of NYMEX under the Securities Act.

17
<PAGE> 24

NYMEX

The following discussion of the business of NYMEX describes the business
that will be conducted by NYMEX Holdings through NYMEX Exchange after the
demutualization.

NYMEX was established in 1872. It is the leading commodity exchange for
trading energy futures and options contracts, which include contracts for crude
oil, heating oil, unleaded gasoline, propane, natural gas and electricity. NYMEX
is also a leading commodity exchange for trading platinum group metals contracts
which include futures contracts for platinum and palladium and options contracts
for platinum. Through COMEX, which is a wholly-owned subsidiary of NYMEX, NYMEX
is the leading commodity exchange for trading precious metals futures and
options contracts, which include contracts for gold and silver. COMEX also
provides for trading of copper and aluminum futures and options contracts and of
FTSE Eurotop 100(R) and FTSE Eurotop 300(R) stock index futures and options
contracts, which are contracts on an index designed to measure the collective
performance of a sector of the European equities market. Based on 1999 trading
volume of approximately 109.5 million contracts, NYMEX is the largest physical
commodity-based futures exchange in the world and the third largest futures
exchange in the United States.

The aggregate trading volume on NYMEX has increased from approximately 78.7
million futures and options contracts in 1994 to approximately 109.5 million
futures and options contracts in 1999. NYMEX believes that this growth has
resulted principally from increased demand for NYMEX's contracts and the
introduction of new contracts. In 1999, for example, NYMEX introduced one new
electricity futures contract and one futures and options contract based on the
North American aluminum market and one futures contract based on the FTSE
Eurotop 300(R) Index and completed preparations for the introduction of
additional contracts, including Middle East sour crude oil futures and options,
coal futures and options, calendar spread and average price options and an
additional electricity contract.

NYMEX's operations are subject to extensive regulation by the Commodity
Futures Trading Commission under the Commodity Exchange Act. The Commodity
Exchange Act requires that, with certain exceptions, futures trading in
commodities be conducted on a commodity exchange designated as a "contract
market" by the CFTC, and establishes certain non-financial criteria for an
exchange to be designated to list futures and options contracts. Designation as
a "contract market" for the trading of a specified futures contract is
non-exclusive; the CFTC may designate additional exchanges as "contract markets"
for trading the same or similar contracts. NYMEX has been designated by the CFTC
as a "contract market" under the Commodity Exchange Act with respect to each of
the futures and options traded on it. NYMEX Exchange is seeking this designation
as a condition to the demutualization.

NYMEX was established in 1872 as the Butter and Cheese Exchange of New York
to provide an organized forum for the trading of dairy products. Its name was
subsequently changed to the Butter, Cheese and Egg Exchange of The City of New
York. In connection with NYMEX's efforts to attract traders of groceries, dried
fruits, canned goods and poultry, the name was changed to New York Mercantile
Exchange in 1882.

COMEX was founded in 1933 from the combination of four futures markets. It
initially traded six commodities: copper, hides, rubber, silk, silver and tin.
In 1994, COMEX merged with NYMEX and is a wholly-owned subsidiary of NYMEX.

At January 31, 2000, NYMEX had approximately 609 employees, most of whom
were based in New York City. NYMEX also has representatives at offices
maintained in Houston, Texas, Washington, D.C. and London, England and has a
marketing representative in Hong Kong. None of NYMEX's employees are represented
by labor unions.

18
<PAGE> 25

NYMEX'S BUSINESS

OVERVIEW

NYMEX exists principally to provide facilities for buying and selling
commodities for future delivery under rules intended to protect the interests of
all market participants. NYMEX itself does not own any commodities, trade
futures and options contracts for its own account or otherwise engage in market
activities. NYMEX provides the physical facilities necessary to conduct an
open-outcry auction market and electronic trading systems and systems for the
matching and clearing of all trades executed on NYMEX. Futures and options
markets, such as NYMEX, facilitate price discovery and provide financial risk
management instruments to a broad array of commercial entities that produce,
consume, trade or have other interests in, underlying commodities. NYMEX
believes that market participants choose to trade on centralized markets such as
NYMEX because of the liquidity those markets help to provide and because those
markets perform an important price discovery function by publishing the prices
at which each trade occurs. The liquidity that NYMEX and other centralized
markets offer is achieved because the traded contracts have standardized terms
and the exchanges' clearinghouses help minimize counterparty performance risk.

STRATEGY

The commodities and securities markets are being affected by the emergence
of electronic trading systems (often referred to as electronic communications
networks, or ECNs) and other technological advances such as the Internet. A
major reason for the demutualization is to ensure that NYMEX is presently
positioned to address both the risks and the opportunities that are presented by
these technology-driven developments. In response to changing market conditions,
among other things, NYMEX is considering the pursuit of joint venture and other
relationships with operators of ECNs; pursuing global expansion opportunities;
seeking to leverage its proven capabilities as a central liquid and transparent
market; providing clearing and settlement services by offering those services to
third parties; and continuing to invest in technology. Particularly in light of
the rapid pace of change in this area, it is not possible to predict whether or
to what extent these initiatives will be successful.

As the leading exchange for trading energy futures and options, NYMEX
actively participates in the development and integration of the energy markets,
attempting to build on its status as the preeminent energy futures exchange.
NYMEX understands that the ultimate success of its contracts lies in their
relevance and utility to the underlying markets. For this reason, NYMEX
provides, and actively develops and seeks expansion opportunities for, a
wide-range of energy products, designing energy futures and options contracts on
a product-by-product basis as related sectors of the energy industry have been

19
<PAGE> 26

deregulated and offering "one-stop shopping" for the energy industry. For
example, with price deregulation of the petroleum markets in the late 1970s and
early 1980s, NYMEX introduced heating oil futures contracts in 1978, crude oil
futures contracts in 1983, gasoline futures contracts in 1984, natural gas
futures contracts in 1990, in each case participating in opportunities created
by the deregulation of relevant industries and the physical market's need for
risk management. More recently, in order to participate in the opportunities
created by the general deregulation of the electric utility industry, NYMEX
introduced electricity futures and options contracts in the spring of 1996 and
added two additional sets of electricity futures and options contracts in 1998
and one new futures contract in 1999.

NYMEX is pursuing a similar strategy with respect to its metals futures and
options business, attempting to build on its status as the preeminent precious
metals futures exchange by offering "one-stop shopping" for the metals industry.
NYMEX augmented its metals complex by adding aluminum futures and options
contracts in 1999. At the same time, NYMEX is seeking to expand its product
offerings beyond energy and metals products to other areas, thereby providing
NYMEX with what it believes to be a natural hedge that results from
diversification. NYMEX currently lists two Pan-European equity index futures
contracts, the FTSE Eurotop 100(R) and FTSE Eurotop 300(R).

In connection with each of these strategies, NYMEX is also attempting to
internationalize its customer base, in large part by undertaking a large-scale
marketing effort to introduce risk management analysis and techniques to
potential customers abroad. Toward achieving that end, NYMEX has placed NYMEX
ACCESS(R) terminals in the United Kingdom, in Australia (through a linkage with
the Sydney Futures Exchange) and in Hong Kong (through a linkage with the Hong
Kong Futures Exchange). In addition, NYMEX concluded an agreement in 1999 with
the Singapore International Monetary Exchange to install NYMEX ACCESS(R)
terminals on the desks of experienced traders in that country. Similar talks are
underway in Japan. The design and introduction of products aimed specifically at
global markets make up a key component of NYMEX's international strategy. While
a number of NYMEX contracts such as gold and crude oil have long had a global
following, the forthcoming Middle East sour crude oil futures and options
contracts will mark the first product designed primarily for a regional overseas
market and to trade exclusively on NYMEX ACCESS(R). A second new regional
contract is now under review for copper futures based on Asian market needs and
practices. The new central Appalachian coal contract is also expected to draw
strong interest from the growing international coal market.

Finally, NYMEX attempts to provide innovative, state-of-the-art trading
systems and facilities to enable its members to efficiently serve their
customers. To support its expanding international business and product base
NYMEX has also made sizable investments to upgrade the operational efficiency
and functionality of both its clearing systems and global electronic trading
platform. Trading on NYMEX ACCESS(R), NYMEX's after-hours electronic trading
system, which was initiated in 1993, climbed to record volumes during 1999,
accounting for approximately 2% of NYMEX's average daily volume, and a new
upgraded version of NYMEX ACCESS(R) was launched in November 1999. The new
system retains the response time of its predecessor while expanding capacity,
using a standard Windows NT interface. It is less costly to operate and easier
to maintain than the previous system, offers brokers and their customers a wider
range of accounting and data tracking functions, and most importantly, allows
for daytime trading, intended for use in low volume contracts and instances of
disaster recovery, as well as the potential to trade financial and other
commodity products (pursuant to joint

20
<PAGE> 27

ventures) in the North American time zone. Toward this end, NYMEX intends to
launch its electricity contracts for trading exclusively on NYMEX ACCESS(R)
during regular business hours in March 2000. Upgrading and modernizing daytime
trade matching and review and correction of clearing operations has also been
the focus of a sustained effort by NYMEX. The installation of the final
subsystems of Clearing 21(R), a highly flexible, state of the art, clearing
system developed jointly with the Chicago Mercantile Exchange to process trades
well into the next century, were also rolled out in 1999 and is expected to be
implemented for COMEX in 2000.

NYMEX is also currently engaging in a number of projects designed to
improve the operational efficiency of the open-outcry method of trading and to
enable NYMEX to compete effectively in an increasingly electronic and
Internet-based trading environment. The underlying principle is to apply as many
technological innovations to the open-outcry method of trading as possible so
that the open-outcry method can compete openly and efficiently with electronic
methods. These technological innovations include electronic order routing and
trade submission. NYMEX is in the process of evaluating a number of feasibility
studies as to the implementation of these innovations as well as wireless voice
and data transmission.

NYMEX'S COMPETITIVE ENVIRONMENT

The marketplace for NYMEX's contracts exists both in the physical format of
open-outcry trading conducted in product-oriented trading rings, which takes
place on the floor of NYMEX, and electronically through the screen-based system
NYMEX ACCESS(R). Other exchanges designated as "contract markets" by the CFTC
and foreign exchanges permitted by the CFTC to do business in this country can
compete with NYMEX in offering market trading of futures and options contracts
in both of these formats. In addition, over-the-counter, or OTC, trading of
physical commodity instruments, such as swaps, forward contracts and NYMEX "look
alike" contracts, in which parties directly negotiate the terms of their
contracts, represents a major source of competition for NYMEX. The International
Petroleum Exchange, based in London, is the only other major international
exchange for the trading of energy products. Major products traded on the IPE
include Brent crude oil (a benchmark crude oil used in Europe and Asia) and
gasoil.

Many market participants believe that the unprecedented growth of
electronic trading systems and Internet-based technologies represents a major
threat to the continued viability of open-outcry trading as practiced at
commodities exchanges such as NYMEX.

NYMEX encounters competition in all aspects of its business and competes
directly with other exchanges, both domestic and foreign, and OTC entities, some
having substantially greater capital and resources and offering a wider range of
products and services than does NYMEX. NYMEX believes that the principal factors
affecting competition with it involve the integrity of the marketplace provided
by NYMEX, the relative prices of services and products it offers, its
substantial liquidity base, its worldwide brand recognition and the quality of
its clearing and execution services.

NYMEX, like other commodities and financial exchanges, is directly affected
by factors such as national and international economic and political conditions,
broad trends in business, finance, technology, legislation and regulations
affecting NYMEX products directly, the national and international financial and
business communities (including taxes), currency values, the level and
volatility of interest rates, fluctuation in the volume and price levels in the
commodities markets and perception of stability in the commodities

21
<PAGE> 28

and financial markets. These and other factors can affect NYMEX's volume of
trading and the stability and liquidity of the commodities markets. A reduced
volume of commodities transactions and reduced market liquidity would result in
lower revenues from transaction and clearing fees. In periods of reduced
transactions, profitability may be adversely affected because certain of its
expenses are relatively fixed.

The futures and options industry is global in nature. It is comprised of
approximately 70 exchanges located in 31 countries. The global futures and
options industry is part of a broader global derivatives industry that consists
principally of OTC products such as swaps, forward rate agreements and
customized options. Generally speaking, those products are not traded on futures
and options exchanges but on off-exchange markets between and among dealers and
their customers, which are typically bulk or large institutions and
corporations.

NYMEX is one of six principal futures exchanges in the United States and
the sixth largest futures exchange in the world. Shown below is a list of the
largest futures exchanges in the world, their country of location, 1999 total
contract volumes and three most active products traded on each of them as
reported by the Futures Industry Association.

<TABLE>
<CAPTION>
1999 TOTAL
CONTRACT
VOLUMES MOST ACTIVE PRODUCTS
---------- --------------------
<S> <C> <C>
EUREX, Germany and Switzerland......... 378,760,300 Euro-BUND futures, Euro-BOBL
futures, DAX options
Chicago Board of Trade, U.S............ 254,561,215 U.S. T-Bond futures, U.S. T-Bond
options, Ten Year T-Note future
Chicago Mercantile Exchange, U.S....... 200,737,123 3 Month Eurodollar futures, S&P 500
Index futures, 3 Month Eurodollar
options
MONEP, France.......................... 177,329,802 CAC 40 Index (Long Term) options,
all options on individual equities,
CAC 40 10 Euro futures
London International Financial Futures
Exchange, U.K........................ 120,040,031 3 Month Euribor futures, 3 Month
Sterling futures, FTSE 100(R) Index
futures
NYMEX, U.S............................. 109,538,831 Crude Oil futures, Natural Gas
futures, Gold futures
London Metal Exchange, U.K............. 61,597,557 High Grade Primary Aluminum futures,
Copper-Grade A futures, Special High
Grade Zinc futures
B, M & F, Brazil....................... 55,931,098 Interest Rate futures, U.S. Dollar
futures, Interest Rate swap futures
OM Stockholm, Sweden................... 53,622,623 All options on individual equities,
OMX(Index) futures, Interest Rate
futures
Amsterdam Exchanges, Netherlands....... 49,431,139 All options on individual equities,
AEX Stock Index options, AEX Stock
Index (FTI) futures
</TABLE>

22
<PAGE> 29

Historically, the futures industry has been characterized by significant
specialization, with exchanges generally developing niches in product categories
that, for the most part, have not substantially competed with futures and
options contracts traded on other exchanges, despite the lack of significant
regulatory obstacles to doing so. The liquidity provided by trading in a
particular contract on an exchange, as described above, typically creates a
competitive advantage for such exchange as compared to other exchanges
considering offering rival contracts. With certain limited exceptions, most of
the trading conducted in a futures product occurs on a single futures exchange.

There have been attempts to list NYMEX's most actively traded products on
other exchanges. For example, the Chicago Board of Trade trades electricity,
gold and silver contracts; the London Metal Exchange trades copper and aluminum;
and the Kansas City Board of Trade trades a natural gas futures contract having
terms similar to that of a NYMEX contract.

NYMEX has worked extensively to appeal to international markets users. In
June 1993, in an effort to directly attract more foreign participation and to
expand its international franchise, NYMEX expanded its trading hours through the
use of NYMEX ACCESS(R) to span time zones. Expanded trading hours have increased
liquidity, efficiency and greater access to markets worldwide. By accommodating
the business day hours in Hong Kong, Sydney, Singapore and the morning trading
hours in London. NYMEX now participates directly in the Far Eastern and European
markets.

NYMEX continues to evaluate all forms of competition as the world business
environment continues to change, with new products and instruments rapidly
emerging, including, for example, the OTC derivative products markets and their
perceived competition with the futures markets. NYMEX believes that OTC products
and exchange-traded futures and options contracts are, to a certain extent,
complementary risk management tools. Exchange products are standardized, liquid
risk management financial instruments. OTC derivatives products are customized
(and often esoteric) financial instruments that do not provide the liquidity of
NYMEX products. Because of their standardized and liquid features, NYMEX
products are often used to hedge the price risk associated with OTC exposure.

As standardized and liquid risk management instruments, products of NYMEX
and other futures exchanges are desirable to market users because they can be
entered into or liquidated with relative ease with no counterparty risk. Buyers,
for example, can generally find offsetting sellers and sellers similarly can
generally find offsetting buyers.

Volume on foreign futures and options exchanges is growing as the benefits
of risk management through futures and options trading become more appreciated
throughout the world and risk management techniques are adopted to meet the
needs of local economies. This growing global awareness has not only aided the
growth of foreign exchanges but has, to a certain extent, also benefited NYMEX
as non-U.S. enterprises become NYMEX members and customers of other NYMEX
members.

Under present competitive conditions, NYMEX believes that increasingly
liquid foreign markets generally have not taken material volume away from NYMEX
since volumes on NYMEX continue to grow. At present, the most active and fastest
growing futures and options products listed on foreign exchanges (e.g., French,
German, Japanese, and Brazilian bonds; Euroyen, Euromark, U.K. Sterling and
French PIBOR deposits; German and Brazilian stock indices) have not competed
with the most active and fastest growing NYMEX products (e.g., natural gas).
Nevertheless, such foreign futures and

23
<PAGE> 30

options exchanges may in fact have taken some volume, and may in the future take
volume, away from NYMEX.

NYMEX believes that its clearing and compliance operations, including
reporting and record keeping requirements, provide a degree of security to
market participants, particularly as compared with foreign exchanges, the OTC
market and, in certain cases, the esoteric and highly customized nature of the
instruments traded in the OTC market. Accordingly, NYMEX believes that such
regulation, together with NYMEX's internal controls and surveillance, is a
benefit to traders that conduct business on NYMEX as opposed to in the OTC
market.

REGULATORY OVERSIGHT

NYMEX is a self-regulatory organization that is subject to the oversight of
the CFTC. In order to guard against default risk with respect to contracts
traded on NYMEX, each of NYMEX and COMEX has instituted detailed risk management
policies and procedures. In order to manage the risk of financial
non-performance, NYMEX (1) has established minimum capital requirements for
clearing members; (2) limits the number of net open contracts that can be held
by any clearing member, based upon that clearing member's capital; (3) requires
clearing members to post original margin collateral, in the form of cash, U.S.
treasury securities or letters of credit for all open positions, and to collect
original margin from their customers; (4) pays and collects variation margin on
a marked-to-market basis at least twice daily; (5) requires clearing members to
collect variation margin from their customers; (6) requires deposits to the
applicable guaranty fund from NYMEX clearing members or COMEX clearing members,
as the case may be, which would be available to cover financial non-performance;
and (7) has broad assessment authority to recoup financial losses. NYMEX also
has extensive surveillance and compliance operations and procedures to monitor
and enforce compliance with rules pertaining to the trading, position sizes,
delivery obligations and financial condition of members.

CLEARING OPERATIONS

NYMEX serves a clearinghouse function, standing as a financial intermediary
on every open futures and option transaction cleared by NYMEX. Specifically,
through its clearinghouses, NYMEX guarantees performance of obligations owed to
buyers and sellers. As such, in the case of a customer or clearing member
financial default, to the extent that funds are not otherwise available to NYMEX
to satisfy the obligations under the applicable contract, NYMEX may be required
to perform the financial obligations.

NYMEX contracts are currently cleared through NYMEX. COMEX contracts are
currently cleared through a wholly-owned subsidiary of COMEX, the COMEX Clearing
Association, Inc., known as CCA. NYMEX is in the process of merging CCA into
NYMEX. NYMEX and the CCA provides operational infrastructure to allow position
matching, reporting and margining for each of NYMEX's and COMEX's contracts.
This structure permits parties to trade with one another without individual
credit determinations or counterparty credit risk, allows for the daily flow of
marked-to-market variation margin payments and allows NYMEX to look to the
financial strength of its clearing members as NYMEX's only customers.

Clearing members must post with NYMEX or the CCA good-faith deposits on all
open positions (i.e., original margin), in the form of cash, U.S. treasury
securities or letters of credit. Upon purchase or sale of a futures or option
contract traded on NYMEX, the

24
<PAGE> 31

customer is required to deposit initial margin with its clearing member.
Customer initial margin requirements must also be paid in the form of cash, U.S.
treasury securities or foreign currency (or, in the case of COMEX, the preceding
forms of margin as well as letters of credit, commodity warehouse receipts,
certain stock exchange and OTC traded securities, physical commodities or the
net liquidation value of such customer's account over the initial margin
requirements for the positions currently carried for such account), thereby
providing funds to offset losses they may experience in the market. NYMEX also
requires that clearing members collect 135% of clearing member margins from non-
member customers and 110% of clearing member margins from member customers and
has the power to impose limits on the number of positions any market participant
can hold. As long as any such customer maintains its position, the applicable
clearing member (and such customer) is required to maintain minimum margin funds
for that position, as well as to deposit additional funds (i.e., variation
margin) to cover the market moves against such customer.

As a further safeguard to ensure proper settlement of contracts, each
clearing member is required to maintain a security deposit, in the form of cash
or U.S. treasury securities, ranging from $100,000 to $2.0 million, depending
upon such clearing member's capital, in a fund known as a guaranty fund for each
of NYMEX and CCA, as applicable. The NYMEX guaranty fund contained approximately
$79.8 million in cash and U.S. treasury securities as of December 31, 1999. The
CCA guaranty fund contained approximately $73.5 million in cash and U.S.
treasury securities as of December 31, 1999. Although the guaranty funds are
controlled by NYMEX or CCA, as applicable, and may be used to cover the
financial defaults of a clearing member, amounts on deposit in the guaranty
funds are not the property of NYMEX and are not available to pay debt service.

SOURCES OF REVENUE

NYMEX's operating revenues consist principally of clearing and transaction
fees earned in connection with trades effected on NYMEX, market data revenue,
which are revenues from fees earned from the sale of real-time price data and,
to a lesser extent, trading floor fee-based revenue.

CLEARING AND TRANSACTION FEES

The largest source of exchange operating revenue is clearing and
transaction fees earned in connection with trades effected on the trading floor
and on NYMEX ACCESS(R). Members and non-members are required to pay clearing
fees based upon each contract side traded. On NYMEX, non-members are also
required to pay a transaction fee per side. On COMEX, the clearing fee for
non-members is equivalent to the clearing fee and transaction fee for
non-members on NYMEX. The fee schedule also differentiates between members'
day-trades (i.e., positions opened and closed during the same trading session)
and trades held overnight. COMEX assesses a clearing surcharge for lessee
trading; on NYMEX, lessee trading is charged as member trading. NYMEX ACCESS(R)
trades are also assessed a surcharge. NYMEX charges additional fees for
deliveries, option notices, transfers and other services, which are not
significant in the aggregate.

In an effort to create additional privileges of membership and to stimulate
liquidity of NYMEX futures and options contracts, NYMEX has maintained the NYMEX
Division Member Fee Reduction Program, pursuant to which certain clearing fees
of certain members who are owners of seats and member firms have been reduced by
$.24 per round turn to $.06 for day trades and $.56 for trades held overnight,
and certain clearing fees of

25
<PAGE> 32

certain lessees and individuals who hold seats beneficially owned by member
firms are reduced by $.05 per round turn to $.25 for day trades and $0.75 for
overnight trades. The board of directors of NYMEX may renew the NYMEX Member Fee
Reduction Program when its current term expires in April 2000.

In addition to the Member Fee Reduction Program, NYMEX has instituted
several other similar programs to create incentives for members and further
stimulate liquidity. These programs include the Exchange Cost Reduction Program,
which includes the Futures Commission Merchants Program, Locals, and Floor
Brokerage Operations on NYMEX and COMEX Divisions, the Electricity Incentive
Program, the Electricity Floor Broker Volume Incentive Program and Specialist
Market Maker Program. All such programs are subject to terms and qualifications
specifically designed to further the objective of that particular incentive
program. Except for the Member Fee Reduction Program, for which the only
qualification is that of membership, minimum standards were established for each
program based on such factors as volume, type and size of trades. The incentives
vary with each type of program and include the waiver of certain facility fees
and payments if certain levels of trading are met.

Shown below is a table indicating the contracts traded and clearing and
transaction fees generated for the years ending December 31, 1998, 1997, 1996,
1995 and 1994 and the nine months ended September 30, 1999 for each of NYMEX and
COMEX.

<TABLE>
<CAPTION>
VOLUME AND EXCHANGE FEES
-------------------------------------------------------------------
CLEARING AND TRANSACTION
CONTRACT VOLUME FEES (1)
------------------------------------ ---------------------------
PERIOD NYMEX COMEX TOTAL NYMEX COMEX TOTAL
------ ---------- ---------- ---------- ------- ------- -------
(IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C>
Nine Months Ended September
30, 1999................. 67,052,701 15,562,643 82,615,344 $60,599 $19,510 $80,109
Years Ended:
1998..................... 76,482,995 18,535,690 95,018,685 67,595 23,169 90,764
1997..................... 63,970,916 19,880,430 83,851,346 55,882 24,891 80,773
1996..................... 56,495,974 19,303,318 75,799,292 52,056 24,770 76,826
1995..................... 54,650,403 18,821,937 73,472,340 56,195 24,682 80,877
1994(2).................. 58,272,314 20,389,069 78,661,383 60,048 26,236 86,284
</TABLE>

- -------------------------
(1) Commencing in 1996, these numbers are net of rebates of (in thousands)
$9,816 for the nine months ended September 30, 1999 and $11,272, $10,012 and
$8,510 for the years ended December 31, 1998, 1997 and 1996, respectively.

(2) COMEX 1994 contract volume and clearing and transaction fees are for the
entire year. NYMEX acquired COMEX in August of 1994.

The magnitude of operating revenues earned by NYMEX during any period
depends heavily on the volume of trading on NYMEX and the type of business
conducted (i.e., non-member or member). Clearing and transaction fees
represented approximately 70% of NYMEX's consolidated operating revenues (of
which approximately 74% were attributable to NYMEX's energy contracts) for the
year ended December 31, 1998 and 74% of NYMEX's consolidated operating revenues
(of which approximately 76% were attributable to energy contracts) for the nine
months ended September 30, 1999.

MARKET DATA REVENUE

NYMEX sells real-time market data relating to prices of contracts traded on
NYMEX to third parties. The data is distributed through information vendors
(e.g.,

26
<PAGE> 33

Reuters, Bridge and Dow Jones) to subscribers who receive real-time data on
terminals at their business or personal locations. NYMEX and COMEX each charge a
monthly subscription fee of $55 per initial unit and $10 per additional unit at
each location. As of December 31, 1999 NYMEX had agreements with 59 vendors
representing approximately 16,400 first units and 58,700 additional units for
NYMEX and 14,200 first units and 53,400 second units for COMEX. The top six
vendors represent approximately 80% of market data revenues. Market data revenue
represented approximately 24%, 27%, 28% and 30% of NYMEX's consolidated
operating revenues for the nine months ended September 30, 1999 and each of the
years ended December 31, 1998, 1997 and 1996, respectively.

FLOOR FEE REVENUE

NYMEX collects floor fee revenue, which consists of fees for various
services provided on the trading floor such as booth licensing fees, clerk fees
and other miscellaneous usage fees. In an effort to promote member profitability
and to enhance the privileges of ownership, some of these fees have been waived
for owners of memberships. For the nine months ended September 30, 1999, NYMEX
had approximately $1.0 million of floor fee revenue.

INVESTMENT INCOME

NYMEX invests in various fixed income securities including U.S. government
and municipal securities. For the nine months ended September 30, 1999, net
investment income totaled approximately $3.4 million.

OTHER

Other components of NYMEX's operating revenue consist of membership
application and transfer fees, NYMEX ACCESS(R) application and terminal fees,
fines levied by NYMEX from time to time and other miscellaneous items.

NYMEX has approximately 115,000 square feet of space available for lease
that it leases to members and others. There can be no assurance that NYMEX
Exchange will be able to continue to lease available space on favorable terms.

PRODUCTS TRADED ON NYMEX

TRADING VOLUME AND OPEN INTEREST ON NYMEX

Contracts traded on NYMEX include futures and/or options contracts for
light sweet crude oil, heating oil, unleaded gasoline, natural gas, propane,
electricity and platinum group metals. Set forth on the following page is
information regarding the annual volume of contracts traded on NYMEX for each of
the years ended December 31, 1999, 1998, 1997, 1996, 1995 and 1994. Trading
volume in NYMEX's two most active contracts - crude oil futures and natural gas
futures - increased by 23% and 27%, respectively in 1999 and 1998 compared to
the prior year. Over the period from January 1, 1994 to December 31, 1999, the
trading of light sweet crude oil futures and options contracts accounted for
approximately 51% of NYMEX trading volume and approximately 39% of NYMEX's
consolidated trading volume; clearing and transaction fees generated from the
trading of such contracts represented approximately 42%, 40% and 36% of NYMEX's
consolidated operating revenues for each of the years ended December 31, 1997,
1998 and 1999, respectively.

27
<PAGE> 34

NYMEX CONTRACTS TRADED
<TABLE>
<CAPTION>
1999 1998 1997 1996
----------------------- ----------------------- ----------------------- ----------
FUTURES OPTIONS FUTURES OPTIONS FUTURES OPTIONS FUTURES
---------- ---------- ---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
Light Sweet Crude Oil............. 37,860,064 8,161,976 30,495,647 7,448,095 24,771,375 5,790,333 23,487,821
Heating Oil....................... 9,200,703 695,558 8,863,764 669,725 8,370,964 1,147,034 8,341,877
New York Harbor Unleaded
Gasoline........................ 8,701,216 600,009 7,992,269 730,421 7,475,145 1,033,778 6,312,339
Natural Gas....................... 19,165,096 3,849,454 15,978,286 3,115,765 11,923,628 2,079,607 8,813,867
Platinum.......................... 567,268 11,146 528,269 14,183 698,597 31,139 802,468
Palladium......................... 75,394 N/A 131,250 N/A 238,716 N/A 205,610
Sour Crude Oil.................... 0 N/A 1 N/A 0 N/A 0
Propane........................... 37,544 N/A 43,868 N/A 40,255 N/A 53,903
Gasoline-Crude Oil Spread
Options......................... N/A 46,281 N/A 22,575 N/A 41,867 N/A
Heating Oil-Crude Oil Spread
Options......................... N/A 46,482 N/A 36,615 N/A 18,657 N/A
Palo Verde Electricity............ 51,852 4,419 139,738 28,597 155,977 19,328 17,548
California-Oregon Border
Electricity..................... 52,032 3,761 128,423 19,989 120,896 13,495 52,340
Permian Basin Natural Gas......... 0 0 0 0 15 0 8,811
Cinergy Electricity............... 34,367 1,419 48,483 2,597 N/A N/A N/A
Entergy Electricity............... 20,528 105 42,580 1,855 N/A N/A N/A
PJM Electricity................... 3,254 N/A N/A N/A N/A N/A N/A
Alberta Natural Gas............... 0 N/A 0 N/A 110 N/A 2,876
Gulf Coast Unleaded Gasoline...... 0 N/A 0 N/A 0 N/A 0
---------- ---------- ---------- ---------- ---------- ---------- ----------
Total..................... 75,769,318 13,420,610 64,392,578 12,090,417 53,795,678 10,175,238 48,099,460
========== ========== ========== ========== ========== ========== ==========

<CAPTION>
1996 1995 1994
--------- ---------------------- ----------------------
OPTIONS FUTURES OPTIONS FUTURES OPTIONS
--------- ---------- --------- ---------- ---------
<S> <C> <C> <C> <C> <C>
Light Sweet Crude Oil............. 5,271,456 23,613,994 3,975,611 26,812,262 5,675,072
Heating Oil....................... 1,108,935 8,266,783 703,388 8,986,835 699,325
New York Harbor Unleaded
Gasoline........................ 655,965 7,071,787 766,557 7,470,836 573,502
Natural Gas....................... 1,234,691 8,086,718 921,520 6,357,560 493,491
Platinum.......................... 36,175 846,693 43,601 895,805 90,556
Palladium......................... N/A 166,713 N/A 143,773 N/A
Sour Crude Oil.................... N/A 0 N/A 0 N/A
Propane........................... N/A 49,532 N/A 45,100 N/A
Gasoline-Crude Oil Spread
Options......................... 31,743 N/A 64,285 N/A 13,932
Heating Oil-Crude Oil Spread
Options......................... 45,920 N/A 72,969 N/A 13,965
Palo Verde Electricity............ 3,964 N/A N/A N/A N/A
California-Oregon Border
Electricity..................... 7,650 N/A N/A N/A N/A
Permian Basin Natural Gas......... 0 N/A N/A N/A N/A
Cinergy Electricity............... N/A N/A N/A N/A N/A
Entergy Electricity............... N/A N/A N/A N/A N/A
PJM Electricity................... N/A 0 N/A 0 N/A
Alberta Natural Gas............... 15 0 N/A 0 N/A
Gulf Coast Unleaded Gasoline...... N/A 252 N/A 300 N/A
--------- ---------- --------- ---------- ---------
Total..................... 8,396,514 48,102,472 6,547,931 50,712,471 7,559,843
========= ========== ========= ========== =========
</TABLE>

- -------------------------

"N/A" means contract was either not in existence at the time or was declared
dormant and therefore not available for trading.

"0" means contract was available for trading but no trades were executed.

28
<PAGE> 35

Set forth below is information with respect to open interest on contracts
traded on NYMEX. Open interest denotes the number of contracts that have not
been liquidated as of the dates shown below.

NYMEX OPEN INTEREST
<TABLE>
<CAPTION>
DECEMBER 31, 1999 DECEMBER 31, 1998 DECEMBER 31, 1997 DECEMBER 31, 1996
------------------- ------------------- ----------------- -----------------
FUTURES OPTIONS FUTURES OPTIONS FUTURES OPTIONS FUTURES OPTIONS
------- --------- --------- ------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Light Sweet Crude Oil......................... 501,819 557,221 483,327 420,962 413,045 363,639 364,170 439,536
Heating Oil................................... 135,259 58,593 176,361 66,632 152,476 86,415 95,408 104,877
New York Harbor Unleaded Gasoline............. 89,804 45,854 100,465 26,859 100,742 25,965 59,806 32,886
Natural Gas................................... 246,629 369,520 222,576 242,379 186,815 221,849 143,846 120,431
Platinum...................................... 11,953 326 11,543 413 10,983 1,141 25,990 3,276
Palladium..................................... 2,869 N/A 2,861 N/A 3,565 N/A 7,995 N/A
Sour Crude Oil................................ 0 N/A 0 N/A 0 N/A 0 N/A
Propane....................................... 2,408 N/A 4,068 N/A 2,019 N/A 3,222 N/A
Gasoline-Crude Oil Spread Options............. N/A 1,411 N/A 977 N/A 2,521 N/A 1,645
Heating Oil-Crude Oil Spread Options.......... N/A 5,235 N/A 4,845 N/A 1,998 N/A 2,655
Palo Verde Electricity........................ 1,769 0 1,537 10 4,515 2,191 1,218 899
California-Oregon Border Electricity.......... 1,974 1 2,401 268 5,336 2,904 3,196 1,743
Permian Basin Natural Gas..................... 0 0 0 0 0 0 50 0
Cinergy Electricity........................... 193 0 2,087 1,490 N/A N/A N/A N/A
Entergy Electricity........................... 25 0 2,653 50 N/A N/A N/A N/A
PJM Electricity............................... 372 N/A N/A N/A N/A N/A N/A N/A
Alberta Natural Gas........................... 0 0 0 0 0 0 162 0
Gulf Coast Unleaded Gasoline.................. 0 N/A 0 N/A 0 N/A 0 N/A
------- --------- --------- ------- ------- ------- ------- -------
Total................................. 995,074 1,038,161 1,009,879 764,885 879,496 708,623 705,063 707,948
======= ========= ========= ======= ======= ======= ======= =======

<CAPTION>
DECEMBER 31, 1995 DECEMBER 31, 1994
----------------- -----------------
FUTURES OPTIONS FUTURES OPTIONS
------- ------- ------- -------
<S> <C> <C> <C> <C>
Light Sweet Crude Oil......................... 353,354 297,642 354,416 244,136
Heating Oil................................... 128,834 72,578 132,743 37,708
New York Harbor Unleaded Gasoline............. 61,632 23,116 53,203 15,432
Natural Gas................................... 162,783 134,748 133,834 55,119
Platinum...................................... 23,690 2,345 23,768 2,942
Palladium..................................... 6,196 0 7,378 0
Sour Crude Oil................................ 0 N/A 0 N/A
Propane....................................... 2,447 0 2,586 0
Gasoline-Crude Oil Spread Options............. N/A 640 N/A 4,033
Heating Oil-Crude Oil Spread Options.......... N/A 9,271 N/A 4,761
Palo Verde Electricity........................ N/A N/A N/A N/A
California-Oregon Border Electricity.......... N/A N/A N/A N/A
Permian Basin Natural Gas..................... N/A N/A N/A N/A
Cinergy Electricity........................... N/A N/A N/A N/A
Entergy Electricity........................... N/A N/A N/A N/A
PJM Electricity............................... N/A N/A N/A N/A
Alberta Natural Gas........................... N/A N/A N/A N/A
Gulf Coast Unleaded Gasoline.................. 0 N/A 100 N/A
------- ------- ------- -------
Total................................. 738,936 540,340 708,028 364,131
======= ======= ======= =======
</TABLE>

- -------------------------

"N/A" means contract was either not in existence at the time or was declared
dormant and therefore not available for trading.

"0" means contract was available for trading but no trades were executed.

29
<PAGE> 36

PRODUCTS TRADED ON COMEX

TRADING VOLUME AND OPEN INTEREST

Contracts traded on COMEX include futures and options contracts for
aluminum, gold, silver, copper and the FTSE Eurotop 100(R) and FTSE Eurotop
300(R) stock index. Set forth below is information regarding the annual volume
of contracts traded on COMEX for each of the years ended December 31, 1999,
1998, 1997, 1996, 1995 and 1994.

COMEX CONTRACTS TRADED
<TABLE>
<CAPTION>
1999 1998 1997 1996
---------------------- ---------------------- ---------------------- ----------
FUTURES OPTIONS FUTURES OPTIONS FUTURES OPTIONS FUTURES
---------- --------- ---------- --------- ---------- --------- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
Gold................................ 9,575,788 2,815,831 8,990,094 1,945,366 9,541,904 2,064,883 8,902,179
Silver.............................. 4,157,500 725,885 4,094,616 818,053 4,893,520 842,923 4,870,808
High Grade Copper................... 2,852,962 160,857 2,483,610 153,332 2,356,170 133,603 2,311,919
FTSE Eurotop 100(R) Index........... 25,181 0 50,619 0 47,427 0 38,925
FTSE Eurotop 300(R) Index........... 6,279 N/A N/A N/A N/A N/A N/A
Aluminum............................ 27,978 642 N/A N/A N/A N/A N/A
5 Day Gold Option................... N/A N/A N/A N/A N/A N/A N/A
5 Day Silver Option................. N/A N/A N/A N/A N/A N/A N/A
5 Day High Grade Copper Option...... N/A N/A N/A N/A N/A N/A N/A
---------- --------- ---------- --------- ---------- --------- ----------
Total....................... 16,645,688 3,703,215 15,618,939 2,916,751 16,839,021 3,041,409 16,123,831
========== ========= ========== ========= ========== ========= ==========

- -------------------------

"N/A" means contract was either not in existence at the time or was declared
dormant and therefore not available for trading.

"0" means contract was available for trading but no trades were executed.

30
<PAGE> 37

Set forth below is information with respect to open interest on contracts
traded on COMEX. Open interest denotes the number of contracts that have not
been liquidated as of the dates shown below.

COMEX OPEN INTEREST
<TABLE>
<CAPTION>
DECEMBER 31, 1999 DECEMBER 31, 1998 DECEMBER 31, 1997 DECEMBER 31, 1996
------------------- ------------------- ----------------- -----------------
FUTURES OPTIONS FUTURES OPTIONS FUTURES OPTIONS FUTURES OPTIONS
------- --------- --------- ------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Gold.......................................... 155,914 629,296 162,912 432,256 177,770 404,403 189,805 328,367
Silver........................................ 76,387 64,209 75,353 60,858 98,906 106,258 84,693 59,319
High Grade Copper............................. 71,753 12,142 71,975 19,960 70,078 15,214 49,176 12,637
FTSE Eurotop 100(R) Index..................... 387 0 1,811 0 2,200 0 2,461 0
FTSE Eurotop 300(R) Index..................... 552 N/A N/A N/A N/A N/A N/A N/A
Aluminum...................................... 571 0 N/A N/A N/A N/A N/A N/A
5 Day Gold Option............................. N/A N/A N/A N/A N/A N/A N/A 0
5 Day Silver Option........................... N/A N/A N/A N/A N/A N/A N/A 0
5 Day High Grade Copper Option................ N/A N/A N/A N/A N/A N/A N/A 0
------- --------- --------- ------- ------- ------- ------- -------
Total................................. 305,564 705,647 312,051 513,074 348,954 525,875 326,135 400,323
======= ========= ========= ======= ======= ======= ======= =======

<CAPTION>
DECEMBER 31, 1995 DECEMBER 31, 1994
----------------- -----------------
FUTURES OPTIONS FUTURES OPTIONS
------- ------- ------- -------
<S> <C> <C> <C> <C>
Gold.......................................... 142,179 276,737 176,072 134,578
Silver........................................ 98,555 67,924 130,451 111,938
High Grade Copper............................. 35,393 5,503 49,948 13,501
FTSE Eurotop 100(R) Index..................... 3,910 0 999 0
FTSE Eurotop 300(R) Index..................... N/A N/A N/A N/A
Aluminum...................................... N/A N/A N/A N/A
5 Day Gold Option............................. N/A 0 N/A 0
5 Day Silver Option........................... N/A 0 N/A 0
5 Day High Grade Copper Option................ N/A 0 N/A 0
------- ------- ------- -------
Total................................. 280,037 350,164 357,470 260,017
======= ======= ======= =======
</TABLE>

- -------------------------

"N/A" means contract was either not in existence at the time or was declared
dormant and therefore not available for trading.

"0" means contract was available for trading but no trades were executed.

31
<PAGE> 38

TECHNOLOGY

GENERAL

In recent years, NYMEX has implemented several initiatives intended to
increase the range and quality of services provided to members which is the only
way to ensure that NYMEX remains competitive in a period of rapid technological
developments. NYMEX believes that open-outcry trading provides the greatest
depth of liquidity but that its electronic trading systems provide it with a
hedge for the possibility that electronic trading becomes the predominant and
preferred way energy and metals futures and options transactions are executed.

OPEN-OUTCRY VERSUS ELECTRONIC TRADING

Exchanges employing traditional open-outcry methods of trading financial
instruments and commodities, such as the method utilized by NYMEX, have come
under increasing competitive pressure from organizations and other exchanges
employing electronic trading methods. These electronic trading methods include
electronic communications networks and other Internet-based systems that
electronically match orders and provide fast, low-cost execution. Both
newly-formed ECNs, like Island, DATEK and Cantor Fitzgerald's eSpeed, as well as
established exchanges such as EUREX are implementing electronic trading methods
and routing order flow away from traditional open-outcry exchanges like the New
York Stock Exchange and the London International Financial Futures Exchange.
While this trend has been most prevalent in the equities, debt and debt futures
market, ECNs and Internet-based entities are emerging at a rapid pace in the
physical, forward and OTC energy marketplace. Examples are entities such as
Bloomberg, which offers a bulletin board system called PowerMatch for physical
electricity transactions; EnronOnline, an Internet-based business-to-business
offering where Enron customers trade on a principal-to-principal basis with
Enron through the Internet; and Houstonstreet.com, an Internet-based system
designed to provide energy traders with an information-rich environment that
offers flexible and anonymous trading. Another possible Internet-based
competitor is Altrade, which provides a real-time electronic marketplace for
physical natural gas, crude oil, natural gas liquids and electricity. While none
of these ECN or Internet-based entities offer a futures market, they all
represent a potential electronic threat to NYMEX. Accordingly, in November 1999,
NYMEX announced its intention to cease trading its electricity markets on the
trading floor and move them to a wholly electronic trading environment,
initially on NYMEX ACCESS(R).

Over the past year, there have been a number of traditional open-outcry
exchanges that have either moved toward or announced their intentions to close
their open-outcry trading floors and become wholly electronic marketplaces.
LIFFE closed its last futures ring in November 1999 and migrated its contracts
to its LIFFEConnect electronic trading system. LIFFE has also stated it will
close its last options ring by the middle of 2000. The Sydney Futures Exchange
closed its trading floor in November 1999 and migrated all of its markets to its
SYCOM(R) electronic trading system and the Hong Kong Futures Exchange has
announced it will become wholly electronic by March 2000.

Since 1993, electronic trading has been available to NYMEX members via
NYMEX ACCESS(R), which is described below. By providing a means for
round-the-clock trading and competing electronically in ways that will enhance
the traditional open-outcry futures auction market, NYMEX believes that
electronic systems such as NYMEX ACCESS(R) will help NYMEX and the entire
futures industry to become more efficient while extending its outreach into new
markets.

32
<PAGE> 39

NYMEX ACCESS(R)

NYMEX ACCESS(R) is an after-hours electronic trading system, launched in
June 1993, which currently permits the trading of futures and options contracts
on crude oil, heating oil, unleaded gasoline, natural gas and platinum, and
futures contracts on gold, silver, copper, aluminum, propane, palladium and
electricity, through a worldwide computer network. The system is currently
active when the trading floor is closed; however, in March 2000, NYMEX
anticipates trading its electricity contracts exclusively on NYMEX ACCESS(R)
throughout the daytime and night sessions. As of January 1, 2000, approximately
300 trader workstations were in place.

NYMEX ACCESS(R) was originally developed jointly by NYMEX, Task Management,
Inc. and AT&T. NYMEX ACCESS(R) is a complete, integrated electronic trading
system. It has been designed to take advantage of computer technology while
maintaining the efficiencies of market pricing inherent in open-outcry trading.
Included within the NYMEX ACCESS(R) system are an order-matching system based
upon the use of a matching algorithm reflecting strict price/time priority for
all orders entered into the system, a unique and proactive risk management
system and a trade allocation system. In February 1998, NYMEX entered into a
joint development agreement with the International Petroleum Exchange to develop
an updated system which would retain the benefits of the current system while
providing expansion of capacity and functionality. In November 1999, NYMEX
launched this updated version of the system and further system refinement is
ongoing.

NYMEX ACCESS(R) is one of the vehicles through which NYMEX has sought to
internationalize its customer base. In November 1994, NYMEX ACCESS(R) began
operating in the United Kingdom. At the present time, 11 trader workstations are
installed in the United Kingdom. In September 1995, NYMEX's energy products,
including crude oil, heating oil, gasoline and natural gas, became available to
The Sydney Futures Exchange, or SFE, traders through a link of NYMEX ACCESS(R)
with the SFE's SYCOM(R)after hours electronic trading system. As originally
implemented, the linkage allowed SFE members to access NYMEX contracts and NYMEX
ACCESS(R)trading systems through their SYCOM(R) terminals. In April 1996, gold,
silver and copper contracts became available to SFE members through the system.
With the updated version of NYMEX ACCESS(R), NYMEX ACCESS(R) terminals have been
placed directly in Australia. There are currently nine NYMEX ACCESS(R) terminals
located in Australia. In June 1996, trading commenced on NYMEX ACCESS(R)
terminals which had been placed in Hong Kong pursuant to a linkage arrangement
between NYMEX and the Hong Kong Futures Exchange. Currently, this linkage
agreement has expired; NYMEX and the Hong Kong Futures Exchange are in the
process of negotiating an extension of the terms of the linkage. In 1999, NYMEX
finalized a new agreement with the Singapore International Monetary Exchange
that will allow it to place terminals in that oil market center. This linkage is
currently pending regulatory approvals in the U.S. and Singapore. Similar
opportunities are being explored in Japan, Korea, and India. NYMEX ACCESS(R)
volume currently accounts for approximately 2% of NYMEX's average daily volume.

MEMBER BENEFIT PLANS

RETENTION PLANS

NYMEX Exchange intends to continue to maintain NYMEX's Members' Retention
and Retirement Plan under which NYMEX makes annual contributions to fund the
plan from which quarterly distributions are made to vested participants who have
reached the

33
<PAGE> 40

age of 59 1/2. For each member who meets the requirement of 15 years of
continuous service (as defined in the plan), payments under the plan are equal
to $25,000 per year (which amount is to be increased by 3% each year, commencing
July 1, 1996, and then to remain fixed for each recipient at each respective
level) for 10 years, with payments commencing for vested participants after
attaining age 59 1/2. Payments are made from the general assets of NYMEX. Under
the terms of the plan, the commitments to members are subject to the claims of
general creditors and may be paid only if they will not render NYMEX insolvent
or unable to carry on its corporate purposes. NYMEX may terminate the plan at
any time based on an affirmative vote of three-fourths of NYMEX's board of
directors. Assets designated for the plan are segregated in a trust. If the plan
is terminated, the plan requires that assets in the trust be distributed first
to vested participants pro rata in proportion to the present value of their
vested benefit payments and thereafter to participants who have served more than
ten years (but less than 15 years) pro rata based on their actual years of
service.

COMEX also maintains a retention program for COMEX members, which is
similar to the NYMEX Exchange plan except that the benefit payments are $12,500
($2,000 for option seatholders) per year for vested participants and no new
participants are permitted since the merger of NYMEX and COMEX. The amount of
the benefit payment to COMEX members under the COMEX plan is not subject to
increase.

SEAT FINANCING PROGRAM

NYMEX Exchange intends to continue to maintain NYMEX's seat financing
program under which NYMEX Exchange (subject to review and approval by a special
committee) may guarantee and collateralize personal loans made to members by
Brown Brothers Harriman & Co. for the purpose of purchasing a NYMEX Division or
a COMEX Division membership. Members may borrow up to 60% of the purchase price
of a membership. The program is presently limited to an aggregate of $8 million
in loan guarantees at any one time. Currently, NYMEX is guarantor for 23 such
loans in an aggregate amount of approximately $6.2 million.

LEGAL PROCEEDINGS

From time to time, NYMEX is involved in legal proceedings and litigation
arising in the ordinary course of business. Set forth below are descriptions of
litigation and legal proceedings to which we are a party as of the date of this
proxy statement and prospectus that could have a material adverse effect on our
business, operating results or financial condition. While the ultimate result of
such proceedings against NYMEX cannot be predicted with certainty, the
management of NYMEX believes that the resolution of these matters will not have
a material adverse effect on its consolidated financial position, results of
operations or cash flows.

NYMEX has been named as a defendant in the following legal actions:

- Ricky Barnes v. New York Mercantile Exchange, Commodity Exchange, Inc. A.
J. Contracting Company, Inc. and Zwicker Electric Company, Inc. This
action is pending in New York State Supreme Court (New York County).
NYMEX was served with the summons and complaint on or about March 4,
1998. This is a personal injury case that relates to the construction of
One North End. Plaintiff, an employee of Forest Datacom Services, Inc., a
subcontractor of A.J. Construction, alleges that he was injured on
December 17, 1996 while working at the One North End construction site.
Plaintiff seeks $10,000,000 in compensatory damages.

34
<PAGE> 41

NYMEX and COMEX are represented by insurance counsel. The case is currently in
discovery.

- Electronic Trading Systems Corporation v. The Board of Trade of the City
of Chicago, the New York Mercantile Exchange, the Chicago Mercantile
Exchange and Cantor Fitzgerald, L.P. This action is pending in United
States District Court for the Northern District of Texas (Dallas
Division). NYMEX was served with a summons and complaint on or about May
10, 1999. This is a patent infringement case. Plaintiff alleges that it
is the owner of United States Letters Patent No. 4,903,201 entitled
"Automated Futures Trade Exchange" and that defendants are infringing
this patent through use of their respective electronic trading systems.
Plaintiff seeks an unspecified amount of royalties. NYMEX is providing
its own defense to this action. NYMEX has filed motion to sever and
transfer venue to the Southern District of New York.

- Phillip Petruzzi and Joann Petruzzi v. the New York Mercantile Exchange.
This action is pending in New York State Supreme Court (New York County).
NYMEX was served with the summons and complaint on or about October 13,
1998. This is a personal injury claim that relates to plaintiff's trading
activity when NYMEX was located at 4 World Trade Center. Plaintiff, a
NYMEX member, alleges that he was injured on July 23, 1993 while trading
in the Natural Gas Ring. Plaintiff seeks $10,750,000 in compensatory
damages and $10,000,000 in punitive damages. NYMEX is represented by
insurance counsel on the compensatory damages portion of the claims and
has retained counsel to represent it on the punitive damages claim. The
case is still in discovery.

- Enrique Rivera and Edith Rivera v. New York Mercantile Exchange, Mark
Kessloff, Les Faison, Brian Bartichek and John Does "1-10." This action
is pending in New York State Supreme Court (Bronx County). NYMEX was
served with the summons and complaint on or about April 22, 1999. This is
an ethnic discrimination case. Plaintiff alleges that throughout his
employment with NYMEX he was subjected to a hostile work environment and
discrimination regarding his ethnic origin. Plaintiff seeks an
unspecified amount of compensatory and punitive damages. NYMEX has
retained counsel to defend it in this matter. The case is in discovery.

- George Scivoletti and Maryanne Scivoletti v. New York Mercantile
Exchange, Commodities Exchange Center, Inc., Cushman & Wakefield, Inc.,
Paris Maintenance, Inc., A.J. Construction of New York, Inc. and
Space/Management Programs, Inc. This action is pending in United States
District Court for the Southern District of New York. The summons and
complaint were filed on or about February 2, 1998. This is a personal
injury case that related to plaintiff's trading activity at NYMEX's One
North End trading facility. Plaintiff alleges that on July 10, 1997 he
was injured while trading in the Natural Gas Ring. Plaintiffs seeks a
total of $30,000,000 in compensatory damages against defendants. NYMEX is
represented by insurance counsel. The case is in discovery.

35
<PAGE> 42

Plaintiff alleges that he was injured on September 11, 1996, while
working at the One North End construction site. Plaintiff seeks a total
of $11,000,000 in compensatory damages. NYMEX is represented by insurance
counsel. This case is in discovery.

- Western Capital Design, LLC v. New York Mercantile Exchange and John Does
"1-50." This action is pending in New York District Court for the
Southern District of New York. NYMEX was served with the summons and
complaint on or about February 17, 1999. This action relates to alleged
wrongful conduct by NYMEX and NYMEX members regarding the execution of
heating oil and natural gas options. Plaintiff alleges that the prices it
was charged for heating oil and natural gas options were improper and
that these improper transactions affected the market price at which
plaintiff transacted its trading. Plaintiff seeks $75,000,000 in
compensatory damages. NYMEX has retained counsel to represent it in this
matter. This action was commenced in State Court in Florida. It was
removed to Federal Court and then venue was transferred to the Southern
District of New York. NYMEX has made a motion to dismiss the complaint.

36
<PAGE> 43

SELECTED FINANCIAL INFORMATION

The following table sets forth selected consolidated financial and other
information for NYMEX. The balance sheet and operating data as of and for each
of the five years ended December 31, have been derived from the audited
consolidated financial statements and notes thereto. The balance sheet and
operating data as of and for the nine months ended September 30, 1999 and 1998
are unaudited but include, in the opinion of management, all adjustments
(consisting of normal recurring accruals) considered necessary for a fair
presentation of such data. The results of operations for the nine months ended
September 30, 1999 are not necessarily indicative of the results that may be
expected for the entire year. The information set forth below should be read in
conjunction with "Management's Discussion and Analysis of Financial Condition
and Results of Operations," the financial statements and the notes thereto and
other financial information included in this proxy statement and prospectus.
Financial information for the year ended December 31, 1999 will be provided in
an amendment to this registration statement when the audit for that year has
been completed.
<TABLE>
<CAPTION>
NINE MONTHS
ENDED
SEPTEMBER 30, YEAR ENDED DECEMBER 31,
--------------------------------- ---------------------------------
1999 1998 1998 1997
---- ---- ---- ----
(DOLLARS IN THOUSANDS, EXCEPT PER SEAT DATA)
<S> <C> <C> <C> <C>
OPERATING DATA
Revenues
Clearing & transaction
fees(1).................. $ 80,109 $ 68,633 $ 90,764 $ 80,773
Market data fees........... 26,068 25,871 34,858 33,457
Other(2)................... 2,782 3,613 4,837 3,557
--------------- --------------- --------------- ---------------
Operating revenues......... 108,959 98,117 130,459 117,787
--------------- --------------- --------------- ---------------
Expenses
General and
administrative........... 65,056 63,092 86,956 83,933
Rent and facility.......... 9,131 9,421 12,672 17,116
Depreciation and
amortization(3).......... 10,191 9,312 12,054 7,368
Marketing.................. 1,778 1,522 2,403 4,813
Loss on disposition of
property & equipment..... - - 2,814 1,234
--------------- --------------- --------------- ---------------
Operating expenses......... 86,156 83,347 116,899 114,464
--------------- --------------- --------------- ---------------
Operating income........... 22,803 14,770 13,560 3,323

Other income and expenses
Investment income, net..... 3,364 5,484 6,739 8,288
Interest expense........... (5,778) (6,032) (7,958) (6,967)
--------------- --------------- --------------- ---------------
Income before income
taxes.................... 20,389 14,222 12,341 4,644
Income tax expense......... 9,787 6,827 6,263 3,495
--------------- --------------- --------------- ---------------
Net income before
cumulative effects of
accounting changes....... 10,602 7,395 6,078 1,149

Cumulative effects of
accounting changes
Investments................ - - - -
Postemployment benefits.... - - - -
--------------- --------------- --------------- ---------------
Net income................. $ 10,602 $ 7,395 $ 6,078 $ 1,149
=============== =============== =============== ===============

YEAR ENDED DECEMBER 31,
---------------------------------------------------
1996 1995 1994
---- ---- ----
(DOLLARS IN THOUSANDS, EXCEPT PER SEAT DATA)
<S> <C> <C> <C>
OPERATING DATA
Revenues
Clearing & transaction
fees(1).................. $ 76,826 $ 80,877 $ 69,942
Market data fees........... 33,232 33,839 23,470
Other(2)................... 2,532 3,198 3,767
--------------- --------------- ---------------
Operating revenues......... 112,590 117,914 97,179
--------------- --------------- ---------------
Expenses
General and
administrative........... 73,170 74,467 62,189
Rent and facility.......... 14,415 12,153 5,723
Depreciation and
amortization(3).......... 9,795 8,322 5,538
Marketing.................. 2,534 3,722 2,864
Loss on disposition of
property & equipment..... - - -
--------------- --------------- ---------------
Operating expenses......... 99,914 98,664 76,314
--------------- --------------- ---------------
Operating income........... 12,676 19,250 20,865
Other income and expenses
Investment income, net..... 4,860 7,429 792
Interest expense........... (1,781) (1,299) (123)
--------------- --------------- ---------------
Income before income
taxes.................... 15,755 25,380 21,534
Income tax expense......... 8,000 11,746 9,425
--------------- --------------- ---------------
Net income before
cumulative effects of
accounting changes....... 7,755 13,634 12,109
Cumulative effects of
accounting changes
Investments................ - - 417
Postemployment benefits.... - - (380)
--------------- --------------- ---------------
Net income................. $ 7,755 $ 13,634 $ 12,146
=============== =============== ===============
</TABLE>

37
<PAGE> 44
<TABLE>
<CAPTION>
NINE MONTHS
ENDED
SEPTEMBER 30, YEAR ENDED DECEMBER 31,
--------------------------------- ---------------------------------
1999 1998 1998 1997
---- ---- ---- ----
(DOLLARS IN THOUSANDS, EXCEPT PER SEAT DATA)
<S> <C> <C> <C> <C>
BALANCE SHEET DATA
Total assets................. $ 395,443 $ 375,605 $ 374,936 $ 372,327
Total liabilities............ 299,206 287,018 288,703 285,762
Short term borrowings........ -- -- -- 5,043
Long term borrowings......... 100,000 100,000 100,000 100,000
Total equity................. 96,237 88,587 86,233 86,565
OTHER DATA
Earnings per seat (based on
816 seats)................. 12,993 9,063 7,449 1,408
Book value per seat (based on
816 seats)................. 117,938 108,563 105,678 106,085
Current ratio (4)............ 5.3 7.0 8.1 5.1
Working capital.............. 118,759 104,229 112,141 102,002
Capital expenditures......... 12,888 14,832 18,175 82,795
Times interest earned (5).... 4.5 3.4 2.6 1.7
Number of employees at end of
period..................... 600 590 597 587
Sales price per NYMEX seat
High....................... 610,000 705,000 705,000 675,000
Low........................ 551,000 430,000 430,000 525,000

YEAR ENDED DECEMBER 31,
---------------------------------------------------
1996 1995 1994
---- ---- ----
(DOLLARS IN THOUSANDS, EXCEPT PER SEAT DATA)
<S> <C> <C> <C>
BALANCE SHEET DATA
Total assets................. $ 329,515 $ 154,986 $ 131,665
Total liabilities............ 237,728 65,721 49,876
Short term borrowings........ 5,043 5,043 5,000
Long term borrowings......... 90,043 10,086 15,000
Total equity................. 91,787 89,265 81,789
OTHER DATA
Earnings per seat (based on
816 seats)................. 9,504 16,708 14,885
Book value per seat (based on
816 seats)................. 112,484 109,393 100,232
Current ratio (4)............ 4.9 3.7 4.2
Working capital.............. 122,438 58,616 58,626
Capital expenditures......... 109,375 26,374 9,352
Times interest earned (5).... 9.8 20.5 176.1
Number of employees at end of
period..................... 528 521 523
Sales price per NYMEX seat
High....................... 585,000 575,000 555,000
Low........................ 410,000 340,000 361,000
</TABLE>

- -------------------------

(1) Clearing and transaction fees are presented net of member fee rebates which
were $9,816 and $8,396 for the nine months ended September 30, 1999 and
1998, respectively, and $11,272, $10,012 and $8,510 for the years ended
December 31, 1998, 1997 and 1996, respectively. There were no member fee
rebates for the years ended December 31, 1995 and 1994.

(2) Beginning in 1998, NYMEX introduced various other rebate programs. These
costs reduced other revenue for the nine months ended September 30, 1999 and
1998 by $2,136 and $913, respectively, and $1,364 for the twelve months
ended December 31, 1998.

(3) Depreciation and amortization expense is net of amortization of deferred
credit for building construction of $1,609 and $1,609 for the nine months
ended September 30, 1999 and 1998, respectively, and $1,930 and $1,287 for
the years ended December 31, 1998 and 1997, respectively. There was no
amortization of deferred credit for building construction for the years
ended 1996, 1995 and 1994.

(4) Equals current assets divided by current liabilities.

(5) Equals income before income taxes and interest expense divided by interest
expense.

38
<PAGE> 45

MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS

OVERVIEW

NYMEX's primary goal in conducting its business is to provide efficient,
orderly and well-regulated markets for trading commodity futures and options
contracts for the benefit of members and the public.

NYMEX's principal business activity is providing facilities and clearing
and other services for the trading of commodity futures contracts and options on
futures contracts. The value of these contracts are sensitive to the volatility
of the price of the underlying physical commodities as well as to general
economic conditions and global affairs. The composition of trading affects the
revenues generated because non-member trades generate higher fees than member
trades. The selling of NYMEX market data is also a significant business
activity, but less susceptible to the volatility of the marketplace. While a
long and sustained downturn in market activity could lead to industry downsizing
and a reduction in the placement of ticker services for NYMEX market data, this
trend would not be as erratic and volatile as trading volume. Unless otherwise
specified, all references herein to "contracts" refer to commodity futures and
options contracts and to "volume" refer to the number of contracts traded during
a specified period.

Over the past several years, NYMEX has enjoyed substantial and sustained
volume growth. Average daily contracts traded on NYMEX (excluding COMEX)
increased from approximately 220,000 during the year ended December 31, 1995 to
approximately 305,100 during the year ended December 31, 1998. Average daily
contracts traded on NYMEX (excluding COMEX) for the nine months ended September
30, 1999 have increased approximately 16% over the same period in 1998. COMEX's
volume growth during these periods has not sustained the same rate of increase
as compared to NYMEX's volume growth, reflecting relatively static volume.
During the year ended December 31, 1995, COMEX experienced average daily volume
of approximately 79,200 contracts traded versus approximately 73,800 contracts
traded daily during the year ended December 31, 1998. COMEX's average daily
contracts traded for the nine months ended September 30, 1999 have increased
approximately 8% over the same period in 1998.

RESULTS OF OPERATIONS

NINE MONTHS ENDED SEPTEMBER 30, 1999 COMPARED TO NINE MONTHS ENDED
SEPTEMBER 30, 1998

For the nine months ended September 30, 1999, NYMEX earned net income of
approximately $10.6 million compared to approximately $7.4 million for the same
period in 1998. Operating revenues for these periods were approximately $109.0
million and $98.1 million, respectively, including the effects of the various
member fee rebate programs. As a result of these rebate programs, during the
nine months ending September 30 1999, NYMEX incurred reductions to operating
revenue of approximately $12.0 million. They were comprised of the Member Fee
Rebate Program (approximately $9.8 million), Futures Commission Merchants Rebate
Program (approximately $1.3 million), Floor Broker Fee Rebate Program
(approximately $0.7 million), and the Electricity Broker Fee Rebate Program
(approximately $0.2 million). During the nine months ended September 30, 1998,
NYMEX incurred reductions to operating revenue due to the Member Fee Rebate
Program (approximately $8.4 million) and the Futures Commission Merchants Rebate
Program (approximately $0.9 million). Revenue growth experienced

39
<PAGE> 46

during the nine months ended September 30, 1999 versus the same period in 1998
was primarily a result of increased volume on NYMEX (approximately 356,700 and
306,300 average daily contracts traded, respectively) and COMEX (approximately
83,100 and 76,700 average daily contracts traded, respectively) for such
periods.

Operating expenses for the nine months ended September 30, 1999, totaled
approximately $86.2 million, an increase of 3.4% compared to the same period in
1998. In accordance with new generally accepted accounting principles taking
effect in 1998 relating to software development costs, NYMEX began capitalizing
costs associated with internally developed software in 1999 which amounted to
$5.9 million. The largest component of operating expenses were salaries and
fringe benefit costs; these costs totaled approximately $34.2 million for the
nine months ended September 30, 1999, reflecting an increase of 3.0% over the
same period in 1998. Telecommunication expenses increased approximately $0.5
million for the nine months ended September 30, over the same period in 1998,
largely the result of network communication contracts supporting development of
NYMEX's Clearing 21(R) project. Rent and facility overhead expenses of $9.1
million for the nine months ended September 30, 1999 were 3.1% lower than in the
same period in 1998 due to maintenance contract renewals and decreased building
management payroll. NYMEX ACCESS(R) terminal fees were approximately $0.3
million higher for the nine months ended September 30, 1999 than the same period
in 1998 reflecting greater NYMEX ACCESS(R) terminal transaction volume for the
nine months ended September 30, 1999. Depreciation and amortization expenses
increased by approximately $0.9 million for the nine months ended September 30,
1999 over the same period in 1998 as a result of capital assets placed in
service during the first nine months of 1999. During the nine months ended
September 30, 1998 NYMEX recognized expenses of approximately $1.1 million
resulting primarily from continued allocated shared expenses for communication
lines and HVAC overhead at 4 World Trade Center in New York City and severance
agreements for terminated employees of the Commodities Exchange Center, Inc.;
similar costs were not incurred during the same period in 1999.

Investment income, which is not a component of operating income, for the
nine months ended September 30, 1999, decreased by approximately $2.1 million
from the same period in 1998 primarily due to a market wide decline in municipal
bond prices.

YEAR ENDED DECEMBER 31, 1998 COMPARED TO YEAR ENDED DECEMBER 31, 1997

For the year ended December 31, 1998, NYMEX's net income was approximately
$6.1 million, compared to approximately $1.1 million for 1997, an increase of
approximately 429%. Operating revenue for 1998 was approximately $130.5 million
versus approximately $117.8 million for 1997, an increase of approximately 11%.
Revenue from clearing and transaction fees, the largest component of NYMEX's
revenue, increased more than 12% from 1997 to 1998 to approximately $102.0
million. This increase in revenue from clearing and transaction fees excludes
the downward impact of the volume driven member fee rebate programs for 1998 and
1997 that resulted in a decrease in member fees of approximately $11.3 million
and $10.0 million, respectively. This increase in revenue from clearing and
transaction fees is attributable to greater volume generated on NYMEX. The
average daily trading volume of NYMEX (excluding COMEX) for 1998 was
approximately 305,000 contracts, compared to approximately 253,800 contracts in
1997; on COMEX, the average daily trading volume was approximately 73,800
contracts during 1998 compared to approximately 78,900 contracts in 1997.
Expansion of the market data subscriber network resulted in a $1.4 million
increase in revenue during 1998 over 1997;

40
<PAGE> 47

NYMEX data subscriber revenue increased 6.0% or approximately $1.1 million, and
COMEX data subscriber revenue increased approximately $0.3 million or 2.0%.

Other revenue in 1998, consisting principally of rental income, increased
approximately $1.2 million compared to 1997. Specifically, with regard to rental
revenue, NYMEX leased additional space at the One North End property during 1998
resulting in a $1.8 million increase over 1997. Telephone equipment fees
increased in 1998 by $0.9 million due primarily to full year invoicing versus
half-year billings during 1997. These fees represent income derived from the
members' use of equipment and phones provided by NYMEX at the One North End
facility on the trading floor; these facilities were previously provided by the
CEC at 4 World Trade Center. During 1998, NYMEX instituted a cost reduction and
incentive program for its Futures Commission Merchants. Incentives and reduced
costs in the form of credits applicable toward amounts owed by Futures
Commission Merchants for trading floor overhead costs resulted in a reduction of
revenue of approximately $1.4 million in 1998.

Operating expenses totaled approximately $116.9 million in 1998 as compared
to approximately $114.5 million in 1997. The substantial portion of expenses
incurred in both 1998 and 1997 were for salary and fringe benefit costs;
approximately $44.6 million of these expenses were incurred in 1998, an increase
of approximately 2.0% over 1997. This increase is primarily attributable to
higher personnel compensation expenses resulting from the full year impact of
additional staffing costs due to the move to NYMEX's new headquarters facility
at One North End. Increases in 1998 salaries and fringe benefits were partially
offset by the termination of the former COMEX employee defined benefit plan, as
well as by reductions to NYMEX's postemployment benefit costs resulting from
plan amendments. Telecommunications and equipment rental costs amounted to
approximately $14.5 million in 1998, an increase of approximately 10% or
approximately $1.3 million above 1997. This increase was due largely to the full
year recognition of rental and service expenses in 1998 versus the approximate
half-year recognition in 1997 as a result of the move to the One North End
facility in mid-1997. Professional services rendered during 1998 were
approximately $2.3 million or 44% greater than in 1997; these expenses included
professional consulting fees for the Clearing 21(R) project and upgrades to
NYMEX ACCESS(R) development. Depreciation and amortization in 1998 increased by
approximately $4.7 million as compared to 1997 as a result of recognition of a
full year of depreciation cost for relocation assets versus the approximate
half-year impact during 1997.

General and administrative expenses, which include travel and related costs
(approximately $2.9 million in 1998), software licensing fees (approximately
$2.2 million in 1998), and all other general office expenses (approximately $9.9
million in 1998), decreased by approximately $1.8 million from 1997. This
decrease resulted primarily from the cost (approximately $3.1 million) incurred
during late 1997 for the settlement reached with the CEC relating to NYMEX's
relinquishment of its lease at 4 World Trade Center. This reduction in expenses
was partially offset in 1998 by increased staff travel resulting from foreign
exchange strategic alliance initiatives (an increase of approximately $0.4
million), as well as by legal settlement costs with an outside vendor
(approximately $0.6 million). Rent and facility expenses amounted to
approximately $12.7 million in 1998 as compared to $17.1 million in 1997. The
decrease in rent and facility expenses was the direct result of running two
facilities (4 World Trade Center and One North End) for half a year during 1997
versus one facility during 1998; operating costs relating to the 4 World Trade
Center facility decreased approximately $5.4 million. This decrease was
partially offset by the approximately $1.1 million increase during 1998 in
facility repair and

41
<PAGE> 48

maintenance costs resulting from the impact of a full year of operations at
NYMEX's One North End facility versus the approximate half-year of operations in
1997. Marketing expenses in 1998 decreased $2.4 million due to one-time costs
related to NYMEX's 125th anniversary and new building campaigns conducted during
1997. Loss on the disposition of assets increased approximately $1.6 million in
1998 primarily due to leasehold improvement write-offs as a result of the
relocation to One North End.

Investment income, which is not a component of operating income, decreased
in 1998 by approximately $1.5 million from 1997 due primarily to a reduction in
the size of the building reserve portfolio during 1998. Interest expense
increased by approximately $1.0 million in 1998 as a result of the
capitalization of interest expense in 1997 on NYMEX's $100 million principal
amount senior notes, the proceeds of which were used to finance the construction
of the new One North End facility; NYMEX began recognizing interest expense on
the senior notes when the new facility was placed into service mid-1997.

YEAR ENDED DECEMBER 31, 1997 COMPARED TO YEAR ENDED DECEMBER 31, 1996

In 1997, NYMEX earned net income of approximately $1.1 million compared to
approximately $7.8 million in 1996, a decrease of approximately $6.7 million or
85%. Several factors, including the global settlement reached with the CEC,
which required a $3.1 million payment to CEC, and the occupation of the new
facility at One North End, negatively affected results of operations in 1997.

Operating revenue in 1997 was approximately $117.8 million versus
approximately $112.6 million in 1996, an increase of almost $5.2 million or
4.6%. The revenue growth experienced during 1997 versus 1996 was primarily a
result of higher clearing and transaction fees which increased approximately
$5.4 million or 6.4% to approximately $90.8 million. This increase in clearing
and transaction fees excludes the downward impact of the volume driven member
fee reduction program for 1997 and 1996 that resulted in a decrease in member
fees of approximately $10.0 million and $8.5 million, respectively. This
increase in clearing and transaction fees in 1997 over 1996 is attributable to
greater volume generated on NYMEX (approximately 253,800 and 225,200 average
daily contracts traded in 1997 and 1996, respectively) and COMEX (approximately
78,900 and 76,900 average daily contracts traded in 1997 and 1996, respectively)
for such periods. Market data fees increased marginally in 1997 by approximately
$0.2 million compared to 1996 as a result of the slight growth of the NYMEX
subscriber network partially offset by a decline of the number of COMEX market
data subscribers. All other revenue increased from approximately $2.5 million in
1996 to approximately $3.6 million in 1997, resulting primarily from fees
charged for telephone equipment use during 1997 of approximately $0.6 million.

Operating expenses in 1997 increased significantly, by approximately $14.6
million or 14%, largely the result of the move to NYMEX's One North End
facility. Salaries and benefits increased approximately $5.0 million during
1997, primarily the result of additional personnel and overtime costs in
anticipation of the move to the new facility. Member benefits also increased
significantly to approximately $6.4 million for 1997. This increase was due
largely to greater members' group insurance premiums resulting from adverse
experience rate factors as well as institution of a new healthcare reimbursement
program. Rent and facility costs were approximately $17.1 million in 1997 as
compared to $14.4 million for 1996, an increase of approximately $2.7 million.
This increase was the direct result of greater overhead expenses (approximately
$5.7 million higher in 1997 than in 1996) due to the move from 4 World Trade
Center into the new facility at One North

42
<PAGE> 49

End. As a result of the move to One North End in 1997, NYMEX incurred lower
operating costs associated with continued CEC overhead at the former trading
sight (approximately $6.5 million for 1997 as compared with approximately $9.6
million for 1996). Other increases in operating expenses in 1997 include
approximately $2.4 million for marketing expenses associated with the NYMEX's
125th anniversary and new building marketing campaign conducted in 1997, as well
as approximately $3.1 million for the settlement reached with the CEC. NYMEX
also recognized a loss on the disposition of assets of approximately $1.2
million in 1997 due to leasehold improvement write-offs as a result of the
relocation to the One North End facility.

Investment income, which is not a component of operating income, increased
approximately $3.4 million in 1997 from 1996 due primarily to unexpended
balances in the construction portfolio account which earned interest income
during 1997. Interest expense increased by approximately $5.2 million in 1997 as
a result of the commencement of the recognition of interest expense on the
senior notes upon moving to the new One North End facility in mid-1997.

LIQUIDITY AND CAPITAL RESOURCES

Historically, NYMEX's cash flows from operations have been adequate to fund
our working capital needs. NYMEX's principal sources of cash flows have been
clearing and transaction fees and market data fees from third parties. Clearing
and transaction fees represented approximately 70% of NYMEX's consolidated
operating revenues (of which approximately 74% were attributable to NYMEX's
energy contracts) for the fiscal year ended December 31, 1998 and 74% of NYMEX's
consolidated operating revenues (of which approximately 76% were attributable to
energy contracts) for the nine months ended September 30, 1999. NYMEX's
principal uses of cash are to fund operating expenses and to upgrade equipment
and facilities.

For the nine-month period ended September 30, 1999, cash and cash
equivalents increased by approximately $23.4 million. This increase consisted
primarily of net income of approximately $10.6 million, a non-cash charge for
depreciation and amortization of approximately $10.2 million, an increase in
accrued income tax liabilities of approximately $13.1 million less capital
expenditures primarily for technology related infrastructure at approximately
$12.9 million.

NYMEX's investment portfolio, with a market value of approximately $87.6
million as of September 30, 1999, includes highly liquid marketable securities
consisting primarily of tax-exempt municipal bonds, direct obligations of the
U.S. government and its agencies and other short-term investments. These assets
include $26.3 million placed in trust in order to pay commitments to eligible
NYMEX members under the NYMEX Division member retention program. Payouts are
made from the general assets of NYMEX, and program commitments are currently
recognized by a transfer from members' equity to a subordinated commitment. For
each of the years ended December 31, 1998, 1997 and 1996, $3.6 million was
transferred. This program may be terminated at any time based on an affirmative
vote of three-fourths of NYMEX's board of directors. Although NYMEX does not
expect early termination of this program, in such event, NYMEX would be required
to provide, first, for a payout to the fully vested participants and,
secondarily, for a pro rata distribution to partially vested participants to the
extent of the assets placed in trust. The COMEX Division's member retention
program will commence making payments to eligible members on January 1, 2002.
The COMEX Division member retention program has been funded at $800,000 annually
since 1996 and the balance in the

43
<PAGE> 50

COMEX member retention fund was approximately $7.2 million as of September 30,
1999.

As of September 30, 1999, NYMEX's consolidated long-term debt was $100
million. This is the result of NYMEX's private placement of debt during 1996 and
1997. The proceeds of the private placement were used to provide financing for
the new trading facility at One North End. This debt is unsecured and consists
of three senior note series each with different maturities, interest rates and
required repayment schedules. During 2000, NYMEX expects to incur interest
expense related to the debt totaling approximately $7.7 million and expects to
fund this interest expense with operating cash flow. The $31.0 million principal
amount of 7.48% Series A notes requires annual principal repayments of
approximately $2.8 million beginning in October 2001 with a final repayment of
remaining principal in October 2011. The $54 million principal amount of 7.75%
Series B notes requires annual principal repayments of approximately $4.9
million beginning in October 2011 with a final repayment of remaining principal
in October 2021. The $15.0 million principal amount of 7.84% Series C notes
requires annual principal repayments of approximately $3.0 million beginning
October 2022 with a final repayment of remaining principal in October 2026. As
of September 30, 1999, NYMEX has set aside approximately $20.7 million in short
term fixed income assets to be used to repay principal on this debt.

It is expected that during 2000, NYMEX capital expenditures will amount to
approximately $14.7 million. Approximately 94% of such amount is expected to be
committed to technology enhancements of the open-outcry trading facilities and
back office support facilities. We expect to continue to make additional capital
expenditures after 2000 for technology enhancements to our open-outcry trading
system to improve its operational efficiency and to enable us to compete
effectively in an increasingly electronic trading environment.

After the demutualization, NYMEX expects to meet short-term liquidity
requirements such as operating expenses from its net cash flow from operations.
NYMEX expects to meet long-term liquidity requirements after the demutualization
such as scheduled debt maturities, investments in facilities and technologies,
and new strategic initiatives from available working capital, issuances of
short-term or long-term debt and, if the common stock of NYMEX Holdings and
membership interests of NYMEX Exchange are unstapled, additional equity
issuances by NYMEX Holdings.

QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK

Set forth below is information regarding certain quantitative and
qualitative information about market risk exposures. This information is limited
to estimates and assumptions made by management. Actual results may differ.
While NYMEX provides trading and clearing services for derivatives products, it
does not trade derivatives for its own account.

INTEREST RATE RISK

Current Assets

In the normal course of business, NYMEX invests primarily in fixed income
securities. All marketable securities bought by NYMEX are held principally for
the purpose of selling them in the near term and are classified as trading
securities. Unrealized gains and losses are included in earnings. For the
periods ended December 31, 1998 and September 30, 1999, NYMEX had net investment
income of $6.7 million and $3.4

44
<PAGE> 51

million, respectively. Accordingly, a substantial portion of our income depends
upon our ability to continue to invest monies in these instruments, prevailing
interest rates and market prices. The fair value of these securities at December
31, 1998 and 1997 was $92 million and $89 million, respectively. The change in
fair value, using a hypothetical 10% decline in prices, is estimated to be a
$9.2 million loss and a $8.9 million loss for December 31, 1998 and 1997,
respectively. NYMEX also invests in U.S. government securities and maintains
interest bearing balances in its trading accounts with its investment managers.
These financial instruments are classified as cash equivalents in the
consolidated financial statements.

Debt

The interest rate on our long-term indebtedness is an average fixed rate of
7.68%. We have not deemed it necessary to employ any market or interest risk
management strategies, such as interest rate swap agreements. In the future, as
NYMEX pursues its market strategy, it may become subject to a higher degree of
interest rate sensitivity if it is required to borrow at higher or at variable
rates. This could significantly increase NYMEX's future sensitivity to interest
rate fluctuations and materially affect, in a negative manner, NYMEX's future
financial position and results of operations.

FOREIGN CURRENCY RISK

At this time, NYMEX transacts minimal business in foreign currencies. NYMEX
transacts the majority of its business in the United States dollar. To the
extent that NYMEX continues to transact its business using the United States
dollar as its functional currency, NYMEX believes that fluctuations in foreign
currency exchange rates will not have a material adverse effect on its results
of operations.

CREDIT RISK

NYMEX mitigates default risk by attempting to invest in high credit quality
securities of an intermediate maturity. NYMEX's portfolio, which is managed by
outside investment firms, is limited to marketable securities with active
secondary or resale markets to ensure portfolio liquidity. As of September 30,
1999, NYMEX had $37.7 million of cash and cash equivalents bearing an average
annual interest rate of 5.0%. We do not believe there is any other significant
risk associated with our investments. However, if NYMEX in the future invests in
other income-producing securities, it could subject NYMEX's income to greater
risk and volatility.

YEAR 2000 RISKS

During the year, NYMEX utilized significant resources throughout its
business operations to minimize the risk of potential disruption from the "year
2000" (Y2K) problem. The problem is a result of computer systems being unable to
interpret data beyond the year 1999.

NYMEX appointed a task force to ensure that all areas at risk to system
failures were addressed. This encompassed both internal systems as well as
developing a response to external system failures. Contingency plans were
developed to mitigate system failures addressing critical functions on a
hierarchical basis. The costs associated with this program, which included
review, remediation and testing of all internal systems, were funded through
operating cash flow and expensed in the period in which they were incurred.

NYMEX did not experience any significant disruptions or any other harmful
effects of the transition to year 2000 and considers its efforts successful.

45
<PAGE> 52

CAPITALIZATION

The following table sets forth the capitalization of NYMEX as of September
30, 1999 on an historical basis as well as on a pro forma basis giving effect to
the proposed demutualization. The table should be read in conjunction with the
"Management's Discussion and Analysis of Financial Condition and Results of
Operations" and the consolidated historical and pro forma financial statements
and notes thereto of NYMEX included elsewhere in this proxy statement and
prospectus.

<TABLE>
<CAPTION>
AS OF SEPTEMBER 30, 1999
------------------------------------
PRO FORMA
ACTUAL ADJUSTMENT PRO FORMA
-------- ----------- ---------
(IN THOUSANDS)
<S> <C> <C> <C>
Long term debt -- notes payable............ $100,000 $ -- $ 100,000
======== ======== =========
Members' Equity:
Members' equity.......................... 96,237 (96,237) --
Common stock, $.01 par value, 816 shares
authorized and outstanding(1)......... -- -- --
Additional paid-in capital............... -- 95,457 95,457
-------- -------- ---------
Total members' equity/stockholders'
equity........................... 96,237 (780) 95,457
-------- -------- ---------
Total capitalization................ $196,237 $ (780) $ 195,457
======== ======== =========
</TABLE>

- -------------------------
(1) Total pro forma common stock amount at September 30, 1999 is $8. Due to
rounding to '000's, this number does not appear on this table.

46
<PAGE> 53

MANAGEMENT

DIRECTORS AND EXECUTIVE OFFICERS

The directors and executive officers of NYMEX Holdings after the
demutualization will be the same as the directors and executive officers of
NYMEX before the demutualization. The certificate of incorporation of NYMEX
Exchange requires NYMEX Holdings, as the sole Class B member, to elect the
directors of NYMEX Holdings to serve as the directors of NYMEX Exchange. NYMEX
Holdings will have a 22 person board consisting of 20 directors who meet the
qualifications of floor broker, futures commission merchant, local, trade, at
large and public directors in the same proportions as provided in NYMEX's
current bylaws. The Chairman and Vice Chairman of the NYMEX Holdings board will
be designated directly by stockholders from among the members of the board in
the specially designated at-large category. The board of NYMEX Holdings will be
divided into three classes serving staggered three-year terms. Directors for
each class will be elected at the annual meeting of stockholders held in the
year in which the term for such class expires.

The following table sets forth certain information regarding the executive
officers and directors of NYMEX Holdings and NYMEX Exchange after the
demutualization.

<TABLE>
<CAPTION>
TERM
NAME AGE POSITION EXPIRES(1)
---- --- -------- ----------
<S> <C> <C> <C>
Daniel Rappaport.............. 45 Chairman of the Board 2001
Albert H. Helmig, Jr.......... 48 Vice Chairman 2000
Richard Schaeffer............. 47 Director, Treasurer 2002
Neil Citrone.................. 36 Director, Secretary 2000
Stephen Ardizzone............. 38 Director 2001
Madeline Boyd................. 47 Director 2001
Robert Coakley................ 36 Director 2002
Gary Cohn..................... 39 Director 2000
Charles Napier Collyns........ 72 Director 2000
John Conheeney................ 70 Director 2000
Thomas Costantino............. 48 Director 2001
Anthony George Gero........... 63 Director 2002
E. Bulkeley Griswold.......... 61 Director 2000
Scott Hess.................... 42 Director 2000
Steven Karvellas.............. 40 Director 2002
Harley Lippman................ 45 Director 2001
Kevin McDonnell............... 40 Director 2002
Gary Rizzi.................... 45 Director 2001
Richard Saitta................ 49 Director 2000
Robert Steele................. 61 Director 2001
Mitchell Steinhause........... 52 Director 2001
David Wender.................. 33 Director 2000
R. Patrick Thompson, Esq...... 50 President
Neal L. Wolkoff, Esq.......... 44 Executive Vice President
Christopher K. Bowen, Esq..... 39 Senior Vice President & General
Counsel
Patrick F. Conroy............. 42 Senior Vice President --
Finance & Administration
Robert Levin.................. 44 Senior Vice President --
Planning & Development
Bernard J. Purta.............. 56 Senior Vice President --
Operations & Regulatory Affairs
Stuart A. Smith............... 52 Senior Vice President --
Operations
</TABLE>

- -------------------------
(1) The Vice Chairman and five member director positions expire in 2000 and will
be filled at an election to be held on March 21, 2000. The terms of three
public directors (Mr. Collyns, Mr. Conheeney and Mr. Griswold) expire at the
conclusion of the first board of directors meeting which follows the annual
meeting of the members (currently scheduled for April 5, 2000). Mr. Collyns
is not eligible for reappointment pursuant to NYMEX bylaws.

47
<PAGE> 54

Each member of the board of directors of NYMEX also serves, and after the
demutualization will continue to serve, on the board of directors of COMEX and
NYMEX Technology Corp. Each member of the NYMEX executive committee serves, and
after the demutualization will continue to serve, on the board of directors of
the NYMEX Charitable Foundation, Inc. and (other than Mr. Karvellas) the COMEX
Clearing Association, Inc.

Daniel Rappaport has been Chairman of the board of directors of NYMEX since
March 1993 and a director of NYMEX since 1986. Mr. Rappaport has also been
Chairman of the board of directors of COMEX and COMEX Clearing Association, Inc.
since August 1994 and Chairman of the board of directors of NYMEX Charitable
Foundation, Inc. since March 1993. He also serves as Chairman of NYMEX
Technology Corp. He currently serves on the CFTC's Global Markets Advisory
Committee and National Petroleum Council as well as on the boards of New York
Law School and Connecticut Innovations. Prior to joining NYMEX, Mr. Rappaport
was a lawyer engaged in the practice of general corporate law and was a
self-employed floor trader. He was also the President of Brighton Trading
Corporation, which was formerly a clearing member of NYMEX. Mr. Rappaport holds
a B.S. from Syracuse University, an M.B.A. from Baruch College, and a J.D. from
New York Law School.

Albert H. Helmig has been Vice Chairman of the board of directors of NYMEX
since 1998 and has been a director since 1991. He also serves on the board of
directors of the International Precious Metals Institute. Mr. Helmig was a
principal of The Helmig Corp. from September 1992 until this year. He holds a
B.S. in Finance and Economics from Philadelphia College of Textiles and Science.

Richard M. Schaeffer has been a director of NYMEX since March 1990 and the
Treasurer of NYMEX since March 1993. Mr. Schaeffer is a Senior Vice President
and Director of Global Energy Futures for ABN Amro, Inc. Prior to that, Mr.
Schaeffer was Senior Vice President/Director of The Chicago Corp., which is a
clearing member of both NYMEX and COMEX, since 1987. Mr. Schaeffer holds a B.S.
in Business Administration from the University of Maryland.

Neil Citrone has been a director of NYMEX since 1997 and has been Corporate
Secretary since 1999. Mr. Citrone is a Vice President of Pioneer Futures, Inc.
and has been employed by Pioneer since 1990. Prior to that, Mr. Citrone was
employed by Delos Commodities. Mr. Citrone has a liberal arts degree from
Westchester University.

Stephen Ardizzone has been a director of NYMEX since 1998 and also serves
as a director of NYMEX PAC. He is presently the owner of Zone Energy Group Inc.
Mr. Ardizzone attended St. John's University, and the John Jay College of
Criminal Justice.

Madeline Boyd has been a director of NYMEX since 1998 and has been a member
of NYMEX for over 15 years. She received her bachelor of science degree in
business from Fairleigh Dickinson University. Ms. Boyd has been an active member
of the NYMEX Facilities Committee for the past ten years. Ms. Boyd is chairman
of the NYMEX Charitable Foundation Committee, Co-Chairman of the NYMEX Local
Advisory Committee, Vice Chairman of the NYMEX Petroleum Products Advisory
Committee and a long time member of the NYMEX Settlement Committee.

Robert Coakley has been a director of NYMEX since 1999 and is presently a
Senior Vice President at FIMAT USA Inc. He became a member of NYMEX in 1990. Mr.
Coakley graduated from Fordham University in 1985 with a bachelor of science
degree in finance and accounting. Pursuant to a settlement agreement reached
with

48
<PAGE> 55

Mr. Coakley, the National Futures Association restricted Mr. Coakley's
registration as a floor broker for two years effective July 28, 1999. This
restriction on registration will be removed after this two year period if Mr.
Coakley is not charged with a violation of the Commodity Exchange Act, National
Futures Association requirements, self-regulatory organization rules or any
statute rule or regulation of any law enforcement or regulatory agency.

Gary D. Cohn has been a director of NYMEX since 1997. He is presently a
managing director at Goldman, Sachs & Co. He became a COMEX member in 1983. Mr.
Cohn was subsequently named to the board of directors and the executive
committee of COMEX, and served on the board of directors and the executive
committee of its clearing house.

Charles Napier Collyns has been a public director of NYMEX since 1994. Mr.
Collyns is a co-founder and managing director of Global Business Network, an
international membership organization based in New York City and Emeryville,
California. Mr. Collyns is also a senior associate of Cambridge Energy Research
Associates.

John Conheeney has been a public director of NYMEX since 1996. Mr.
Conheeney has also been a member of the boards of the Chicago Board of Trade,
the Chicago Mercantile Exchange, Globex and COMEX. He is a graduate of Manhattan
College, and also attended the Graduate School of Business at Tulane University.

Thomas Costantino has been a director of NYMEX since 1995 and has been a
member of NYMEX since 1993. He is currently employed by Unocal. Mr. Costantino
received a bachelor of science degree in economics, and a masters of business
administration in finance from the University of Maryland. He has completed
other graduate level work in accounting and finance at New York University.

Anthony George Gero has been a member of NYMEX since 1966 and has served as
a director for an aggregate of 19 years. He is presently Senior Vice President
of investments, senior spokesman for the futures division, and a President's
Council member of Prudential Securities, Incorporated. Mr. Gero is also a first
vice president of PSI. A graduate of the New York University School of Commerce,
Mr. Gero received his certificate in investment banking from the Investment
Bankers Association at the Wharton School in 1965. Mr. Gero is currently a board
member of the New York Futures Exchange, and the American Stock Exchange and was
previously a director of the Commodity Clearing Corporation. He is also Chairman
of the Commodity Floor Brokers and Traders Association. He is a member of the
American Stock Exchange, COMEX, the New York Board of Trade, New York Futures
Exchange, FINEX, the Coffee, Sugar & Cocoa Exchange and the New York Cotton
Exchange and authored the textbook Precious Metals.

E. Bulkeley Griswold has been a public director of NYMEX since 1996. Mr.
Griswold is the Managing General Partner of L&L Capital Partners, LLC, and
serves on the boards of Pioneer Medical Systems, Scan-Optics, Trust Company of
Connecticut, NLC, World Direct Floral Supply and Visiocom USA.

Scott Hess has been a member of NYMEX since 1982 and a director since 1992.
He is presently a partner in G&H Commodities. Mr. Hess holds a business degree
from Montclair State University and a masters of business administration in
marketing from Pace University.

Steven J. Karvellas has been a director of NYMEX since 1996. After majoring
in finance at the University of Pennsylvania, Mr. Karvellas's career began in
1981 as a clerk on COMEX. In 1984, he became a member of COMEX. He was elected
to the board of directors of COMEX in 1987.

49
<PAGE> 56

Harley Lippman has been a public director of NYMEX since 1999. Mr. Lippman
is the founder and chief executive officer of Genesis 10, an information
technology company. He currently serves on the advisory board of the School of
International and Public Affairs at Columbia University. He also serves on the
board of the Middle East Forum and the national commission of the
Anti-Defamation League of New York.

Kevin McDonnell has been a director of NYMEX since 1999 and a member of
NYMEX for more than 15 years. He is a graduate of Fordham University with a
bachelor of science degree in accounting and finance.

Gary Rizzi has been a director of NYMEX since 1995. Mr. Rizzi has been an
officer of A.G. Edwards and a conferring member of NYMEX since 1985. He is a
conferring member of the Coffee, Sugar & Cocoa Exchange and the New York Cotton
Exchange.

Richard Saitta has been a director of NYMEX since 1983. He is presently an
independent floor broker and is President of Star Futures Corp. He has been a
member since 1976 and has served on the NYMEX board since 1983.

Robert Steele has been a public director of NYMEX since 1999 and previously
served as a director from 1988 to 1995. Mr. Steele is a former public director
of NYMEX and vice chairman of the John Ryan Company, an international bank
marketing firm. He currently serves on six corporate boards and is chairman of
the board of directors of Moore Medical Corporation. He also served as a U.S.
Congressman from the second district in Connecticut from 1970 - 1974.

Mitchell Steinhause has been a director of NYMEX since 1992 and previously
served as Corporate Secretary. He has been a member of NYMEX since 1975 as both
a floor broker and local trader. Mr. Steinhause received his bachelor of arts
degree from the University of Pittsburgh and a masters of business
administration in accounting from St. John's University. He was first elected as
a director in 1992 and was re-elected in 1995.

David Wender has been a director of NYMEX since 1997. He graduated magna
cum laude from the Wharton School at the University of Pennsylvania in 1988 with
a bachelor of science in economics with a concentration in finance. In March of
1993, Mr. Wender became a NYMEX member and was elected to the board of directors
in March of 1997.

R. Patrick Thompson has been President of NYMEX since October 1989. Mr.
Thompson also serves as President of COMEX, the COMEX Clearing Association, Inc.
and NYMEX Technology Corp. From March 1988 to October 1989, he served as
Executive Vice President of NYMEX. He has also held positions with NYMEX as
Senior Vice President -- Compliance, and Senior Vice President and General
Counsel. Mr. Thompson sits on the board of directors of the National Futures
Association and the Futures Industry Institute. Earlier in his career he served
as a trial attorney with the CFTC. Mr. Thompson holds a B.S. in Biology from St.
Joseph's College and a J.D. from Catholic University.

Neal L. Wolkoff has been Executive Vice President of NYMEX since July 1993
and was Senior Vice President -- Operations and Regulatory Affairs from November
1989 to July 1993. Mr. Wolkoff has also served as Executive Vice President of
COMEX, the COMEX Clearing Association, Inc. and NYMEX Technology Corp. since
August 1994. He previously served as a director of EnerSoft Inc. Earlier in his
career, he served as a trial attorney with the CFTC. Mr. Wolkoff holds a B.A.
from Columbia College and a J.D. from Boston University School of Law. He is a
member of the bar of the State of New York.

50
<PAGE> 57

Christopher K. Bowen has been Senior Vice President and General Counsel of
NYMEX since 1997. Mr. Bowen has also held positions at the Exchange of Associate
General Counsel and Senior Associate General Counsel. He has also served as
Counsel/ Manager of Futures Compliance at Morgan Stanley & Co. Inc. and as an
attorney at the CFTC. Mr. Bowen holds a B.A. from Columbia University and a J.D.
from the University of Maryland. Mr. Bowen also serves as Senior Vice President
and General Counsel of COMEX, the COMEX Clearing Association, Inc. and NYMEX
Technology Corp.

Patrick F. Conroy has been the Senior Vice President -- Finance &
Administration of NYMEX since January 1993. Mr. Conroy also serves as Senior
Vice President -- Finance of COMEX, the COMEX Clearing Association, Inc. and
NYMEX Technology Corp. From 1987 to 1993, Mr. Conroy was employed as the Senior
Vice President -- Finance of the American Stock Exchange. Prior to such time,
Mr. Conroy was employed by KPMG Peat Marwick. Mr. Conroy is a licensed C.P.A.
who holds a B.S. in Accounting from St. John's University.

Robert Levin has been Senior Vice President -- Planning and Development of
NYMEX since June 1993. Mr. Levin was Vice President - Product Development of
NYMEX from July 1991 until June 1993. Mr. Levin also currently serves as Senior
Vice President -- Planning and Development of COMEX and NYMEX Technology Corp.
Mr. Levin holds a B.A. from the University of Rochester and an M.A. and Ph.D.
from the University of New Mexico.

Bernard J. Purta has been Senior Vice President -- Operations and
Regulatory Affairs of NYMEX since December 1993. He also serves as Senior Vice
President -- Operations and Regulatory Affairs of COMEX, the COMEX Clearing
Association, Inc. (of which he is also Treasurer) and NYMEX Technology Corp.,
and as Treasurer of NYMEX PAC. He currently is a director of the FIA Operations
Division (N.Y.). Mr. Purta is a licensed C.P.A. who holds an M.B.A. in
Management from Fairleigh Dickinson University, a B.S. in Accounting from St.
Peter's College and an A.A.S. in Accounting from Bergen Community College.
Earlier in his career he served as a staff member at the CFTC.

Stuart A. Smith has been Senior Vice President -- Operations of NYMEX since
May 1992. Mr. Smith currently serves as Senior Vice President -- Operations of
COMEX and NYMEX Technology Corp. Mr. Smith previously served as Vice President
of Trading Floor Operations at NYMEX from 1986 to 1996. Prior to that time, he
was an Assistant Vice President at the American Stock Exchange. Mr. Smith holds
a B.B.A. from Pace University.

COMMITTEES OF THE BOARD

The board of NYMEX Holdings is authorized to designate from among its
members an executive committee, which will have all the authority of the board
of directors, and other committees, each consisting of two or more directors.
The Chairman of the board will be an ex officio member of all committees. The
board of NYMEX Exchange will have the same committees with the same functions
and members as NYMEX had before the demutualization. In addition the board of
NYMEX Exchange may appoint additional regular committees of the board of NYMEX
Exchange. The executive and audit committees are described below.

EXECUTIVE. The executive committee exercises the authority of the board of
directors when the board is not in session, as permitted by law and the bylaws
and rules of NYMEX. Members: Citrone, Cohn, Helmig, Karvellas, Rappaport,
Schaeffer and Steinhause.

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<PAGE> 58

AUDIT. The audit committee makes recommendations concerning the engagement
of independent public accountants, reviews with the independent public
accountants the scope and results of audit engagement, approves professional
services provided by the independent public accountants, reviews the
independence of the independent public accountants, considers the range of audit
and non-audit fees and reviews the adequacy of NYMEX's internal accounting
controls. Members: Griswold, Rappaport and Steele.

COMPENSATION OF DIRECTORS

Members of the board of NYMEX Exchange will receive the same compensation
as members of the board of NYMEX before the demutualization as set forth below.
Directors of NYMEX Holdings will not receive any compensation for their service
on the board of NYMEX Holdings.

CHAIRMAN STIPEND. Effective January 1, 2000, the Chairman receives an
annual stipend of $600,000. The Chairman is also eligible to receive a year-end
bonus in an amount to be determined and approved by the board.

VICE CHAIRMAN STIPEND. The Vice Chairman of the board receives a monthly
stipend of $4,166, or $50,000 a year. Effective April 1, 2000, the Vice Chairman
will receive an annual stipend of $100,000 as well as a fee of $1,000 for each
board meeting attended. The Vice Chairman is also eligible to receive a year-end
bonus in an amount to be determined and approved by the board.

DIRECTOR STIPEND. Directors, other than the Chairman and Vice Chairman of
the board, receive a monthly stipend of $2,500, or $30,000 a year. Effective
April 1, 2000, directors, other than the Chairman will receive a fee of $1,000
for each board meeting attended. In addition, effective April 1, 2000, directors
serving on the executive committee, other than the Chairman and Vice Chairman,
will receive a $20,000 yearly retainer. Directors serving on the executive
committee are also eligible to receive a year end bonus in an amount to be
determined and approved by the board.

52
<PAGE> 59

EXECUTIVE COMPENSATION

The following table sets forth certain information concerning the
compensation of our Chairman of the board and the other four most highly paid
officers in respect of 1999.

SUMMARY COMPENSATION TABLE

<TABLE>
<CAPTION>
ANNUAL COMPENSATION(1)
---------------------- ALL OTHER
NAME AND PRINCIPAL POSITION YEAR SALARY BONUS COMPENSATION
- ---------------------------------------- ---- -------- ---------- ------------
<S> <C> <C> <C> <C>
Daniel Rappaport, Chairman.............. 1999 -- 1,500,000 100,000(2)
R. Patrick Thompson, Esq., President.... 1999 412,500 200,000 --
Neal Wolkoff, Esq., Executive Vice
President............................. 1999 342,500 130,000 --
Albert Helmig, Jr., Vice Chairman....... 1999 -- 300,000 50,000(3)
Christopher Bowen, Esq., Sr. Vice
President & General Counsel........... 1999 198,450 76,923 --
</TABLE>

- -------------------------
(1) Perquisites and other personal benefits aggregating the lower of $50,000 or
10% of the sum of salary and bonus are not reported.

(2) Represents stipend payments for serving as the Chairman of the board of
directors.

(3) Represents stipend payments for serving as Vice Chairman of the board of
directors.

EMPLOYEE BENEFITS PLANS

401(k) PLAN

NYMEX sponsors a defined contribution plan known as the "Savings and
Investment Plan," for all eligible domestic employees with at least one year of
service (provided they have completed 1,000 hours of employment during a
specific computation period). This plan qualifies as a deferred salary
arrangement under Section 401(k) of the Internal Revenue Code. Participating
employees may elect to defer up to 15% of their base salary, subject to the
annual Internal Revenue Code contribution limit. NYMEX matches pre-tax
contributions up to a maximum of 3% of base salary. A participant may also make
after-tax contributions. NYMEX does not match these contributions. This amount
may be reduced to comply with applicable Internal Revenue Code requirements.
NYMEX also makes a year end contribution (the "regular" contribution) ranging
from 2% to 7% of base salary based upon tenure for each eligible plan member
provided NYMEX attains certain minimum corporate profitability thresholds.
Participants are immediately vested in their before-tax and after-tax
contributions and actual earnings thereon. Vesting in the matching and year end
contributions vest 40% after two full years of service, and then 20% per year up
to 100% after five years of service. Participants may receive the full value of
their accounts generally only upon termination of employment. The plan allows
earlier receipt of a participant's share in the plan, subject to certain
limitations and conditions as set forth in the plan document.

DEFERRED COMPENSATION PLAN

Effective July 1, 1997, NYMEX instituted a non-qualified deferred
compensation plan for eligible officers. The deferred compensation plan allows
participants to defer receipt of current compensation in order to provide
retirement benefits on behalf of such employees. NYMEX may provide a matching
and year end contribution to the plan. Matching contribution percentages and
vesting follow the same guidelines as NYMEX's defined

53
<PAGE> 60

contribution plan. The deferred compensation plan is not intended to be a
qualified plan under the provisions of the Internal Revenue Code. It is intended
to be unfunded and, therefore, all compensation deferred under this plan is held
by NYMEX and commingled with its general assets. The participating employees are
general creditors of NYMEX with respect to these benefits. NYMEX has the right
to amend, modify or terminate the deferred compensation plan at any time.

POSTRETIREMENT BENEFIT PLANS

NYMEX provides certain health care and life insurance benefit plans for
qualifying retired employees. Substantially all of NYMEX's employees may become
eligible for these benefits if they reach specified age and years of service
criteria while employed by NYMEX.

BENEFICIAL OWNERSHIP OF DIRECTORS AND EXECUTIVE OFFICERS

The following table sets forth the number of shares of common stock of
NYMEX Holdings which will be beneficially owned upon the completion of the
demutualization by each director and executive officer of NYMEX Holdings. The
number of shares of common stock of NYMEX Holdings owned will be the same as the
number of memberships owned prior to the demutualization. No director or
executive officer of NYMEX Holdings will beneficially own more than one percent
of all outstanding shares of common stock upon completion of the
demutualization. The directors and executive officers of NYMEX Holdings as a
group will own 2.9% of the outstanding shares of common stock upon completion of
the demutualization. No person will be the beneficial owner of 5% or more of the
shares of common stock.

<TABLE>
<CAPTION>
SHARES OF
COMMON
STOCK
BENEFICIALLY
NAME OF BENEFICIAL OWNER OWNED
- ------------------------ ------------------
<S> <C>
Daniel Rappaport...................................... 4
Albert H. Helmig, Jr.................................. 1
Richard Schaeffer..................................... 3
Neil Citrone(1)....................................... 1
Stephen Ardizzone..................................... 1
Madeline Boyd......................................... 1
Robert Coakley(2)..................................... 1
Gary Cohn(3).......................................... 2
Charles Napier Collyns................................ 0
John Conheeney........................................ 0
Thomas Costantino(4).................................. 1
Anthony George Gero................................... 2
E. Bulkeley Griswold.................................. 0
Scott Hess............................................ 1
Steven Karvellas...................................... 1
Harley Lippman........................................ 0
Kevin McDonnell....................................... 1
Gary Rizzi(5)......................................... 1
Richard Saitta........................................ 1
Robert Steele......................................... 0
</TABLE>

54
<PAGE> 61

<TABLE>
<CAPTION>
SHARES OF
COMMON
STOCK
BENEFICIALLY
NAME OF BENEFICIAL OWNER OWNED
- ------------------------ ------------------
<S> <C>
Mitchell Steinhause................................... 1
David Wender.......................................... 1
R. Patrick Thompson, Esq.............................. 0
Neal L. Wolkoff, Esq.................................. 0
Christopher K. Bowen, Esq............................. 0
Patrick F. Conroy..................................... 0
Robert Levin.......................................... 0
Bernard J. Purta...................................... 0
Stuart A. Smith....................................... 0
All directors and executive officers as a group....... 24
</TABLE>

- -------------------------
(1) Pursuant to an ABC agreement with Pioneer Futures, Inc., a member firm of
NYMEX, Mr. Citrone is the nominal holder of Pioneer's membership and is
entitled to the privileges of the membership, including the right to vote on
all matters on which members are entitled to vote. However, Mr. Citrone may
not sell, transfer or otherwise encumber the membership without the consent
of Pioneer. The provisions of this agreement also apply to the common stock
of NYMEX Holdings shown to be beneficially owned by Mr. Citrone.

(2) Pursuant to an ABC agreement with FIMAT USA Inc., a member firm of NYMEX,
Mr. Coakley is the nominal holder of FIMAT's membership and is entitled to
the privileges of the membership, including the right to vote on all matters
on which members are entitled to vote. However, Mr. Coakley may not sell,
transfer or otherwise encumber the membership without the consent of FIMAT.
The provisions of this agreement also apply to the common stock of NYMEX
Holdings shown to be beneficially owned by Mr. Coakley.

(3) Pursuant to an ABC agreement with Goldman, Sachs & Co., a member firm of
NYMEX, Mr. Cohn is the nominal holder of Goldman Sachs' membership and is
entitled to the privileges of the membership, including the right to vote on
all matters on which members are entitled to vote. However, Mr. Cohn may not
sell, transfer or otherwise encumber the membership without the consent of
Goldman Sachs. The provisions of this agreement also apply to the common
stock of NYMEX Holdings shown to be beneficially owned by Mr. Cohn.

(4) Pursuant to an ABC agreement with Union Oil Company of California., a member
firm of NYMEX, Mr. Costantino is the nominal holder of Union Oil's
membership and is entitled to the privileges of the membership, including
the right to vote on all matters on which members are entitled to vote.
However, Mr. Costantino may not sell, transfer or otherwise encumber the
membership without the consent of Union Oil. The provisions of this
agreement also apply to the common stock of NYMEX Holdings shown to be
beneficially owned by Mr. Costantino.

(5) Pursuant to an ABC agreement with AGE Commodity Clearing Corp., a member
firm of NYMEX, Mr. Rizzi is the nominal holder of AGE Commodity Clearing's
membership and is entitled to the privileges of the membership, including
the right to vote on all matters on which members are entitled to vote.
However, Mr. Rizzi may not sell, transfer or otherwise encumber the
membership without the consent of AGE Commodity Clearing. The provisions of
this agreement also apply to the common stock of NYMEX Holdings shown to be
beneficially owned by Mr. Rizzi.

55
<PAGE> 62

CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

The following are descriptions of material transactions involving NYMEX and
its directors as of February 9, 2000:

- Pioneer Futures, Inc., of which Mr. Citrone is Vice President, currently
leases from NYMEX approximately 13,000 square feet of space at the One
North End facility. Pioneer has two leases, one for 2,840 square feet
expiring on December 4, 2002 and one for 10,360 square feet expiring on
December 14, 2002. The current aggregate annual rent for such space is
$457,320. Pioneer is currently negotiating with NYMEX to obtain
approximately 15,000 additional square feet.

- FIMAT USA Inc., of which Mr. Coakley is a Senior Vice President,
currently leases from NYMEX approximately 1350 square feet of space at
the One North End facility. The lease expires on July 27, 2001. The
current annual rent for such space is $56,574.

- Mr. Lippman is the founder and Chief Executive Officer of Genesis 10
Corp., a company which, among other things, places executives in the
information technology field. Mr. Lippman owns 95% of the equity
interests of Genesis 10 Corp. NYMEX is currently engaged in a search for
a new Chief Information Officer; Genesis 10 Corp. is one of the companies
which NYMEX has consulted with regarding the search. In the event that
NYMEX hires a candidate recommended by Genesis 10 Corp., Genesis 10 Corp.
will earn a fee of 30% of the annual compensation of the candidate who is
hired (which is a typical fee for this type of consulting and
recommendation service). In addition, Genesis 10 Corp. has provided one
information technology professional (a Senior Developer/Architect
position) to NYMEX. This position has been provided to NYMEX at a rate of
$115 per hour. From October 1999 to the present, approximately $81,800
has been billed to NYMEX pursuant to this arrangement. No payments have
yet been made. NYMEX is in the process of finalizing internal approvals
for the establishment of a written contractual relationship for the
placement of information technology personnel with NYMEX on a basis
competitive with other similar relationships. In the event that such
personnel are placed with NYMEX on a permanent basis, Genesis 10 Corp.
will be entitled to a fee equal to approximately 30% of the total annual
compensation of any person placed with NYMEX.

- Mr. Schaeffer currently leases from NYMEX approximately 2,500 square feet
of space. The lease expires on February 1, 2003. The current annual rent
for such space is $92,426.

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<PAGE> 63

DESCRIPTION OF CAPITAL STOCK OF NYMEX HOLDINGS

The following summary of NYMEX Holdings' capital stock describes the
material terms of the stock. For a complete description, we refer you to NYMEX
Holdings' charter and bylaws, which are attached as Annexes C and D to this
proxy statement and prospectus.

GENERAL

NYMEX Holdings' charter authorizes the issuance of 816 shares of common
stock, par value $0.01 per share. This number corresponds to the number of NYMEX
memberships outstanding immediately prior to the demutualization. Immediately
following the demutualization, all 816 shares of NYMEX Holdings common stock
will be issued and outstanding.

VOTING RIGHTS, DIVIDEND RIGHTS AND LIQUIDATION RIGHTS

Each outstanding share of common stock is entitled to one vote on any
matter on which stockholders are entitled to vote. The holders of shares of
common stock are entitled to share ratably in dividends or distributions, if, as
and when dividends or distributions are declared by the board of directors of
NYMEX Holdings at its discretion. NYMEX Holdings has no current plans to pay
cash dividends on the common stock. Upon dissolution, liquidation or winding-up
of NYMEX Holdings, holders of common stock are entitled to share ratably in the
net assets available for distribution to stockholders after the payment of debts
and other liabilities subject to the prior rights of any issued preferred
shares. Holders of common stock do not have any rights to purchase additional
shares of stock from NYMEX Holdings, to have their common stock converted into
or exchanged for other securities, to have their common stock repurchased by
NYMEX Holdings or to receive a preferred return on their shares of common stock.

TRANSFER RESTRICTIONS

In the demutualization, each membership of NYMEX will be automatically
converted into one Class A membership of NYMEX Exchange as well as one share of
NYMEX Holdings common stock. Each Class A membership of NYMEX Exchange will be
"stapled" together with the corresponding share of NYMEX Holdings common stock.
The Class A memberships and the common stock of NYMEX Holdings will not be
separately transferable either by the Class A Members or the stockholders of
NYMEX Holdings.

The Class A memberships may be "unstapled" from the common stock of NYMEX
Holdings by a vote of a majority of the shares of common stock. If the
stockholders approve the unstapling, the charter of NYMEX Holdings will be
amended and the Class A memberships and the common stock of NYMEX Holdings will
be separately transferable.

TRANSFER AGENT

NYMEX Holdings will be the transfer agent and registrar of the common
stock.

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<PAGE> 64

DESCRIPTION OF MEMBERSHIPS OF NYMEX EXCHANGE

The following summary of the terms of NYMEX Exchange's memberships
describes the material terms of the memberships following the demutualization.
For a complete description, we refer you to NYMEX Exchange's certificate of
incorporation and bylaws which are attached to this proxy statement and
prospectus as Annexes E and F. When we refer to NYMEX members or members
throughout this document, we are referring to owners of memberships in the NYMEX
Division of the New York Mercantile Exchange, as opposed to members of the COMEX
Division and lessees of NYMEX Division memberships.

GENERAL

NYMEX Exchange has two classes of memberships: Class A memberships and one
Class B membership. The number of Class A memberships is limited to 816. The
board of directors may create additional classes of members having rights and
limitations as the board determines, except that no additional class of
membership, other than the Class B membership, may have voting or other rights
equal to or greater than the Class A memberships.

Class A memberships may be held solely by those who qualify for membership
in NYMEX Exchange. The sole Class B membership will be held by NYMEX Holdings
following the demutualization.

The members of NYMEX's COMEX Division will continue to have the same
trading and other contractual rights following the demutualization as at
present. NYMEX Exchange, as the corporate successor to NYMEX, will assume all of
its obligations to the COMEX Division members.

TRADING PRIVILEGES

The Class A memberships have trading privileges on the NYMEX Exchange as
set forth in the rules of NYMEX Exchange. Those trading privileges are identical
to the privileges that NYMEX members enjoy today.

VOTING RIGHTS

Each membership is entitled to one vote on all matters on which a
membership is entitled to vote. Unlike NYMEX, members of NYMEX Exchange are not
limited to one vote per member, regardless of the number of memberships owned;
rather, each membership is entitled to one vote, even if multiple memberships
are owned by the same person. The Class B member is entitled to one vote on all
matters including on fundamental changes such as an amendment to the certificate
of incorporation or a merger of NYMEX Exchange. The certificate of incorporation
of NYMEX Exchange provides that so long as the common stock of NYMEX Holdings
and Class A memberships are stapled, the Class B member must elect any person
who becomes a director of NYMEX Holdings as a director of NYMEX Exchange. The
Class A memberships is only entitled to vote on amendments to the bylaws of
NYMEX Exchange. Amendments to the bylaws of NYMEX Exchange must be approved by a
majority of all memberships of NYMEX Exchange, voting together as a single
class.

So long as the Class A memberships remain stapled to the common stock of
NYMEX Holdings, NYMEX Holdings must elect the directors of NYMEX Holdings to
serve as the directors of NYMEX Exchange and must elect the Chairman and Vice

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<PAGE> 65

Chairman of NYMEX Holdings to serve as the Chairman and Vice Chairman,
respectively, of NYMEX Exchange.

DISTRIBUTIONS

NYMEX Holdings, as the sole Class B member, is entitled to receive all
dividends and other distributions of any type, including upon liquidation, made
by NYMEX Exchange. The Class A members have no right to receive any dividends or
distributions made by NYMEX Exchange.

TRANSFER RESTRICTIONS

Membership in NYMEX Exchange is a personal privilege and transferable only
pursuant to the terms and conditions established by the certificate of
incorporation, bylaws and rules of NYMEX Exchange. The Class A memberships of
NYMEX Exchange are "stapled" to the shares of NYMEX Holdings common stock. This
means that the Class A memberships are not transferable and will not be
transferred upon the books of NYMEX Exchange unless a simultaneous transfer is
made by the same transferor to the same transferee of a number of shares of
NYMEX Holdings common stock equal to the number of Class A memberships being
transferred. In addition, each certificate evidencing ownership of shares of
NYMEX Holdings common stock will be deemed to evidence the same number of Class
A memberships. The Class A memberships may be "unstapled" from the common shares
of NYMEX Holdings by a vote of the holders of a majority of the outstanding
shares of common stock of NYMEX Holdings. If this occurs, the Class A
memberships and the common stock of NYMEX Holdings will be separately
transferable.

Members of NYMEX Exchange may only transfer their Class A memberships to
another member or a member-elect.

Before transferring a Class A membership, the member must first file a
notice of intention to transfer with the Office of the Secretary of NYMEX
Exchange. A member who owns a sole Class A membership will cease to have floor
trading privileges on the date a notice of intention to transfer is filed with
respect to his Class A membership.

No member may transfer a Class A membership unless and until all dues,
fees, assessments and other monies due to NYMEX Exchange have been paid. In
addition, no member may transfer a Class A membership unless and until all
claims arising out of the transaction of business on NYMEX Exchange have been
settled or discharged including all claims filed with the secretary of NYMEX
Exchange within 10 days after NYMEX Exchange notified the member of its receipt
of the notice of intention to transfer.

Notwithstanding the requirements set forth in the two preceding paragraphs,
a member may transfer a Class A membership if (1) the member owns more than one
Class A membership and the value of the claim is less than the then current
value of a Class A membership or (2) the transferor deposits a certified check
with NYMEX Exchange, payable to NYMEX Exchange, in an amount equal to the price
at which a Class A membership last sold or at which one was bid, whichever is
greater, and files an affidavit stating that all outstanding claims arising out
of the transaction of business with respect to that membership on NYMEX Exchange
have been settled or discharged.

No member (other than a lessee) may transfer a Class A membership if the
member is the subject of any disciplinary proceeding or investigation by NYMEX
Exchange under the bylaws or rules of NYMEX Exchange unless the member submits a
written

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<PAGE> 66

agreement, acceptable to the board of NYMEX Exchange, by which the member
submits to the continuing jurisdiction of NYMEX Exchange.

The transferee of a Class A membership must pay a transfer fee to NYMEX
Exchange in an amount to be fixed by the board of NYMEX Exchange.

All purchases and sales of Class A memberships must be made through the
Office of the Secretary, which shall maintain a file of bids and offers for
memberships. Any member desiring to buy or sell a membership must submit a
written offer to the Office of the Secretary.

Within 45 days of election to membership, a member-elect must purchase a
Class A membership. In the interim, the member-elect must abide by the
certificate of incorporation, bylaws and rules of NYMEX Exchange. If the
member-elect fails to cause the membership to be transferred within 45 days of
election to membership, his election will be void unless the time for compliance
is extended by the board of NYMEX Exchange.

The board of NYMEX Exchange may adopt rules relating to any requirements or
procedures for the acquisition or transfer of a membership as it may determine.

LEASING OF MEMBERSHIPS

A member may lease a membership to another member. Memberships subject to
outstanding seat financing agreements are prohibited from being leased. A copy
of the lease agreement must be delivered to the Office of the Secretary of NYMEX
Exchange and to the lessee's qualifying clearing member. A member may separately
lease his privileges to trade during regular trading hours and to trade
electronically on the NYMEX ACCESS(R) System.

If the member leases a membership to a member-elect, the lease agreement
must be approved by the membership committee. The agreement will not be
effective until the lessee is elected to membership and the lease agreement, or
its extension, is approved by the membership committee. The board of NYMEX
Exchange may establish requirements regarding provisions to be included in the
lease agreements.

A member who owns a sole membership and confers the benefits of membership
on a member firm may not lease such membership at any time. A member who has
leased his sole membership and seeks to regain membership status upon
termination of the lease will be required to file an application for
reinstatement to membership.

If a member leases either his regular trading privileges or his electronic
trading privileges with respect to his last or sole membership, the member will
not be entitled to member rates for trades executed for his account during the
trading session in which he has leased his rights. If a member leases only his
regular trading privileges without encumbering his electronic trading
privileges, the member will not be entitled to:

- serve on the board of NYMEX Exchange;

- receive any life insurance and/or disability insurance benefits;

- earn continuous service credits in connection with the Members Retention
and Retirement Plan;

- place orders for the execution of any futures or options contracts
(except that, if properly registered as a clerk, such person may transmit
customer orders for execution).

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<PAGE> 67

Notwithstanding the foregoing, the lessee of a membership by operation of
the lease is entitled to:

- serve on the board of NYMEX Exchange;

- receive life insurance and/or disability insurance benefits;

- vest and participate in any distributions from the Members Retention and
Retirement Plan;

- receive member rates for any trades executed for his account during any
regular trading hour.

Lessees of memberships have no voting rights in NYMEX Exchange or NYMEX
Holdings.

Lessors and lessees are permitted to serve on NYMEX Exchange committees to
the extent allowed by the certificate of incorporation, bylaws and rules and as
determined by the board of NYMEX Exchange. All lessors and lessees shall be
subject to such dues and assessments as are from time-to-time determined by the
board of NYMEX Exchange. Lessees shall not be entitled to any other residual
rights of membership not specifically granted by the lessor or the certificate
of incorporation, bylaws and rules of NYMEX Exchange.

A lessee who is the subject of any disciplinary proceeding or investigation
by NYMEX Exchange may transfer a membership back to a lessor upon the
termination of the lease provided that:

- the lessee will remain subject to NYMEX Exchange jurisdiction and be
personally liable for any fines assessed in connection with the
proceeding or investigation;

- the lessee will be deemed to have consented to the jurisdiction of the
court of the State of New York in New York County for the purpose of any
action brought by NYMEX Exchange to enforce its rights against such
lessee;

- the required trading account equity funds shall be (1) frozen until the
investigation is closed or proceeding concluded, (2) paid to NYMEX
Exchange to satisfy any outstanding fines, and (3) released only upon
written approval to the lessee's clearing member from the NYMEX
Exchange's Compliance Department.

Upon the termination of the lease agreement, whether by reason of death of
the lessee or the natural termination of the term of the lease, the parties
shall give written notice to NYMEX Exchange of such termination as promptly as
possible. The lessor of a membership shall give notice of a proposed lease
agreement or renewal thereof to the Office of the Secretary of NYMEX Exchange at
least 10 business days prior to the filing of the agreement. The lessor or
lessee of a membership who does not intend to renew a lease agreement must give
notice to the Office of the Secretary of NYMEX Exchange at least 10 business
days prior to the termination of the lease agreement. Neither the lessor nor the
lessee are permitted to sell or transfer the leased membership during the term
of the lease, unless the agreement specifically provides otherwise.

The board of NYMEX Exchange may adopt new or different rules relating to
eligibility and procedures for leasing of memberships. Rules established by the
board need not be uniform and may differ among different categories of
memberships as determined by the board in its sole discretion.

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<PAGE> 68

ELIGIBILITY CRITERIA AND PROCEDURES

The criteria for eligibility for membership and procedures for becoming a
Class A member will be the same as the criteria and procedures currently
applicable to NYMEX members.

Every member and every applicant for membership must be at least 18 years
old or the minimum age of majority required to be responsible for his contracts
in each jurisdiction in which the member or applicant conducts business. Each
non-floor member and each applicant for membership other than as a floor member
shall have and, at all times shall maintain, net liquid assets of not less than
$25,000 or shall be guaranteed by a member firm for all obligations of such
member arising out of the transaction of business of NYMEX Exchange to the
extent of $25,000. Each applicant as a floor member must be qualified to trade
on the floor by a clearing member who must execute such guarantees and other
documents as required by the board of NYMEX Exchange. With limited exceptions,
each applicant as a floor member must maintain, at all times, $50,000 equity
value in a trading account with the clearing member.

To be eligible for membership, an applicant must be sponsored by two
members in good standing. One of the sponsors must appear before the membership
committee and report the sponsor's knowledge of the personal history and
financial affairs of the applicant.

Each applicant must submit an application and such other documentation as
the board of NYMEX Exchange may require. The application must be accompanied by
a non-refundable application fee in such amount as may be determined by the
board of NYMEX Exchange. Each member has the affirmative obligation to keep
informed of all pending applications and to provide the membership committee
with any adverse firsthand knowledge or information relating to an applicant's
character or financial or business history. Each member will be investigated and
every reference listed, all of whom must be members themselves, may be
contacted. Also, the applicant's financial statement will be verified by an
independent inquiry. However, any applicant as an off-the-floor member who is
the subject of an unlimited guarantee by his member firm shall not be required
to provide a financial statement.

The membership committee shall review each application and may require
additional documentation as determined by the committee. The membership
committee will ultimately vote on whether to recommend the application to the
board of NYMEX Exchange for approval. Each applicant must appear before the
committee along with at least one sponsor, unless waived by the committee. A
vote of two-thirds of the directors present at a meeting of the board of NYMEX
Exchange is required for election. An applicant who has been rejected by the
board of NYMEX Exchange may not be reconsidered for membership by the membership
committee for one year after the date of rejection.

The Chairman of the membership committee may waive certain eligibility
requirements as he may determine in the case of a member who transfers his last
membership and acquires a new membership within 45 days. Within two days after
posting his last membership for transfer, such member must notify the Office of
the Secretary of his intention to acquire a new membership and file an
application form with the Office of the Secretary.

Members may confer membership privileges upon corporations, partnerships,
cooperative associations and sole proprietorships subject to the rules and
limitations set by the board of NYMEX Exchange. The board may also establish
procedures for conferring

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<PAGE> 69

membership privileges and financial requirements for member firms as it may
determine in its sole discretion.

The board of NYMEX Exchange may adopt rules relating to the eligibility
requirements and financial standards for floor members as it may determine in
its sole discretion. Such requirements and standards may differ from the
requirements set for regular membership.

The board may adopt new or different rules relating to financial standards
applicable to Class A members and member firms as a condition to becoming a
Class A member. Those rules may or may not also relate to a member's
continuation as a Class A member. Standards set by the board need not be uniform
and may differ among different categories of membership as determined by the
board in its sole discretion. Any Class A member, however, who is registered
with the CFTC must still comply with such rules and regulations as the CFTC
adopts relating to financial requirements.

DUES, FEES AND ASSESSMENTS

The annual dues of Class A members will be fixed by the board at any
meeting of the board and are payable at such time as the board may determine.
The board may waive the payment of dues by all Class A members or by individual
Class A members as it determines. Dues are payable by the Class A member in
whose name the membership is registered.

From time to time the board may establish fees, in such amounts as it
determines, on contracts traded on NYMEX Exchange. From time to time the board
may levy such assessments as it determines to be necessary. All assessments are
due and payable if and when the board determines. All assessments are payable by
the Member in whose name the membership is registered.

If a Class A member fails to pay any dues, assessments or fees when due and
the failure is not cured within 30 days after written notice to the Class A
member by NYMEX Exchange that the dues, assessments or fees are due, then the
Class A member will be suspended automatically from all rights and privileges of
membership. The suspension shall continue in effect until the failure is cured.
The Executive Committee of NYMEX Exchange, upon written application received
prior to the expiration of such period, may extend the 30 day period, in its
sole discretion.

If a Class A member who is suspended fails to pay any dues, assessments or
fees within 30 days of the suspension, then the Class A member will be expelled
from membership. The board or the Executive Committee, upon written application
received prior to the expiration of the 30 day period, and for good cause, may
extend the 30 day period.

Any Class A member who fails to pay any dues, assessments or fees after
written notice to the Class A member that such dues, assessments or fees are
payable, will pay a penalty, in addition to the sanctions imposed, as fixed from
time to time by the board, but not less than 20% of the amount due.

Notice of all dues and assessments will be published by NYMEX Exchange and
will be given personally by delivery to a postal box located on the NYMEX
Exchange premises or by first class mail, postage prepaid and addressed to the
Class A member at the address such Class A member has filed with NYMEX Exchange.
Non-receipt of the notice will not operate to relieve the Class A member from
payment, to extend the time for payment

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<PAGE> 70

or to relieve any Class A member from the imposition of penalties for failing to
pay dues and assessments.

EFFECT OF SUSPENSION OR EXPULSION

A Class A member or member firm whose rights and privileges of membership
have been suspended will continue to be:

- subject to the bylaws and rules of NYMEX Exchange;

- liable for all dues, assessments, fees and fines imposed by NYMEX
Exchange; and

- obligated to NYMEX Exchange and to its members for all contracts,
obligations and liabilities entered into or incurred before, during and
after such suspension.

A Class A member or member firm who has been expelled from the rights and
privileges of membership will continue to be:

- subject to the disciplinary and arbitration rules of NYMEX Exchange;

- liable for all dues, assessments, fees and fines imposed by NYMEX
Exchange prior to such expulsion; and

- obligated to NYMEX Exchange and its members for all contracts,
obligations, liabilities, fines and penalties entered into or incurred
prior to or after such expulsion.

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CERTIFICATE OF INCORPORATION AND BYLAW PROVISIONS
OF NYMEX HOLDINGS, INC. AND NYMEX EXCHANGE

The summary set forth below describes the material provisions of the
certificate of incorporation and bylaws of both NYMEX Holdings and NYMEX
Exchange, each of which are attached as Annexes to this proxy statement and
prospectus.

BOARD OF DIRECTORS

The board of directors of NYMEX Holdings is divided into three classes
serving staggered three-year terms. In addition, any or all of the directors may
be removed for cause or without cause by vote of the holders of a majority of
the outstanding shares of common stock of NYMEX Holdings. Vacancies on the board
of directors may be filled by the remaining directors. Such elected director may
serve until the next annual meeting and until his successor is elected and
qualified.

The certificate of incorporation of NYMEX Exchange provides that, so long
as the common stock of NYMEX Holdings and Class A memberships of NYMEX Exchange
are stapled, the Class B member of the Exchange must elect any person who
becomes a director of NYMEX Holdings as a director of NYMEX Exchange. As a
result, the board of directors of NYMEX Exchange will be identical to and will
serve the same term as, the board of directors of NYMEX Holdings.

MEETINGS AND ACTIONS BY WRITTEN CONSENT

The presence in person or by proxy of holders of a majority of the shares
entitled to vote at a meeting of stockholders is necessary, and will constitute
a quorum, for the transaction of business at a meeting. Each stockholder will be
entitled to one vote for each share of stock held of record on the books of
NYMEX Holdings. The bylaws also allow stockholder action by written consent in
lieu of a meeting, but only if the action taken has the written consent of the
holders of shares having at least the minimum number of votes required to
authorize the action at a meeting at which all shares entitled to vote were
present and voted.

Commencing with the year 2001, annual meetings of stockholders will be held
on the third Tuesday in March of each year or if that day is a holiday, the next
business day, or as fixed by the board. At each annual meeting, the stockholders
will elect directors and transact other business that is properly brought before
the meeting.

Special meetings of stockholders may be called by the board of directors or
the Chairman at any time and for any purpose. The Chairman or the Secretary will
be required to call a special meeting upon the written request of the holders of
at least 10% of all outstanding shares entitled to vote on the action proposed
to be taken.

Notice of annual and special meetings shall be given not less than 10 nor
more than 50 days before the date of such meeting to each stockholder entitled
to vote at the meeting.

The bylaws of NYMEX Exchange provide that any action of NYMEX Exchange
taken by the members will require the vote of a majority of the votes cast at an
annual or special meeting of members by the members entitled to vote on such
action. The presence, in person or by proxy, of 150 members will constitute a
quorum for the transaction of business at a meeting. Each member will be
entitled to one vote for each membership

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owned of record by that member. A member may not vote on any matter while any
dues, assessments, fees or fines are unpaid or during any period of suspension.

Annual meetings of members will be held on the third Tuesday in March of
each year to elect directors and transact other business that may come before
the meeting. Special meetings of members may be called by the board of directors
or the Chairman in their discretion. In addition, the Chairman or Secretary will
be required to call a special meeting upon the written request of a majority of
the board of directors or of members entitled to cast 10% of the votes entitled
to be cast at the meeting.

Notice of any meeting of the members must be given to each member not less
than 10 days nor more than 50 days before the date of the meeting.

LIMITATIONS OF LIABILITY AND INDEMNIFICATION MATTERS

Section 145 of the Delaware General Corporation Law authorizes a
corporation's board of directors to grant indemnity to directors and officers in
terms sufficiently broad to permit indemnification under some circumstances for
liabilities, including reimbursement for expenses incurred, arising under the
Securities Act, as amended.

As permitted by Delaware law, the certificate of incorporation of each of
NYMEX Holdings and NYMEX Exchange includes a provision that eliminates the
personal liability of directors for monetary damages for breach of fiduciary
duty as a director, except for liability:

- for any breach of the director's duty of loyalty to NYMEX Holdings, NYMEX
Exchange or its stockholders or members;

- for acts or omissions not in good faith or that involve intentional
misconduct or a knowing violation of law;

- under Section 174 of the Delaware General Corporation Law regarding
unlawful dividends and stock purchases; or

- for any transaction from which the director obtained an improper personal
benefit.

Pursuant to the bylaws of NYMEX Holdings, NYMEX Holdings will indemnify its
directors, officers, employees and other agents to the fullest extent permitted
by law and may pay the expenses of such persons incurred in defending a suit or
proceeding in advance of the final disposition of the suit or proceeding. In
addition, the bylaws of NYMEX Exchange provide that NYMEX Exchange will
indemnify its officers, directors and employees as well as members of committees
of NYMEX Exchange to the maximum extent permitted by law. The NYMEX Holdings
bylaws also permit us to secure insurance on behalf of any officer, director,
employee or other agent for any liability arising out of his or her actions in
such capacity, regardless of whether the bylaws would permit indemnification.

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COMPARISON OF RIGHTS OF NYMEX MEMBERS
BEFORE AND AFTER THE DEMUTUALIZATION

The rights of members are currently governed by New York law and the
charter, bylaws and rules of NYMEX. Upon completion of the demutualization, the
rights of members will be governed by Delaware law, the certificate of
incorporation and bylaws of NYMEX Exchange and the certificate of incorporation
and bylaws of NYMEX Holdings. The following is a summary of the material
differences between NYMEX memberships and the combination of NYMEX Exchange
Class A memberships and common stock of NYMEX Holdings. This summary is not
intended to be a complete discussion of, and is qualified in its entirety by
reference to New York law, Delaware law, and the certificate of incorporation
and bylaws of NYMEX, NYMEX Exchange and NYMEX Holdings. Copies of the
certificate of incorporation and bylaws of NYMEX Exchange and NYMEX Holdings are
attached as Annexes to this document.

<TABLE>
<CAPTION>
NYMEX EXCHANGE CLASS
A MEMBERSHIPS AND
NYMEX HOLDINGS COMMON
STOCK NYMEX MEMBERSHIPS
---------------------------- ----------------------------
<S> <C> <C>
DIVIDENDS - The Delaware General - The New York
Corporation Law permits not-for-profit corporation
the payment of dividends law prohibits the payment
by NYMEX Holdings and of dividends, subject only
NYMEX Exchange. The board to very limited
of each has the discretion exceptions.
to determine whether and
when to declare and
distribute dividends to
the stockholders and
members.
AUTHORIZED CAPITAL - The certificate of - The charter of NYMEX
incorporation and bylaws authorizes a total of 900
of NYMEX Exchange memberships, but the board
authorizes a total of 816 may create additional
Class A memberships and classes of memberships.
one Class B membership, However, no such
but the board may create additional class of
additional classes of membership may have voting
memberships with such or other rights equal to
rights and limitations as or greater than the class
it determines. No of regular members.
additional class of
membership may have voting
or other rights equal to
or greater than the Class
A memberships.
- The certificate of
incorporation of NYMEX
Holdings authorizes the
issuance of up to 816
shares of common stock,
par value $0.01.
</TABLE>

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<PAGE> 74

<TABLE>
<CAPTION>
NYMEX EXCHANGE CLASS
A MEMBERSHIPS AND
NYMEX HOLDINGS COMMON
STOCK NYMEX MEMBERSHIPS
---------------------------- ----------------------------
<S> <C> <C>
MEMBER INTERESTS - NYMEX Exchange members - NYMEX members hold regular
hold Class A memberships memberships representing
representing trading trading, economic and
rights and the right to voting rights in NYMEX.
approve changes to the
bylaws. The economic and
other voting rights are
held by NYMEX Holdings in
the form of one Class B
membership.
- Members of NYMEX Exchange
also hold common stock in
NYMEX Holdings
representing economic and
voting rights in NYMEX
Holdings.
LIQUIDITY AND - The Class A memberships of - Members of NYMEX may
TRANSFERABILITY NYMEX Exchange and the transfer their memberships
common stock of NYMEX in their entirety;
Holdings are "stapled" provided that the member
together and cannot be or transferee is not the
separately transferred. A subject of any
member may transfer both disciplinary proceeding or
the member's Class A investigation, unless
membership in NYMEX certain conditions are
Exchange and the common met.
stock of NYMEX Holdings
together, provided that - There is no public market
the member or transferee for the memberships of NYMEX
is not the subject of any Exchange or the common
disciplinary proceeding or stock of NYMEX Holdings.
investigation, unless Memberships may be
certain conditions are transferred only to
met. transferees that meet
certain fiscal and other
requirements.
- There is no public market
for NYMEX memberships.
Memberships may be
transferred only to
transferees that meet
certain fiscal and other
requirements.
</TABLE>

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<PAGE> 75

<TABLE>
<CAPTION>
NYMEX EXCHANGE CLASS
A MEMBERSHIPS AND
NYMEX HOLDINGS COMMON
STOCK NYMEX MEMBERSHIPS
---------------------------- ----------------------------
<S> <C> <C>
VOTING RIGHTS - The Class B membership - Each member of NYMEX has
held by NYMEX Holdings has one vote regardless of the
the sole voting right on number of memberships
matters relating to NYMEX owned.
Exchange, except that
Class A memberships have - Lessees of NYMEX
the right to vote with the memberships may have
Class B membership on voting rights as provided
proposed amendments to the for in the rules of NYMEX
bylaws of NYMEX Exchange. from time to time.
As to any matters upon
which Class A members are
entitled to vote, each
member has one vote per
membership.
- Each stockholder of NYMEX
Holdings is entitled to
one vote per share on all
matters presented to the
stockholders.
- Lessees of NYMEX Exchange
memberships have no voting
rights.
VOTE ON EXTRAORDINARY - Delaware law requires that - New York law requires that
TRANSACTIONS a merger, consolidation, an affirmative vote of at
sale of all or least 66 2/3% of votes
substantially all of the cast is required for the
assets or a dissolution approval of a merger,
must be approved by an consolidation, sale of all
affirmative vote of or substantially all of
holders of at least a the assets or a
majority of the dissolution of NYMEX,
memberships having the provided that the
right to vote for the affirmative vote of at
election of directors in least a quorum is also
the case of transactions obtained.
relating to NYMEX Exchange
or of outstanding shares
in the case of
transactions relating to
NYMEX Holdings.
ANNUAL MEETINGS - The bylaws of both NYMEX - The bylaws of NYMEX
Exchange and NYMEX provide for annual
Holdings provide for meetings to be held on the
annual meetings to be held third Tuesday in March of
on the third Tuesday in each year.
March of each year or if
that day is a holiday, the
next business day, or as
fixed by the board.
</TABLE>

69
<PAGE> 76

<TABLE>
<CAPTION>
NYMEX EXCHANGE CLASS
A MEMBERSHIPS AND
NYMEX HOLDINGS COMMON
STOCK NYMEX MEMBERSHIPS
---------------------------- ----------------------------
<S> <C> <C>
DUES, FEES AND ASSESSMENTS - The board of NYMEX - The board of NYMEX is
Exchange is authorized to authorized to set dues,
set dues, fees and fees and assessments and
assessments and determine determine the date for
the date for payment in payment in its discretion.
its discretion. The common
stock of NYMEX Holdings is
nonassessable.
REDEMPTION - Neither the bylaws of - The bylaws of NYMEX do not
NYMEX Exchange nor of provide for redemption
NYMEX Holdings provide for rights.
redemption rights.
AMENDMENT OF GOVERNING - The Class B member, NYMEX - Each member is entitled to
DOCUMENTS Holdings, has the sole vote on a one vote per
vote on changes to the member basis on any
charter of NYMEX Exchange. changes to the charter and
The Class A memberships bylaws of NYMEX.
have the right to vote
with the Class B member on
all proposed amendments to
the bylaws of NYMEX
Exchange.
- Each common stockholder of
NYMEX Holdings is entitled
to one vote per share on
changes to the charter of
NYMEX Holdings which,
under Delaware law, are
required to be submitted
to the stockholders for
approval. The bylaws of
NYMEX Holdings may be
amended by the
stockholders of NYMEX
Holdings.
PREEMPTIVE RIGHTS - Neither the bylaws of - The bylaws of NYMEX do not
NYMEX Exchange nor NYMEX provide for preemptive
Holdings provide for rights.
preemptive rights.
APPRAISAL RIGHTS - The bylaws of NYMEX - Neither New York law nor
Exchange do not provide the bylaws of NYMEX
for appraisal rights. provide for appraisal
rights under any
circumstances.
- Delaware law provides for
appraisal rights for
stockholders of NYMEX
Holdings in the case of
certain mergers or other
consolidations involving
NYMEX Holdings.
</TABLE>

70
<PAGE> 77

<TABLE>
<CAPTION>
NYMEX EXCHANGE CLASS
A MEMBERSHIPS AND
NYMEX HOLDINGS COMMON
STOCK NYMEX MEMBERSHIPS
---------------------------- ----------------------------
<S> <C> <C>
LIQUIDATION RIGHTS - Holders of Class A - Owners of NYMEX
memberships are not memberships are entitled
entitled to any to share ratably in any
liquidating distributions. liquidating distributions.
The holder of the Class B
membership has the right
to any such distributions.
- Stockholders of NYMEX
Holdings are entitled to
share ratably in any
liquidating distributions.
ELECTION OF DIRECTORS - The board of NYMEX - The members of NYMEX are
Exchange is required to entitled to vote on a one
mirror the board of NYMEX vote per member basis for
Holdings as long as the the appointment of the
Class A memberships of member directors, the
NYMEX Exchange are Chairman and the Vice
"stapled" to the common Chairman.
stock of NYMEX Holdings.
As the sole voting member,
the Class B member is
required to appoint the
directors of NYMEX
Holdings as directors of
NYMEX Exchange Any
director who leaves the
board of NYMEX Holdings is
required to leave the
board of NYMEX Exchange.
- Each stockholder is
entitled to cast one vote
per share for the election
of the directors and
designation of the
Chairman and Vice
Chairman.
TAXATION - NYMEX Exchange will be - NYMEX is treated as a
treated as a corporation corporation for federal
for federal income tax income tax purposes. The
purposes. Its profits will corporation is taxed on
be taxed at regular its profits. The
corporate tax rates. individual members are
taxed on dividends they
receive, if any, as
ordinary income.
</TABLE>

71
<PAGE> 78

<TABLE>
<CAPTION>
NYMEX EXCHANGE CLASS
A MEMBERSHIPS AND
NYMEX HOLDINGS COMMON
STOCK NYMEX MEMBERSHIPS
---------------------------- ----------------------------
<S> <C> <C>
- NYMEX Holdings will be
treated as a corporation
for income tax purposes.
NYMEX Holdings will be
taxed at regular corporate
tax rates. The holders of
common stock will have to
pay tax on any dividends
received as ordinary
income.
LIMITED LIABILITY - Stockholders of NYMEX - Members are subject to the
Holdings are not subject assessment provisions of
to personal liability for NYMEX's charter, bylaws
the debts, obligations or and rules.
liabilities of NYMEX
Holdings. In addition the
common stock of NYMEX
Holdings is nonassessable.
- NYMEX Exchange members are
subject to the assessment
provisions of NYMEX
Exchange's certificate of
incorporation, bylaws and
rules, which are identical
to NYMEX's charter, bylaws
and rules.
</TABLE>

72
<PAGE> 79

FEDERAL INCOME TAX CONSEQUENCES OF THE DEMUTUALIZATION

The following is a summary of the material federal income tax consequences
to NYMEX and its members of the demutualization. The tax treatment of a member
may vary depending upon the member's particular situation, and certain members
(including insurance companies, tax-exempt organizations, financial
institutions, broker-dealers, and persons who are neither citizens nor residents
of the United States, or which are foreign corporations, foreign partnerships or
foreign estates or trusts as to the United States) may be subject to special
rules not discussed below. The following summary is based on the Internal
Revenue Code of 1986, as amended, treasury regulations promulgated under the
Code, administrative rulings and pronouncements, and judicial decisions
available on the date of this proxy statement and prospectus. This summary does
not address any state, local or foreign tax consequences.

EACH NYMEX MEMBER IS URGED TO CONSULT THE MEMBER'S TAX ADVISOR AS TO THE
PARTICULAR TAX CONSEQUENCES TO THE MEMBER OF THE DEMUTUALIZATION.

NYMEX has applied to the Internal Revenue Service for a ruling that is
expected to conclude that:

- memberships in NYMEX are treated as stock of NYMEX and the Class B
membership in NYMEX Exchange is treated as stock of NYMEX Exchange for
purposes of the Code;

- the exchange of memberships completed in the first merger will satisfy
the continuity of interest requirement for a tax-free reorganization
under Section 368 of the Code;

- assuming the first merger qualifies as a reorganization under Section
368(a)(1)(F) of the Code, the first merger and the second merger will be
treated as separate transactions in applying the reorganization and
Section 351 tax-free exchange rules of the Code;

- NYMEX will not recognize any gain or loss as a result of the first
merger;

- NYMEX members will not recognize gain or loss (and no amount will be
included in their income) as a result of the demutualization;

- the aggregate adjusted tax basis of the NYMEX Holdings stock and Class A
memberships in the hands of each member will be the same as the adjusted
tax basis of the member's interest in NYMEX immediately prior to the
demutualization, and will be allocated entirely to the Class A membership
in NYMEX Exchange owned by such member; and

- the holding period of the NYMEX Holdings stock will in each instance
include the holding period of the membership in NYMEX held immediately
before the demutualization if that member held the membership as a
capital asset on the effective date of the demutualization.

A ruling from the IRS, while generally binding on the IRS, may under
certain circumstances be revoked or modified by the IRS retroactively. NYMEX is
not currently aware of any facts or circumstances that would cause the IRS to
revoke or modify the IRS ruling.

73
<PAGE> 80

In seeking the ruling NYMEX will make the representations based on the
opinion of Clifford Chance Rogers & Wells LLP, counsel to NYMEX, that:

(1) the first merger will qualify as a reorganization under Section
368(a)(1)(F) of the Code; and

(2) the second merger will qualify as a tax-free exchange under Section
351(a) of the Code.

NYMEX has obtained an opinion of its counsel as to these two issues rather than
seeking a ruling from the IRS as to these issues because the IRS takes the
position that the consequences of reorganizations are adequately established in
the tax law and it generally will not issue a ruling as to whether a transaction
qualifies as a reorganization under Section 368(a) of the Code or an exchange
under Section 351(a) of the Code.

An opinion of counsel is not binding on the IRS or the courts, and no
assurance can be given that the IRS will not challenge the tax treatment of the
demutualization. Furthermore, the opinions of Clifford Chance Rogers & Wells LLP
are dependent upon future events, such as NYMEX Exchange continuing to own and
conduct NYMEX's business after the demutualization, the results of which will
not be reviewed by counsel. NYMEX is not currently aware of any facts or
circumstances that would cause the representations that they have made to the
IRS and to counsel to be untrue or incorrect in any material respect.

The highest marginal individual Federal income tax rate (which applies to
ordinary income and gain from the sale or exchange of capital assets held for
one year or less) is 39.6%. The maximum regular Federal income tax rate on
capital gains derived by individual taxpayers generally is 20% for sales and
exchanges of capital assets held for more than one year. All net capital gain of
a corporate taxpayer is subject to tax at ordinary corporate income tax rates of
up to 35%.

Clifford Chance Rogers & Wells LLP, counsel for NYMEX, has delivered an
opinion that the description of the Federal income tax consequences of the
demutualization, contained in this summary correctly sets forth the material
Federal income tax consequences of the demutualization to NYMEX and its members.
These opinions are based upon, among other things, the anticipated IRS Ruling
and representation letters provided by NYMEX containing customary statements
relating to certain technical requirements under the Code, including statements
by NYMEX (similar to those made to the IRS in connection with the IRS Ruling
request) concerning the continuation of NYMEX's business and the use of certain
assets of NYMEX after the demutualization.

74
<PAGE> 81

LEGAL MATTERS

The validity of the common stock offered hereby will be passed upon for
NYMEX Holdings by Clifford Chance Rogers & Wells LLP, New York, New York.

EXPERTS

The consolidated financial statements of the New York Mercantile Exchange
and subsidiaries as of December 31, 1998 and 1997 and for each of the three
years in the period ended December 31, 1998 included in this registration
statement, of which this proxy statement and prospectus form a part, have been
audited by Deloitte & Touche LLP, independent auditors, as stated in their
report appearing in the registration statement and are included in reliance upon
the report of such firm given upon their authority as experts in accounting and
auditing.

75
<PAGE> 82

INDEX TO FINANCIAL STATEMENTS AND PRO FORMA FINANCIAL INFORMATION

<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Independent Auditors' Report................................ F-2
Consolidated Balance Sheets December 31, 1998 and 1997...... F-3
Consolidated Statements of Income and Members' Equity Years
Ended December 31, 1998, 1997 and 1996.................... F-4
Consolidated Statements of Cash Flows Years Ended December
31, 1998, 1997 and 1996................................... F-5
Notes to Consolidated Financial Statements Years Ended
December 31, 1998, 1997 and 1996.......................... F-6
Condensed Consolidated Balance Sheets September 30, 1999
(Unaudited) and December 31, 1998......................... F-22
Condensed Consolidated Statements of Income and Members'
Equity Nine Months Ended September 30, 1999 and 1998
(Unaudited)............................................... F-23
Condensed Consolidated Statements of Cash Flows Nine Months
Ended September 30, 1999 and 1998 (Unaudited)............. F-24
Notes to Condensed Consolidated Financial Statements Nine
Months Ended September 30, 1999 and 1998 (Unaudited)...... F-25
Pro Forma Financial Information............................. F-30
</TABLE>

F-1
<PAGE> 83

INDEPENDENT AUDITORS' REPORT

To the Board of Directors of the
New York Mercantile Exchange:

We have audited the accompanying consolidated balance sheets of the New York
Mercantile Exchange and subsidiaries (the "Exchange") as of December 31, 1998
and 1997, and the related consolidated statements of income and members' equity
and of cash flows for each of the three years in the period ended December 31,
1998. These financial statements are the responsibility of the Exchange's
management. Our responsibility is to express an opinion on these financial
statements based on our audits.

We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.

In our opinion, such consolidated financial statements present fairly, in all
material respects, the financial position of the New York Mercantile Exchange
and its subsidiaries at December 31, 1998 and 1997, and the results of their
operations and their cash flows for each of the three years in the period ended
December 31, 1998 in conformity with generally accepted accounting principles.

DELOITTE & TOUCHE LLP

New York, New York
March 19, 1999 (January 5, 2000 as to Notes 14 and 15)

F-2
<PAGE> 84

NEW YORK MERCANTILE EXCHANGE AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
DECEMBER 31, 1998 AND 1997
(DOLLARS IN THOUSANDS)

<TABLE>
<CAPTION>
1998 1997
-------- --------
<S> <C> <C>
ASSETS
Cash and cash equivalents................................ $ 14,353 $ 12,382
Marketable securities (includes members' retention funds
of $33,820 in 1998 and $28,422 in 1997)................ 92,259 89,028
Clearing and transaction fees receivable................. 6,075 8,117
Market data fees receivable.............................. 3,640 3,486
Prepaid taxes and expenses............................... 9,233 11,631
Other current assets..................................... 2,442 2,428
-------- --------
Total current assets........................... 128,002 127,072
Property and equipment, net.............................. 223,000 219,469
Goodwill, net............................................ 22,788 24,942
Other assets............................................. 1,146 844
-------- --------
TOTAL ASSETS................................... $374,936 $372,327
======== ========
LIABILITIES AND MEMBERS' EQUITY
LIABILITIES:
Accounts payable....................................... $ 5,127 $ 3,512
Accrued salaries and related liabilities............... 2,505 1,276
Deferred credit -- grant for building construction..... 2,145 2,145
Accrued interest payable............................... 1,920 3,116
Current portion of notes payable....................... -- 5,043
Other accrued liabilities.............................. 4,164 9,978
-------- --------
Total current liabilities...................... 15,861 25,070
Deferred income taxes.................................... 9,113 851
Postemployment and postretirement benefits............... 6,585 6,165
Notes payable............................................ 100,000 100,000
Deferred credit--grant for building construction......... 123,324 125,254
Subordinated commitment--members' retention program...... 33,820 28,422
-------- --------
Total liabilities.............................. 288,703 285,762
Commitments and contingencies (See Note 14)
Members' equity.......................................... 86,233 86,565
-------- --------
TOTAL LIABILITIES AND MEMBERS' EQUITY.................... $374,936 $372,327
======== ========
</TABLE>

The accompanying notes are an integral part of these statements.
F-3
<PAGE> 85

NEW YORK MERCANTILE EXCHANGE AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF INCOME AND MEMBER'S EQUITY
YEARS ENDED DECEMBER 31, 1998, 1997 AND 1996
(DOLLARS IN THOUSANDS)

<TABLE>
<CAPTION>
1998 1997 1996
--------------- --------------- ---------------
<S> <C> <C> <C>
OPERATING REVENUES:
Clearing and transaction fees, net of member
fee rebates of $11,272, $10,012 and $8,510
in 1998, 1997 and 1996.................... $ 90,764 $ 80,773 $ 76,826
Market data fees............................. 34,858 33,457 33,232
Other........................................ 4,837 3,557 2,532
--------------- --------------- ---------------
Total operating revenues............. 130,459 117,787 112,590
--------------- --------------- ---------------
OPERATING EXPENSES:
Salaries and employee benefits............... 44,552 43,676 38,639
General and administrative................... 15,071 16,869 15,233
Telecommunications, equipment rentals and
maintenance............................... 14,503 13,164 9,870
Rent and facility............................ 12,672 17,116 14,415
Depreciation and amortization, net of
deferred credit amortization.............. 12,054 7,368 9,795
Professional services........................ 7,486 5,198 6,655
Marketing.................................... 2,403 4,813 2,534
Loss on disposition of property and
equipment................................. 2,814 1,234 --
Other........................................ 5,344 5,026 2,773
--------------- --------------- ---------------
Total operating expenses............. 116,899 114,464 99,914
--------------- --------------- ---------------
INCOME FROM OPERATIONS......................... 13,560 3,323 12,676
OTHER INCOME (EXPENSES):
Investment income, net....................... 6,739 8,288 4,860
Interest expense............................. (7,958) (6,967) (1,781)
--------------- --------------- ---------------
INCOME BEFORE PROVISION FOR INCOME TAXES....... 12,341 4,644 15,755
PROVISION FOR INCOME TAXES..................... 6,263 3,495 8,000
--------------- --------------- ---------------
NET INCOME..................................... 6,078 1,149 7,755
MEMBERS' EQUITY, BEGINNING OF YEAR............. 86,565 91,787 89,265
LESS NET TRANSFER TO MEMBERS' RETENTION
PROGRAM:
NYMEX Division............................... (5,255) (5,006) (4,423)
COMEX Division............................... (1,155) (1,365) (810)
--------------- --------------- ---------------
MEMBERS' EQUITY, END OF YEAR................... $ 86,233 $ 86,565 $ 91,787
=============== =============== ===============
</TABLE>

The accompanying notes are an integral part of these statements.
F-4
<PAGE> 86

NEW YORK MERCANTILE EXCHANGE AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS
YEARS ENDED DECEMBER 31, 1998, 1997 AND 1996
(DOLLARS IN THOUSANDS)

<TABLE>
<CAPTION>
1998 1997 1996
--------------- --------------- ---------------
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income................................................ $ 6,078 $ 1,149 $ 7,755
Adjustments to reconcile net income to net cash provided
by (used in) operating activities:
Depreciation and amortization, net of deferred credit
amortization.......................................... 12,054 7,368 9,795
Provision (benefit) for deferred income taxes........... 8,262 4,378 (2,636)
Loss on disposition of property and equipment........... 2,814 1,234 --
Net changes in operating assets and liabilities:
(Increase) decrease in marketable securities.......... (3,231) 40,232 (68,193)
Decrease (increase) in clearing and transaction fees
receivable......................................... 2,042 (1,477) 293
Increase in market data fees receivable............... (154) (3,486) --
Decrease (increase) in prepaid taxes and expenses..... 2,398 (9,353) 553
(Increase) decrease in other current assets........... (14) (1,095) 436
Decrease (increase) from due from affiliate........... -- 4,810 (1,647)
Decrease (increase) in prepaid pension cost........... -- 2,003 (306)
Increase in accounts payable.......................... 1,615 99 13
Increase (decrease) in accrued salaries and related
liabilities........................................ 1,229 (34) 172
(Decrease) increase in accrued interest payable....... (1,196) 545 1,042
(Decrease) increase in other accrued liabilities...... (5,814) (7,923) 7,309
Increase in postemployment and postretirement
benefits........................................... 420 1,905 2,099
--------------- --------------- ---------------
Net cash provided by (used in) operating
activities....................................... 26,503 40,355 (43,315)
--------------- --------------- ---------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures...................................... (18,175) (82,795) (109,375)
Increase in other assets.................................. (302) (110) (579)
--------------- --------------- ---------------
Net cash used in investing activities.............. (18,477) (82,905) (109,954)
--------------- --------------- ---------------
CASH FLOWS FROM FINANCING ACTIVITIES:
COMEX acquisition note repayments......................... (5,043) (5,043) (5,043)
Proceeds from notes payable............................... -- 15,000 85,000
Grant receipts from EDC and ESDC for building
construction............................................ -- 38,698 77,369
Distributions under NYMEX Division members' retention
program................................................. (1,012) (1,148) (1,187)
--------------- --------------- ---------------
Net cash (used in) provided by financing
activities....................................... (6,055) 47,507 156,139
--------------- --------------- ---------------
NET INCREASE IN CASH AND CASH EQUIVALENTS................... 1,971 4,957 2,870
CASH AND CASH EQUIVALENTS, BEGINNING OF YEAR................ 12,382 7,425 4,555
--------------- --------------- ---------------
CASH AND CASH EQUIVALENTS, END OF YEAR...................... $ 14,353 $ 12,382 $ 7,425
=============== =============== ===============
SUPPLEMENTAL INFORMATION
Cash paid for:
Interest................................................ $ 9,130 $ 8,514 $ 725
=============== =============== ===============
Income taxes............................................ -- $ 4,877 $ 9,300
=============== =============== ===============
Cash received from:
Income tax refunds...................................... $ 3,461 -- --
=============== =============== ===============
Noncash members' equity transaction -- transfer to
subordinated commitment -- members' retention program:
NYMEX Division.......................................... $ 5,255 $ 5,006 $ 4,423
=============== =============== ===============
COMEX Division.......................................... $ 1,155 $ 1,365 $ $810
=============== =============== ===============
</TABLE>

The accompanying notes are an integral part of these statements.
F-5
<PAGE> 87

NEW YORK MERCANTILE EXCHANGE AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 1998, 1997 AND 1996

1. DESCRIPTION OF OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

NATURE OF BUSINESS -- The New York Mercantile Exchange (the "Exchange") is
a membership corporation organized under the New York State Not-for-Profit
Corporation Law. Under these laws, the Exchange is prohibited from paying
dividends (subject to only very limited exceptions).

As an exchange designated for trading futures contracts and options on
futures contracts by the Commodity Futures Trading Commission, the Exchange has
the primary objective of creating and maintaining an orderly market for
contracts that are traded on the Exchange. Through its in-house clearing unit,
the Exchange stands as buyer to every seller and seller to every buyer. To
manage the risk of financial nonperformance, the Exchange requires members to
post margin, in the form of cash, U.S. government securities or irrevocable
letters of credit. The Exchange also requires guaranty fund deposits from
clearing members which would be available to cover financial nonperformance.
(See Notes 11 and 12.) The Exchange has extensive surveillance and compliance
operations and procedures to monitor and enforce the rules pertaining to
trading, position limits and financial condition of its members.

PRINCIPLES OF CONSOLIDATION -- The accompanying consolidated financial
statements include the accounts of the Exchange and its wholly-owned
subsidiaries: Commodity Exchange, Inc. ("COMEX"), COMEX Clearing Association,
Inc. and NYMEX Technology Corp. (which became inactive in November 1996). All
significant intercompany balances and transactions have been eliminated in
consolidation.

USE OF ESTIMATES -- The preparation of the accompanying consolidated
financial statements requires the Exchange's management to make estimates and
assumptions that affect the amounts reported in these consolidated financial
statements and accompanying notes. Actual results could differ from those
estimates.

CASH AND CASH EQUIVALENTS -- Cash and cash equivalents consist of cash and
all highly-liquid investments with maturities of three months or less when
purchased. The fair value of cash and cash equivalents approximates their
carrying amounts.

Securities purchased under agreements to resell are treated as cash
equivalents and are carried at contract value, as specified in the agreements.
The market value of securities purchased under agreements to resell is monitored
by the Exchange and additional collateral is obtained as necessary to protect
against credit exposure. At December 31, 1998 and 1997, U.S. government
securities held in a segregated account by a U.S. money-center bank
collateralized the securities purchased under agreements to resell.

MARKETABLE SECURITIES -- Marketable securities consist primarily of high
grade tax-exempt municipal bonds, direct obligations of the U.S. government and
its agencies, and other short-term investment funds. The Exchange has classified
its investments in debt and equity securities with quoted market values as
trading and, accordingly, carries such securities at market value, with the
resulting unrealized gains and losses recognized currently in the consolidated
statement of income and members' equity. At December 31,

F-6
<PAGE> 88
NEW YORK MERCANTILE EXCHANGE AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

1998 and 1997, the cost of marketable securities was approximately $89.9 million
and $87.6 million, respectively.

REVENUE RECOGNITION -- The largest sources of the Exchange's operating
revenues are clearing and transaction fees. These fees are recognized as revenue
in the same period that trades are effectuated on the Exchange. Clearing and
transaction fees receivable are monies due the Exchange from clearing member
firms. Exposure to losses on receivables is principally dependent on each member
firm's financial condition. Fees owed to the Exchange are collateralized by
members' seats. At the end of December 31, 1998 and 1997, no clearing and
transaction fee receivable balance was greater than the underlying collateral.
Management does not believe that a concentration of credit risk exists from
these receivables. The Exchange retains the right to liquidate a member's seat
in order to satisfy its receivable.

Effective January 1, 1996, the Exchange adopted a fee reduction program,
pursuant to which certain clearing fees of NYMEX members are substantially
reduced. Effective January 1, 1998, the Exchange adopted a fee reduction program
for Futures Commission Merchants ("FCMs"). This program reduced various
operating costs incurred by FCMs, such as telephone, office rent and marketing.

The Exchange's market data services provide real time information to
subscribers regarding prices of futures contracts traded on the Exchange. As is
common business practice in the industry, fees are remitted to the Exchange by
market data vendors on behalf of subscribers. The Exchange accrues revenue for
the current month based on the last month reported. The Exchange conducts
periodic audits of the information provided. At December 31, 1998, two vendors
each had receivable balances greater than 5% of the total balance.

The Exchange believes its reserves are adequate to cover member credits and
potential credit risk losses. The Exchange believes the likelihood of incurring
material losses due to collectibility is remote.

PROPERTY AND EQUIPMENT -- Property and equipment are stated at cost, less
allowances for depreciation and amortization. Depreciation and amortization are
provided utilizing the straight-line method over the estimated useful lives of
the assets or lease terms, whichever is shorter. (See Note 3.)

The following table summarizes the years over which significant assets are
generally depreciated or amortized:

<TABLE>
<S> <C>
Building and improvements........................... 20 to 60 years
Information system equipment........................ 4 to 10 years
Furniture, fixtures, office machinery and other..... 3 to 15 years
Leasehold improvements.............................. 15 to 40 years
</TABLE>

Where different depreciation methods or lives are used for tax purposes,
deferred income taxes are recorded.

The Exchange capitalizes purchases of software and amortizes these costs
using the straight line method over a period of three years. All software
development and implementation costs have been expensed when incurred. Beginning
in 1999, the Exchange

F-7
<PAGE> 89
NEW YORK MERCANTILE EXCHANGE AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

will adopt Statement of Position 98-1 Accounting for the Costs of Computer
Software Developed or Obtained for Internal Use, and will begin capitalizing
certain software development and implementation costs.

The carrying value of property and equipment is assessed annually and/or
when factors indicating an impairment may be present. The Exchange determines
such impairment by measuring undiscounted future cash flows. If an impairment is
present, the assets are reported at the lower of carrying value or fair value.

Expenditures for repairs and maintenance are charged to expense as
incurred. Expenditures for major renewals and betterments which significantly
extend the useful lives of existing property and equipment are capitalized and
depreciated. Fully depreciated assets are retained in property and accumulated
depreciation accounts until removed from service. Upon retirement or disposition
of property and equipment, the cost and related accumulated depreciation are
removed from the accounts and any resulting gain or loss is recognized in
income.

GOODWILL -- Goodwill, representing the excess of the purchase price over
the fair value of the net assets of COMEX, is being amortized on a straight-line
basis over the period of expected benefit of fifteen years. Periodically, the
Exchange reviews the recoverability of goodwill. The measurement of possible
impairment is based on the ability to recover the balance of the goodwill from
expected future operating cash flows on an undiscounted basis. There were no
impairments recognized during any of the periods presented. Total amortization
of goodwill recorded in each of the fiscal years 1998, 1997 and 1996 was $2.2
million.

INCOME TAXES -- While the Exchange's corporate structure was organized
under the New York State Not-for-Profit Corporation Law, it is not considered a
tax exempt organization. The Exchange is, therefore, a taxable corporate entity
for tax reporting purposes. The Exchange accounts for income taxes in accordance
with Statement of Financial Accounting Standards ("SFAS") No. 109, Accounting
For Income Taxes. SFAS No. 109 requires that deferred taxes be established based
upon the temporary differences between financial statement and income tax bases
of assets and liabilities using the enacted statutory rates. (See Note 10.)

The principal types of temporary differences giving rise to the Exchange's
deferred taxes are depreciation and amortization, certain postemployment and
postretirement medical costs, deferred compensation, and unrealized gains and
losses on marketable securities.

POSTRETIREMENT BENEFITS OTHER THAN PENSIONS -- The Exchange accounts for
certain postretirement benefits in accordance with SFAS No. 106, Employers'
Accounting for Postretirement Benefits Other than Pensions. SFAS No. 106
requires the Exchange to accrue the estimated cost of retiree benefit payments
other than pensions during the employees' active service lives. For the
Exchange, such benefits consist principally of health care benefits. (See Note
9.)

In February 1998, the Financial Accounting Standards Board issued SFAS No.
132, Employers' Disclosures About Pensions and Other Postretirement Benefits.
SFAS No. 132 does not change the measurement or recognition provisions of
previously issued standards,

F-8
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NEW YORK MERCANTILE EXCHANGE AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

but revises disclosures about pensions and other postretirement benefit plans.
The Exchange adopted SFAS No. 132 during 1998. Restatement of disclosures for
the prior year has been made for comparative purposes.

SEGMENT REPORTING -- The Exchange adopted SFAS No. 131, Disclosures About
Segments of an Enterprise and Related Information, during 1998. Management
reported on two segments: the NYMEX Division, providing futures and options
trading of energy product contracts and platinum group metals contracts, and the
COMEX Division, providing for futures and options trading of precious metals
contracts, copper and aluminum contracts, and FTSE Eurotop 100(R) and FTSE
Eurotop 300(R) stock index futures and options contracts. Management is
currently using revenues of these two divisions as a measurement of operating
performance. (See Note 13.)

DEFERRED CREDIT -- GRANT FOR BUILDING CONSTRUCTION - By agreement dated May
18, 1995, the Exchange secured a grant from the New York City Economic
Development Corporation ("EDC") and the Empire State Development Corporation
("ESDC", formerly called the New York State Urban Development Corporation) for
approximately $128.7 million for construction of a new facility. The grant is
being recognized in income on the same basis as and matched to the depreciation
of the facility. (See Note 14.) The 1998 and 1997 amortization of the deferred
credit is recorded as a reduction to depreciation and amortization expense.

RECLASSIFICATIONS -- Certain reclassifications have been made to the 1996
and 1997 consolidated financial statements to conform to the 1998 presentation.

2. AFFILIATED ENTITY

The Commodities Exchange Center, Inc. ("CEC") was jointly formed in
September 1973 under the New York State Not-for-Profit Law, on a cooperative
basis, to provide trading floor and other physical facilities and service
functions relating thereto for the benefit of its members (the Exchange,
including COMEX, and two other commodity exchanges). Operations of CEC were
funded by its members based on agreed upon expense allocations. During 1998 the
Exchange entered into a "Global Settlement and Surrender Agreement" with CEC.
The Exchange paid CEC $3.1 million in satisfaction of certain operating
liabilities and relinquished its rights to use a portion of the trading floor.
Such amount was included in the accompanying consolidated balance sheet as other
accrued liabilities at December 31, 1997.

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NEW YORK MERCANTILE EXCHANGE AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

3. PROPERTY AND EQUIPMENT, NET

Property and equipment are stated at cost, less related accumulated
depreciation and amortization of $21,552,000 at December 31, 1998 and
$10,785,000 at December 31, 1997.

PROPERTY AND EQUIPMENT (IN THOUSANDS)

<TABLE>
<CAPTION>
DECEMBER 31, DECEMBER 31,
1998 1997
------------------- -------------------
NET GROSS NET GROSS
-------- -------- -------- --------
<S> <C> <C> <C> <C>
Building and improvements................ $173,809 $178,700 $168,689 $170,239
Information system equipment............. 36,572 50,492 37,277 44,219
Furniture, fixtures, office machinery and
other.................................. 11,208 12,880 9,269 9,760
Leasehold improvements................... 1,411 2,480 4,234 6,036
-------- -------- -------- --------
$223,000 $244,552 $219,469 $230,254
======== ======== ======== ========
</TABLE>

Depreciation and amortization expense on property and equipment is
presented net of amortization of the grant for building construction.
Depreciation and amortization expense of property and equipment, net of
amortization of the deferred credit, was approximately $9.9 million, $5.2
million and $7.6 million in 1998, 1997 and 1996, respectively.

In 1998, the Exchange disposed of leasehold improvements and its related
accumulated amortization totaling $3.9 million and $1.1 million, respectively.
The resulting loss (remaining net book value) of $2.8 million was recognized in
current earnings. In 1997, a similar loss of $1.2 million was recognized.

Interest expense incurred during construction of the new facility was
capitalized in the amount of $1.6 million during 1997.

4. NOTES PAYABLE

Notes payable at December 31, 1998 and 1997 consisted of the following (in
thousands):

<TABLE>
<CAPTION>
1998 1997
-------- --------
<S> <C> <C>
Current portion:
COMEX Acquisition Notes, 7.25%............. $ -- $ 5,043
======== ========
Long-term portion:

Private Placement Notes:
7.48%, Senior Notes, Series A, due 2011.... $ 31,000 $ 31,000
7.75%, Senior Notes, Series B, due 2021.... 54,000 54,000
7.84%, Senior Notes, Series C, due 2026.... 15,000 15,000
-------- --------
$100,000 $100,000
======== ========
</TABLE>

In connection with the acquisition of COMEX on August 3, 1994, the Exchange
issued notes to the members of COMEX as part of the purchase price. The notes
reflected a fixed payment ($20 million plus interest in aggregate subject to
adjustment in certain

F-10
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NEW YORK MERCANTILE EXCHANGE AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

circumstances) and contingent payments of up to a maximum of $20 million in the
aggregate. The fixed notes were due on the first through fourth anniversaries of
the acquisition and bore interest at the prime rate, in effect at the time of
the agreement as defined in the agreement. During 1998, the Exchange paid the
last of its four installments under the note agreement. The Exchange's
obligation to make payments under the notes was fully supported by irrevocable
letters of credit issued by Chase Manhattan Bank.

The Exchange issued a private offering of debt during 1996 and 1997,
totaling $100 million to provide completion financing for the new Exchange
trading facility. This issue contained three series each with different
maturities, interest rates, and required repayment schedules. Series A notes
require annual principal repayments from 2001 to 2010, and a final payment of
principal in 2011. Series B notes require annual principal repayments from 2011
to 2020, and a final payment of principal in 2021. Series C notes require annual
principal repayments from 2022 to 2025, and a final payment of principal in
2026. The notes represent senior unsecured obligations of the Exchange and are
not secured by the facility, the Exchange's interest therein or any other
collateral.

Long term debt that becomes due during the next five years is as follows:

5. MEMBERS' RETENTION PROGRAM

The Exchange maintains a Retention Program under which qualified NYMEX
Division members, based on long-term and continuous membership, as defined, may
receive payments of $25,000 per year for ten years. The program was amended to
increase the scheduled payment by three percent each year, commencing July 1,
1996, and then remain fixed for each recipient at each respective level.
Eligibility is based primarily on years of continuous service, as defined, with
payments commencing for vested participants after attaining age 59 1/2. Payments
are made from the general assets of the Exchange, and program commitments are
currently recognized by a transfer from members' equity to a subordinated
commitment to the membership. For each of the years ended December 31, 1998,
1997 and 1996, $3,600,000 was transferred.

The commitments to members under the NYMEX Retention Program are subject to
the claims of general creditors and may be paid only if they will not render the
Exchange insolvent. Although the Exchange has not expressed any intention to
terminate this program, it may do so at any time based on an affirmative vote of
three-fourths of the Exchange's board of directors. The program was amended in
February 1997 to provide for a payout of benefits to the members in the event of
termination of the plan to the extent that the assets were placed in a trust. In
1997, the board established a trust for the purpose of making payments under the
NYMEX Retention Program and at December 31, 1998 all of the assets of the
Members' Retention Program were held in the trust. Assets of the trust are
available to general creditors of the Exchange and are, therefore, recognized as
marketable securities on the balance sheet.

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NEW YORK MERCANTILE EXCHANGE AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

At December 31, 1998 and 1997, based on the membership data on those dates,
a discount rate on benefit commitments of 7.5 percent, and membership mortality
and turnover assumptions, contingent benefits based on service to date
approximated $26 million and $22 million, respectively.

The Exchange also maintains a Retention Program for members of the COMEX
Division. The program is similar to the NYMEX Division program except that the
benefit payments are $12,500 ($2,000 for Option Members) for vested participants
and no new participants were permitted after the date of the merger. No payments
may be made prior to January 1, 2002. In addition, under the terms of the merger
agreement, the COMEX Division program will be funded at a minimum of $400,000
annually. In any year in which the Exchange funds the NYMEX Division program or
makes a distribution to NYMEX Division members, the funding shall be $800,000.
Such amounts may be reduced if actuarial assumptions indicate that full funding
can be achieved without making the entire funding contributions indicated above.

All benefits to be paid under the COMEX Division program shall be based
upon reasonable actuarial assumptions which, in turn, are based upon the amounts
that are available and are expected to be available to pay benefits, except that
the benefits paid to any individual will not exceed the amounts stated above.
Subject to the foregoing, the board of directors of the Exchange reserves the
right to amend or terminate the program upon an affirmative vote of a majority
of the board members voting.

6. DEFINED CONTRIBUTION PLAN

The Exchange sponsors a defined contribution plan (the "Plan") for all
eligible domestic employees with at least one year of service. The Plan
qualifies as a deferred salary arrangement under Section 401(k) of the Internal
Revenue Code. Under the Plan, participating employees may defer up to 15 percent
of their pre-tax earnings, subject to the annual Internal Revenue Code
contribution limit. The Exchange matches contributions up to a maximum of 3
percent of salary. In addition, the Exchange makes annual contributions ranging
from 2 to 7 percent based upon tenure for each eligible Plan member. Employees
vest immediately in their contribution and vest in the Exchange's contribution
at a rate of 20 percent per year of service, 100 percent after five years. For
the year ended December 31, 1998, the Exchange's total contributions to the Plan
were approximately $1.6 million, and $1.2 million for each of the years ended
December 31, 1997 and 1996, respectively.

7. DEFERRED COMPENSATION

Effective July 1, 1997, the Exchange instituted a nonqualified deferred
compensation plan (the "Deferred Plan") for key employees to permit them to
defer receipt of current compensation in order to provide retirement benefits on
behalf of such employees. The Exchange may provide a matching and a regular
year-end contribution to the Deferred Plan. Matching contribution percentages
and vesting follow the same guidelines as the Exchange's defined contribution
plan. The Deferred Plan is not intended to be a qualified plan under the
provisions of the Internal Revenue Code. It is intended to be unfunded and,
therefore, all compensation deferred under the Deferred Plan is held by the
Exchange and commingled with its general assets. The participating employees are
general creditors of

F-12
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NEW YORK MERCANTILE EXCHANGE AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

the Exchange with respect to these benefits. The Exchange has the right to
amend, modify or terminate the Deferred Plan at any time.

8. DEFINED BENEFIT PENSION PLAN

As a result of its merger with COMEX, the Exchange sponsored a
noncontributory defined benefit pension plan (the "Plan") which covered
substantially all COMEX Division employees who were employees through December
31, 1995. Effective December 31, 1996, the Plan was terminated. All remaining
assets of the Plan were fully distributed to the Plan participants by February
1998.

The table of actuarially computed benefit obligations and net assets held
by the trustee at fair value of the Plan at December 31 is as follows (in
thousands):

<TABLE>
<CAPTION>
1997 1996
------ ------
<S> <C> <C>
Accumulated benefit obligation - fully vested.... $7,710 $6,277
====== ======
Projected benefit obligation for service rendered
to date........................................ $7,710 $6,277
Plan assets at fair value........................ 8,331 8,589
------ ------
Funded status.................................... 621 2,312
Unrecognized gain................................ -- (309)
Reversion of assets.............................. (621) --
------ ------
Prepaid pension costs............................ $ -0- $2,003
====== ======
</TABLE>

During the 1997 Plan year, all pension plan liabilities were settled
through the purchase of an annuity contract with the Hartford Life Insurance
Company in the amount of $2,330,600 and lump sum payments totaling $5,380,464.
This resulted in a settlement loss of $1,815,750 and a reversion of assets from
the pension trust of $620,055.

Net pension benefit of the defined benefit plan includes the following
components (in thousands):

<TABLE>
<CAPTION>
1997 1996
------ ------
<S> <C> <C>
Interest cost on projected benefit obligation.... $ (421) $ (430)
Actual return on plan assets..................... 854 1,315
Net amortization and deferral.................... -- (580)
------ ------
Net pension benefit.............................. $ 433 $ 305
====== ======
</TABLE>

The discount rates used in determining the actuarial present value of the
projected benefit obligation were 7.00 percent and 7.25 percent at December 31,
1997 and 1996, respectively. The expected long-term rate of return on assets was
10 percent in both 1997 and 1996.

9. POSTRETIREMENT BENEFITS OTHER THAN PENSIONS

In addition to providing pension benefits, the Exchange provides certain
health care and life insurance benefit plans for qualifying retired employees.
Substantially, all of the Exchange's employees may become eligible for these
benefits if they reach specified age and years of service criteria while working
for the Exchange. The benefits are provided

F-13
<PAGE> 95
NEW YORK MERCANTILE EXCHANGE AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

through certain insurance companies. The Exchange expects to fund its share of
such benefit costs principally on a pay-as-you-go basis.

The following table presents the funded status of such plans reconciled
with amounts recognized in the Exchange's consolidated financial statements at
December 31 (in thousands):

<TABLE>
<CAPTION>
1998 1997 1996
------- ------- -------
<S> <C> <C> <C>
Change in accumulated postretirement benefit
obligation:
Accumulated postretirement benefit obligation,
beginning of year............................. $ 4,658 $ 7,623 $ 6,170
Service cost..................................... 461 1,328 1,164
Interest cost.................................... 239 584 442
Amendments....................................... -- (4,186) --
Actuarial gain................................... (1,022) (541) --
Benefits paid.................................... (168) (150) (153)
------- ------- -------
Accumulated postretirement benefit obligation,
end of year................................... $ 4,168 $ 4,658 $ 7,623
======= ======= =======
- --------------------------------------------------------------------------------
Funded status.................................... $(4,168) $(4,658) $(7,623)
Unrecognized transition obligation............... 1,549 1,645 3,942
Unrecognized prior service cost.................. (1,732) (1,850) --
Unrecognized net (gain) loss..................... (847) 132 697
------- ------- -------
Accrued postretirement benefit cost, end of
year.......................................... $(5,198) $(4,731) $(2,984)
======= ======= =======
Net periodic postretirement benefit cost consists of the following components:
Service cost..................................... $ 461 $ 1,328 $ 1,164
Interest cost.................................... 239 584 442
Amortization of:
Transition obligation......................... 96 219 219
Prior service cost............................ (118) -- --
Net (gain) loss............................... (43) 25 5
------- ------- -------
Net periodic postretirement benefit cost......... $ 635 $ 2,156 $ 1,830
======= ======= =======
</TABLE>

The weighted average discount rates used in determining the accumulated
postretirement benefit obligation were 6.75, 7.00 and 7.25 percent at December
31, 1998, 1997 and 1996, respectively.

The weighted average annual assumed rates of increase in the per capita
cost to cover benefits (i.e., health care cost trend rate) is 11.5 percent for
1998 and is assumed to decrease gradually to 5 percent by 2005 and remain level
thereafter.

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NEW YORK MERCANTILE EXCHANGE AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

The following shows the impact of a 1% change in the trend rate:

<TABLE>
<CAPTION>
1% 1%
POINT POINT
INCREASE DECREASE
-------------- --------------
<S> <C> <C>
Effect on total of service and interest
cost........................................ $ 56,622 $ (52,384)
Effect on postretirement benefit obligation... $303,985 $(281,921)
</TABLE>

Effective as of the end of the 1997 fiscal year, the postretirement medical
and life insurance benefits were amended by the Exchange. Changes to such plans
were: retirement eligibility at age 60 (or later) with at least 20 years of
service; future premium costs limited to two times the 1997 premium amount; and
participation in the plan begins on the later of the employee's date of hire or
the date the employee reaches age 40. The first two changes resulted in a
reduction in the accumulated postretirement benefit obligation of $4,186,000 and
the third plan change resulted in a curtailment gain of $259,000.

10. INCOME TAXES

The provision (benefit) for income taxes in the consolidated statements of
income and members' equity for the years ended December 31, 1998, 1997 and 1996,
respectively, consisted of the following (in thousands):

<TABLE>
<CAPTION>
1998 1997 1996
------- ------ ------
<S> <C> <C> <C>
Current:
Federal.................................... $(2,024) $ (542) $6,645
State and local............................ 25 (341) 3,991
------- ------ ------
(1,999) (883) 10,636
------- ------ ------
Deferred:
Federal.................................... 5,717 2,601 (1,653)
State and local............................ 2,545 1,777 (983)
------- ------ ------
8,262 4,378 (2,636)
------- ------ ------
Total........................................ $ 6,263 $3,495 $8,000
======= ====== ======
</TABLE>

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NEW YORK MERCANTILE EXCHANGE AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

Reconciliation of the statutory U.S. federal income tax rate to the
effective tax rate on income before tax is as follows:

<TABLE>
<CAPTION>
1998 1997 1996
---- ---- ----
<S> <C> <C> <C>
Statutory U.S. federal tax rate................ 35.0% 35.0% 35.0%
State and local taxes, net of federal
benefit...................................... 0.1% 1.1% 8.9%
Member benefits................................ 12.2% 31.6% 4.4%
Amortization of goodwill....................... 6.1% 16.2% 4.9%
Deferred credit amortization -- grant for
building construction........................ (5.5%) (15.9%) --
Tax-exempt income.............................. (6.4%) (13.1%) (5.6%)
Reversion of pension assets.................... -- 13.0% --
Nondeductible expenses......................... 2.1% 5.6% 1.9%
Other, net..................................... 7.1% 1.8% 1.3%
---- ----- ----
Effective tax rate........................ 50.7% 75.3% 50.8%
==== ===== ====
</TABLE>

At December 31, the components of net deferred tax assets (liabilities)
were as follows (in thousands):

<TABLE>
<CAPTION>
1998 1997
---- ----
<S> <C> <C>
Deferred tax assets:
Postretirement benefit........................... 2,963 2,774
Deferred compensation............................ 120 --
Unrealized loss on securities.................... -- 229
Accrued expenses................................. 53 46
Suspended contributions.......................... 819 --
Federal net operating loss....................... 523 483
State and city net operating losses.............. 490 --
Other............................................ 2,257 2,023
-------- ------
Deferred tax assets.............................. $ 7,225 $5,555
-------- ------
Deferred tax liabilities:
Depreciation and amortization.................... (16,093) (6,406)
Unrealized gains on securities................... (226) --
Other............................................ (19) --
-------- ------
Deferred tax liabilities......................... (16,338) (6,406)
-------- ------
Net deferred tax liabilities....................... $ (9,113) $ (851)
======== ======
</TABLE>

11. SEGREGATED FUNDS

The Exchange is required under the Commodity Exchange Act to segregate cash
and securities that are deposited by clearing members at banks approved by the
Exchange as margin for house and customer accounts; such assets belong to
members and thus are not included in the accompanying consolidated financial
statements. At December 31, 1998 and 1997, $17,606 and $433,739 of cash,
$2,558,480,915 and $3,129,110,000 of U.S. Treasury obligations, and $7,860,000
and $14,210,000 of U.S. Treasury bills purchased

F-16
<PAGE> 98
NEW YORK MERCANTILE EXCHANGE AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

under agreements to resell, respectively, were segregated pursuant to such
regulations by the NYMEX Division. In addition, at December 31, 1998 and 1997,
the NYMEX Division held irrevocable letters of credit amounting to $102,350,000
and $64,300,000, respectively, which are used by members to meet their
obligations to the Exchange for margin requirements in lieu of depositing cash
and/or securities. The Exchange invests cash deposits and earns interest
thereon. All income earned on U.S. government securities deposits accrue to the
member firms depositing such securities.

At December 31, 1998 and 1997, the COMEX Division's segregated funds
consisted of $574,802 and $5,956,384 in cash and $474,584,750 and $776,345,000
in U.S. Treasury bills, respectively. The COMEX Division also holds irrevocable
letters of credit aggregating $39,100,000 and $28,600,000 as of December 31,
1998 and 1997, respectively.

12. GUARANTY FUND

Each clearing member is required to maintain a security deposit, in the
form of cash or U.S. Treasury securities, ranging from $100,000 to $2,000,000,
depending upon such clearing member's reported regulatory capital, in a fund
known as a "Guaranty Fund" for the respective clearing division (NYMEX and/or
COMEX). Separate and distinct Guaranty Funds, held by NYMEX, are maintained for
the NYMEX and COMEX Divisions. These funds may be used by the Exchange for any
loss sustained by the Exchange as a result of the failure of a clearing member
to discharge their obligations.

At December 31, 1998 and 1997, the total deposits maintained in the NYMEX
Division Guaranty Fund were $78,518,950 and $72,341,000, respectively. At
December 31, 1998 and 1997, the total deposits for the COMEX Division Guaranty
Fund were $75,193,900 and $71,793,650, respectively.

13. SEGMENT REPORTING

The Exchange has two operating segments: the NYMEX Division, providing
futures and options trading of energy product contracts and platinum group
metals contracts, and the COMEX Division, providing for futures and options
trading of precious metals contracts, copper and aluminum contracts, and FTSE
Eurotop 100(R) and FTSE Eurotop 300(R) stock index futures and options
contracts. A summary by business segment follows (dollars in thousands):

F-17
<PAGE> 99
NEW YORK MERCANTILE EXCHANGE AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

<TABLE>
<CAPTION>
NYMEX COMEX TOTAL
------- ------- --------
<S> <C> <C> <C>
Year Ended December 31, 1998
OPERATING REVENUES:
Clearing and transaction fees
Regular trading hours(1)..................... $73,199 $22,332 $ 95,531
NYMEX ACCESS(R)(2)........................... 5,668 837 6,505
Market data fees................................ 18,864 15,994 34,858
Other........................................... 4,072 765 4,837
Member fee rebate............................... (11,272) N/A (11,272)
------- ------- --------
Total operating revenue................. $90,531 $39,928 $130,459
======= ======= ========
Year Ended December 31, 1997
OPERATING REVENUES:
Clearing and transaction fees
Regular trading hours(1)..................... $61,871 $24,397 $ 86,268
NYMEX ACCESS(R)(2)........................... 4,023 494 4,517
Market data fees................................ 17,795 15,662 33,457
Other........................................... 2,527 1,030 3,557
Member fee rebate............................... (10,012) N/A (10,012)
------- ------- --------
Total operating revenue................. $76,204 $41,583 $117,787
======= ======= ========
Year Ended December 31, 1996
OPERATING REVENUES:
Clearing and transaction fees
Regular trading hours(1)..................... $59,111 $24,648 $ 83,759
NYMEX ACCESS(R)(2)........................... 1,455 122 1,577
Market data fees................................ 16,792 16,440 33,232
Other........................................... 1,557 975 2,532
Member fee rebate............................... (8,510) N/A (8,510)
------- ------- --------
Total operating revenue................. $70,405 $42,185 $112,590
======= ======= ========
</TABLE>

- -------------------------
(1) Clearing and transaction fees generated from trading on the open outcry
system during regular business hours.

(2) Clearing and transaction fees generated from trading on the NYMEX ACCESS(R)
system.

14. COMMITMENTS AND CONTINGENCIES

The Exchange is involved in litigation, investigations of a routine nature,
and various legal matters which are being handled in the ordinary course of
business. Management believes, after consultation with counsel, that the results
of such proceedings will not have a material adverse effect on the Exchange's
financial position, results of operations or cash flows.

NYMEX has been named as a defendant in the following legal actions:

- Ricky Barnes v. New York Mercantile Exchange, Commodity Exchange, Inc. A.
J. Contracting Company, Inc., and Zwicker Electric Company, Inc. This
action is

F-18
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NEW YORK MERCANTILE EXCHANGE AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

pending in New York State Supreme Court (New York County). NYMEX was
served with the summons and complaint on or about March 4, 1998. This is
a personal injury case that relates to the construction of One North End.
Plaintiff, an employee of Forest Datacom Services, Inc., a subcontractor
of A.J. Construction, alleges that he was injured on December 17, 1996
while working at the One North End construction site. Plaintiff seeks
$10,000,000 in compensatory damages. NYMEX and COMEX are represented by
insurance counsel. The case is currently in discovery.

- Electronic Trading Systems Corporation v. The Board of Trade of the City
of Chicago, the New York Mercantile Exchange, the Chicago Mercantile
Exchange, and Cantor Fitzgerald, L.P. This action is pending in United
States District Court for the Northern District of Texas (Dallas
Division). NYMEX was served with a summons and complaint on or about May
10, 1999. This is a patent infringement case. Plaintiff alleges that it
is the owner of United States Letters Patent No. 4,903,201 entitled
"Automated Futures Trade Exchange" and that defendants are infringing
this patent through use of their respective electronic trading systems.
Plaintiff seeks an unspecified amount of royalties. NYMEX is providing
its own defense to this action. NYMEX has filed motion to sever and
transfer venue to the Southern District of New York.

F-19
<PAGE> 101
NEW YORK MERCANTILE EXCHANGE AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

he was injured while trading in the Natural Gas Ring. Plaintiffs seeks a
total of $30,000,000 in compensatory damages against defendants. NYMEX is
represented by insurance counsel. The case is in discovery.

- Robert Teofrio and Susan Teofrio v. NYMEX, Turner Construction and AJ
Construction of New York. This action is pending in New York State
Supreme Court (New York County). NYMEX was served with the summons and
complaint on or about July 20, 1998. This is a personal injury case that
relates to plaintiff's involvement in the construction of One North End.
Plaintiff is an ironworker employed by Diamond Installations, a
subcontractor of Turner Construction. Plaintiff alleges that he was
injured on September 11, 1996, while working at the One North End
construction site. Plaintiff seeks a total of $11,000,000 in compensatory
damages. NYMEX is represented by insurance counsel. This case is in
discovery.

The Exchange was a participant in a sublease arrangement with CEC. The
lease entered into by CEC, on behalf of its members, was for an initial term of
fifteen years with two ten-year renewal options (expiring 2012) at a fair rental
at the time of renewal. In connection with the relocation to a new facility, the
Exchange negotiated a settlement of its obligations under the sublease
arrangement with CEC. (See Note 2.)

The Exchange occupies premises under leases with various lessors which
expire in 1999 through 2069. For the years ended December 31, 1998, 1997 and
1996, rental expense for the premises amounted to $2,242,665, $4,253,616 and
$4,030,314, respectively. At December 31, 1998, the Exchange was obligated for
future minimum rental payments required under the noncancelable terms of various
leases as follows:

<TABLE>
<S> <C>
1999.................................................... $ 1,675,000
2000.................................................... 1,606,000
2001.................................................... 1,581,000
2002.................................................... 1,506,000
2003.................................................... 1,506,000
2004 and thereafter..................................... 21,584,000
-----------
Total......................................... $29,458,000
===========
</TABLE>

F-20
<PAGE> 102
NEW YORK MERCANTILE EXCHANGE AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

The Exchange began sub-leasing space in its headquarters during 1997. Most
of the space was sublet to member firms. Rents collected from these rentals were
$1,879,656 and $91,076 during 1998 and 1997, respectively.

In 1994, the Exchange entered into a Letter of Intent with Battery Park
City Authority ("BPCA"), the New York City Economic Development Corporation
("EDC"), and the Empire State Development Corporation ("ESDC," formerly called
the New York State Urban Development Corporation) to construct a new trading
facility and office building on a site in Battery Park City. By agreement dated
May 18, 1995, EDC and ESDC agreed to provide funding of $128.7 million to
construct the facility. The Exchange is liable for liquidated damages on a
declining scale, with an initial maximum of up to $75 million, if it violates
terms of the occupancy agreement at any time prior to the fifteen years from the
date of occupancy.

In May 1995, the Exchange signed a ground lease (expiring June 2069) with
BPCA for the new trading facility. The lease establishes payments in lieu of
taxes ("PILOTs") due to New York City, as follows: for the trading portion of
the facility, PILOTs are entirely abated for the first 20 years after occupancy
and, thereafter, at an amount equal to assessment; for the office portion of the
facility, PILOTs are entirely abated for one year after occupancy, at a
percentage of assessment (ranging from 25% to 92.5%) for the next ten years and,
thereafter, at an amount equal to assessment.

The Exchange has provided financial guarantees and pledged collateral
relating to a membership seat financing program with one of its banks. The
member remains primarily liable for the loan which is used to purchase a seat on
the Exchange. The guarantee is limited to 60% of the purchase price of the seat,
and the Exchange has the right to liquidate the seat if the member defaults on
the loan. Under the program, the Exchange may issue guarantees totaling, in the
aggregate, up to $5 million.

15. SUBSEQUENT EVENT

On January 5, 2000, the Board of Directors approved a plan for
demutualization of the New York Mercantile Exchange whereby the Exchange would
be converted from a New York not-for-profit membership organization into a
Delaware for-profit entity that will be organized as a stock holding company
with a subsidiary membership organization. Under this plan, membership interests
in the Exchange would be converted into shares of common stock in a newly-formed
stock holding company organized under Delaware law (NYMEX Holdings, Inc.) and
Class A memberships in a subsidiary of NYMEX Holdings, Inc. organized as a
non-stock corporation under Delaware law (New York Mercantile Exchange, Inc.).

******

F-21
<PAGE> 103

NEW YORK MERCANTILE EXCHANGE AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
SEPTEMBER 30, 1999 (UNAUDITED) AND DECEMBER 31, 1998
(DOLLARS IN THOUSANDS)

<TABLE>
<CAPTION>
SEPTEMBER 30, DECEMBER 31,
1999 1998(1)
------------- ------------
<S> <C> <C>
ASSETS
Cash and cash equivalents.......................... $ 37,709 $ 14,353
Marketable securities (includes members' retention
funds of $33,586 in 1999 and $33,820 in 1998).... 87,575 92,259
Clearing and transaction fees receivable........... 10,328 6,075
Market data fees receivable........................ 4,715 3,640
Prepaid taxes and other current assets............. 6,136 11,675
-------- --------
Total current assets..................... 146,463 128,002
Property and equipment, net........................ 225,703 223,000
Goodwill, net...................................... 21,173 22,788
Other assets....................................... 2,104 1,146
-------- --------
TOTAL ASSETS............................. $395,443 $374,936
======== ========

LIABILITIES AND MEMBERS' EQUITY
LIABILITIES:
Accounts payable and accrued liabilities......... $ 27,704 $ 15,861
-------- --------
Total current liabilities................ 27,704 15,861
Deferred income taxes.............................. 9,113 9,113
Postemployment and postretirement benefits......... 7,088 6,585
Notes payable...................................... 100,000 100,000
Deferred credit - grant for building
construction..................................... 121,715 123,324
Subordinated commitment - members' retention
program.......................................... 33,586 33,820
-------- --------
Total liabilities........................ 299,206 288,703
Commitments and contingencies (See Note 5)
Members' Equity.................................... 96,237 86,233
-------- --------
TOTAL LIABILITIES AND MEMBERS' EQUITY.............. $395,443 $374,936
======== ========
</TABLE>

- -------------------------
(1) The amounts as of December 31, 1998 have been derived from the audited
financial statements of New York Mercantile Exchange and its subsidiaries
contained elsewhere in this proxy statement and prospectus.

The accompanying notes are an integral part of these statements.
F-22
<PAGE> 104

NEW YORK MERCANTILE EXCHANGE AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
AND MEMBERS' EQUITY
NINE MONTHS ENDED SEPTEMBER 30, 1999 AND 1998 (UNAUDITED)
(DOLLARS IN THOUSANDS)

<TABLE>
<CAPTION>
1999 1998
-------- -------
<S> <C> <C>
OPERATING REVENUES:
Clearing and transaction fees, net of member fee rebates
of $9,816 in 1999 and $8,396 in 1998................... $ 80,109 $68,633
Market data fees.......................................... 26,068 25,871
Other..................................................... 2,782 3,613
-------- -------
Total operating revenues.......................... 108,959 98,117
-------- -------

OPERATING EXPENSES:
Salaries and employee benefits............................ 34,236 33,240
Telecommunications, equipment rentals and maintenance..... 11,321 10,434
Depreciation and amortization, net of deferred credit
amortization........................................... 10,191 9,312
Rent and facility......................................... 9,131 9,421
General and administrative................................ 10,402 10,161
Professional services..................................... 5,115 5,034
Marketing................................................. 1,778 1,522
Other..................................................... 3,982 4,223
-------- -------
Total operating expenses.......................... 86,156 83,347
-------- -------
INCOME FROM OPERATIONS...................................... 22,803 14,770

OTHER INCOME (EXPENSES):
Investment income, net.................................... 3,364 5,484
Interest expense.......................................... (5,778) (6,032)
-------- -------
INCOME BEFORE PROVISION FOR INCOME TAXES.................... 20,389 14,222
PROVISION FOR INCOME TAXES.................................. 9,787 6,827
-------- -------
NET INCOME.................................................. 10,602 7,395
MEMBERS' EQUITY, BEGINNING OF YEAR.......................... 86,233 86,565
LESS NET TRANSFER TO MEMBERS' RETENTION PROGRAM
NYMEX Division............................................ (293) (4,995)
COMEX Division............................................ (305) (378)
-------- -------
MEMBERS' EQUITY, END OF PERIOD.............................. $ 96,237 $88,587
======== =======
</TABLE>

The accompanying notes are an integral part of these statements.
F-23
<PAGE> 105

NEW YORK MERCANTILE EXCHANGE AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
NINE MONTHS ENDED SEPTEMBER 30, 1999 AND 1998 (UNAUDITED)
(DOLLARS IN THOUSANDS)

<TABLE>
<CAPTION>
1999 1998
------- --------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income.............................................. $10,602 $ 7,395
Adjustments to reconcile net income to net cash provided
by operating activities:
Depreciation and amortization, net of deferred credit
amortization....................................... 10,191 9,312
Net changes in operating assets and liabilities:
Decrease (increase) in marketable securities....... 4,684 (2,728)
(Increase) decrease in clearing and transaction
fees receivable................................. (4,253) 529
Increase in market data fees receivable............ (1,075) (38)
Decrease in prepaid taxes and other current
assets.......................................... 5,539 8,539
Increase in accounts payable and accrued
liabilities..................................... 11,843 2,689
Increase in postemployment and postretirement
benefits........................................ 503 675
------- --------
Net cash provided by operating activities....... 38,034 26,373
------- --------
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures.................................... (12,888) (14,832)
Increase in other assets................................ (958) (51)
------- --------
Net cash used in investing activities........... (13,846) (14,883)
------- --------
CASH FLOWS FROM FINANCING ACTIVITIES:
COMEX acquisition note repayments....................... -- (5,043)
Distributions under NYMEX Division members' retention
program.............................................. (832) (506)
------- --------
Net cash used in financing activities........... (832) (5,549)
------- --------
NET INCREASE IN CASH AND CASH EQUIVALENTS................. 23,356 5,941
CASH AND CASH EQUIVALENTS, BEGINNING OF YEAR.............. 14,353 12,382
------- --------
CASH AND CASH EQUIVALENTS, END OF PERIOD.................. $37,709 $ 18,323
======= ========
SUPPLEMENTAL INFORMATION
Cash paid for:
Interest............................................. $ 3,840 $ 4,203
======= ========
Income taxes......................................... -- --
======= ========
Noncash members' equity transaction - transfer to
subordinated commitment - members' retention program:
NYMEX Division....................................... $ 293 $ 4,995
======= ========
COMEX Division....................................... $ 305 $ 378
======= ========
</TABLE>

The accompanying notes are an integral part of these statements.
F-24
<PAGE> 106

NEW YORK MERCANTILE EXCHANGE AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
NINE MONTHS ENDED SEPTEMBER 30, 1999 AND 1998

1. DESCRIPTION OF OPERATIONS AND SUMMARY OF SIGNIFICANT
ACCOUNTING POLICIES

BASIS OF PRESENTATION -- The accompanying unaudited condensed consolidated
financial statements of the New York Mercantile Exchange have been prepared in
accordance with Accounting Principles Board Opinion No. 28 and Rule 10-01 of
Regulation S-X promulgated by the Securities and Exchange Commission (the
"SEC"). These are condensed consolidated financial statements and do not include
all the necessary disclosures required for complete financial statements.

Generally accepted accounting principles require that management make
estimates and assumptions that affect the amounts reported in these statements
and accompanying notes. These estimates and assumptions are based on judgment
and available information and, consequently, actual results could be materially
different from these estimates.

In the opinion of the Exchange's management, the accompanying unaudited
condensed consolidated financial statements reflect all adjustments, consisting
only of normal recurring adjustments, necessary to present fairly the Exchange's
financial position as of September 30, 1999 and December 31, 1998 and its
results of operations and cash flows for the nine month interim period ended
September 30, 1999 and 1998. Interim period operating results may not be
indicative of the operating results for a full year. This information should be
read in conjunction with the audited consolidated financial statements and notes
thereto as of December 31, 1998 and 1997 and for each year in the three year
period ended December 31, 1998, 1997 and 1996 included elsewhere herein.

For a summary of significant accounting policies (which have not
significantly changed from December 31, 1998 with the exception of AICPA
Statement of Position (SOP) 98-1 - see note 2 to the unaudited condensed
consolidated financial statements) and additional information, see note 1 to the
audited December 31, 1998 financial statements.

Certain reclassifications have been made to the Exchange's prior year
consolidated financial statements to conform with the current year's unaudited
consolidated financial statements.

SEGMENT REPORTING -- The Exchange adopted SFAS No. 131, Disclosures About
Segments of an Enterprise and Related Information, during 1998. Management
reported on two segments; the NYMEX Division, providing futures and options
trading of energy product contracts and platinum group metals contracts, and the
COMEX Division, providing for futures and options trading of precious metals
contracts, copper and aluminum contracts, and FTSE Eurotop 100(R) and FTSE
Eurotop 300(R) stock index futures and options contracts. Management is
currently using revenues of these two divisions as a measurement of operating
performance. (See Note 4.)

2. NEW ACCOUNTING STANDARDS

The American Institute of Certified Public Accountants issued SOP 98-1,
Accounting for the Costs of Computer Software Developed or Obtained for Internal
Use, effective for fiscal years beginning after December 15, 1998. Generally,
once the capitalization criteria

F-25
<PAGE> 107
NEW YORK MERCANTILE EXCHANGE AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

of the SOP have been met, external direct costs of materials and services used
in development of internal-use software, payroll and payroll-related costs for
employees directly involved in the development of internal-use software are to
be capitalized. Beginning in 1999, the Exchange capitalized certain software
development and implementation costs. The Exchange capitalizes internally
developed software costs based on a project-by-project analysis of each
project's significance to the Exchange and its estimated useful life. The total
amount of internally developed software costs capitalized for the nine months
ended September 30, 1999 was $5.9 million. All capitalized internally developed
software costs are amortized using the straight-line method over the estimated
useful lives, not exceeding five years. Prior to 1999, all costs associated with
internally developed software were expensed.

3. GUARANTY FUND

Each clearing member is required to maintain a security deposit, in the
form of cash or U.S. Treasury securities, ranging from $100,000 to $2,000,000,
depending upon such clearing member's reported regulatory capital, in a fund
known as a "Guaranty Fund" for the respective clearing division (NYMEX and/or
COMEX). Separate and distinct Guaranty Funds are maintained for the NYMEX and
COMEX Divisions. These funds may be used by the Exchange for any loss sustained
by the Exchange as a result of the failure of a clearing member to discharge
their obligations.

At September 30, 1999 and December 31, 1998, the total deposits maintained
in the NYMEX Division Guaranty Fund were $80,048,450 and $78,518,950,
respectively. At September 30, 1999 and December 31, 1998, the total deposits
for the COMEX Division Guaranty Fund were $76,415,650 and $75,193,900,
respectively.

4. SEGMENT REPORTING

The Exchange has two operating segments: the New York Mercantile Exchange
("NYMEX", providing futures and options trading of energy product contracts and
platinum group metals contracts), and the Commodity Exchange, Inc. ("COMEX",
providing for futures and options trading of precious metals contracts, copper
and aluminum contracts, and FTSE Eurotop 100(R) and FTSE Eurotop 300(R) stock
index futures and options contracts). A summary by business segment follows
(dollars in thousands):

<TABLE>
<CAPTION>
NYMEX COMEX TOTAL
------- ------- --------
<S> <C> <C> <C>
Nine Months Ended September 30, 1999
OPERATING REVENUES:
Clearing and transaction fees
Regular trading hours (1).................... $64,805 $18,811 $ 83,616
NYMEX ACCESS(R)(2)........................... 5,609 700 6,309
Market data fees................................ 14,129 11,939 26,068
Other........................................... 2,714 68 2,782
Member fee rebate............................... (9,816) N/A (9,816)
------- ------- --------
Total operating revenue................. $77,441 $31,518 $108,959
======= ======= ========
</TABLE>

F-26
<PAGE> 108
NEW YORK MERCANTILE EXCHANGE AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

<TABLE>
<CAPTION>
NYMEX COMEX TOTAL
------- ------- --------
<S> <C> <C> <C>
Nine Months Ended September 30, 1998
OPERATING REVENUES:
Clearing and transaction fees
Regular trading hours (1).................... $55,010 $17,377 $ 72,387
NYMEX ACCESS(R)(2)........................... 3,995 647 4,642
Market data fees................................ 13,803 12,068 25,871
Other........................................... 2,814 799 3,613
Member fee rebate............................... (8,396) N/A (8,396)
------- ------- --------
Total operating revenue................. $67,226 $30,891 $ 98,117
======= ======= ========
</TABLE>

- -------------------------
(1) Clearing and transaction fees generated from trading on the open outcry
system during regular business hours.

(2) Clearing and transaction fees generated from trading on NYMEX ACCESS(R)
system.

5. COMMITMENTS AND CONTINGENCIES

The Exchange is subject to the litigation set forth below:

- Ricky Barnes v. New York Mercantile Exchange, Commodity Exchange, Inc. A.
J. Contracting Company, Inc., and Zwicker Electric Company, Inc. This
action is pending in New York State Supreme Court (New York County).
NYMEX was served with the summons and complaint on or about March 4,
1998. This is a personal injury case that relates to the construction of
One North End. Plaintiff, an employee of Forest Datacom Services, Inc., a
subcontractor of A.J. Construction, alleges that he was injured on
December 17, 1996 while working at the One North End construction site.
Plaintiff seeks $10,000,000 in compensatory damages. NYMEX and COMEX are
represented by insurance counsel. The case is currently in discovery.

F-27
<PAGE> 109
NEW YORK MERCANTILE EXCHANGE AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

defense to this action. NYMEX has filed motion to sever and transfer
venue to the Southern District of New York.

- Western Capital Design, LLC v. New York Mercantile Exchange and John Does
"1-50." This action is pending in New York District Court for the
Southern District of

F-28
<PAGE> 110
NEW YORK MERCANTILE EXCHANGE AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

New York. NYMEX was served with the summons and complaint on or about
February 17, 1999. This action relates to alleged wrongful conduct by
NYMEX and NYMEX members regarding the execution of heating oil and
natural gas options. Plaintiff alleges that the prices it was charged for
heating oil and natural gas options were improper and that these improper
transactions affected the market price at which plaintiff transacted its
trading. Plaintiff seeks $75,000,000 in compensatory damages. NYMEX has
retained counsel to represent it in this matter. This action was
commenced in State Court in Florida. It was removed to Federal Court and
then venue was transferred to the Southern District of New York. NYMEX
has made a motion to dismiss the complaint.

6. SUBSEQUENT EVENT

******

F-29
<PAGE> 111

PRO FORMA FINANCIAL INFORMATION
(UNAUDITED)

Since the demutualization is a common control merger and due to the
accounting treatment of the demutualization and the fact that NYMEX Holdings and
NYMEX Exchange have no assets and no operating history, the only pro forma
adjustment consists of the transaction cost relating to the demutualization.
This cost is estimated to be approximately $1.5 million broken down as follows:

<TABLE>
<CAPTION>
(IN THOUSANDS EXCEPT
PER SEAT DATA)
<S> <C>
Legal fees................................................ $ 750
Investment advisory fees.................................. 275
Registration, filing and other............................ 275
Accounting................................................ 200
-------
Total costs associated with demutualization..... 1,500
Less: Income tax effect assuming 48% rate................. (720)
-------
Net income reduction due to demutualization.......... $ 780
=======
Pro forma book value at September 30, 1999, after
demutualization is as follows:
Members' equity at September 30, 1999..................... $96,237
Reduction due to expense of demutualization, net of
taxes................................................... (780)
-------
Pro forma book value at September 30, 1999........... $95,457
=======
Pro forma net income at September 30, 1999:
Net income for the nine months ended September 30,
1999............................................... $10,602
Less net income reduction due to demutualization..... (780)
-------
Pro forma net income at September 30, 1999...... $ 9,822
=======
Pro forma earnings per seat(1).................. $12,037
=======
</TABLE>

The pro forma financial information for the year ended December 31, 1999,
will be provided in an amendment to this registration statement when the audit
for that year has been completed. The impact of the demutualization will be the
same as that presented above.
- -------------------------
(1) Based on 816 shares issued and outstanding. Membership seats will be
exchanged for common stock on a 1 for 1 basis.

F-30
<PAGE> 112

ANNEX A

AGREEMENT AND PLAN OF MERGER

DATED AS OF , 2000

BY AND BETWEEN

NEW YORK MERCANTILE EXCHANGE, INC.

AND

NEW YORK MERCANTILE EXCHANGE
<PAGE> 113

This AGREEMENT AND PLAN OF MERGER ("Agreement"), dated as of
, 2000, is by and between NEW YORK MERCANTILE EXCHANGE, INC. (the
"Company"), a nonstock corporation organized and existing under the Delaware
General Corporation Law (the "DGCL"), and NEW YORK MERCANTILE EXCHANGE
("NYMEX"), a corporation organized and existing under the New York
Not-for-Profit Corporation Law (the "NPCL").

RECITALS

The Boards of Directors of the Company and NYMEX each has determined that
it is advisable and in the best interests of their respective companies and
members that upon the terms and subject to the conditions set forth in this
Agreement, NYMEX will merge with and into the Company (the "Merger"), with the
Company being the surviving entity of the merger.

AGREEMENT

In consideration of the representations, warranties, covenants and
agreements contained in this Agreement, the parties agree as follows:

ARTICLE I

THE MERGER

Section 1.1. The Merger.

(a) Upon the terms and subject to the conditions set forth in this
Agreement, at the Effective Time (as defined in Section 1.2.), NYMEX shall be
merged with and into the Company in accordance with the DGCL and the NPCL,
whereupon the separate corporate existence of NYMEX shall cease and the Company
shall be the surviving company in the merger (the "Surviving Corporation").

(b) The Merger shall have the effects set forth in the DGCL and the NPCL.
Accordingly, from and after the Effective Time, the Surviving Corporation shall
possess all the rights, privileges, powers and franchises and be subject to all
of the restrictions, disabilities, liabilities and duties of the Company and
NYMEX.

Section 1.2. Effective Time. The parties shall execute and file a
Certificate of Merger or other appropriate documents in accordance with the DGCL
and the NPCL, and shall make all other filings or recordings required with
respect to the Merger under the DGCL and the NPCL. The Merger shall become
effective at the time of acceptance for filing by the Secretary of State of the
State of Delaware and the Department of State of the State of New York of the
Certificate of Merger (the "Effective Time").

Section 1.3. Charter and Bylaws. The certificate of incorporation (the
"Charter") and bylaws (the "Bylaws") of the Surviving Corporation upon the
Effective Time shall be substantially in the forms set forth in Exhibit A and
Exhibit B hereto, respectively, until further amended in accordance with
applicable Delaware law.

Section 1.4. Directors. The persons who immediately prior to the Effective
Time of the Merger constitute the board of directors of NYMEX shall be the
Directors of the Surviving Corporation from and after the Effective Time and
shall hold office until their

A-1
<PAGE> 114

respective successors are duly elected or appointed and qualified in the manner
provided in the Charter and Bylaws of the Surviving Corporation, or as otherwise
provided by law.

Section 1.5. Officers. The persons who immediately prior to the Effective
Time of the Merger are the officers of NYMEX shall be the officers of the
Surviving Corporation (each to hold the same office or offices) from and after
the Effective Time and shall hold office until their respective successors are
duly elected or appointed and qualified in the manner provided in the Charter
and Bylaws of the Surviving Corporation, or as otherwise provided by law.

Section 1.6. Additional Actions. If, at any time after the Effective Time,
the Surviving Corporation determines that any deeds, bills of sale, assignments,
assurances or any other acts or things are necessary or desirable (a) to vest,
perfect or confirm, of record or otherwise, in the Surviving Corporation, its
right, title or interest in, to or under any of the rights, properties or assets
of NYMEX by reason of, or as a result of, the Merger, or (b) otherwise to carry
out the purposes of this Agreement, then the Surviving Corporation and its
proper officers and directors shall be authorized to execute and deliver, in the
name and on behalf of NYMEX, all such deeds, bills of sale, assignments and
assurances and to do, in the name and on behalf of NYMEX, all such other acts
and things necessary or desirable to vest, perfect or confirm any and all right,
title or interest in, to or under such rights, properties or assets in the
Surviving Corporation or otherwise to carry out the purposes of this Agreement.

ARTICLE II

EFFECTS OF THE MERGER

Section 2.1. Effect on Membership.

(a) Memberships of NYMEX Owned by NYMEX. As of the Effective Time, any
memberships of NYMEX that are owned by NYMEX automatically shall be cancelled
and retired and all rights with respect thereto shall cease to exist, and no
consideration shall be delivered in exchange therefor.

(b) Memberships of the Company Owned by NYMEX. As of the Effective Time,
any memberships of the Company that are owned by NYMEX automatically shall be
cancelled and retired and all rights with respect thereto shall cease to exist,
and no consideration shall be delivered in exchange therefor.

(c) Conversion of NYMEX Memberships Into Company Memberships. At the
Effective Time, except as provided in Section 2.1(a), each issued and
outstanding membership of NYMEX shall be converted by virtue of the Merger,
automatically and without any action on the part of the holder thereof, into
both one fully paid Class A membership of the Company and one fully paid Class B
membership of the Company.

ARTICLE III

MISCELLANEOUS

Section 3.1. Termination. This Agreement may be terminated and abandoned
by action of the Board of Directors of each of the Company and NYMEX at any time
prior to the Effective Time, whether before or after approval by the members of
the Company and the members of NYMEX.

A-2
<PAGE> 115

Section 3.2. Approval. The respective obligation of each party to effect
the Merger is subject to adoption by the requisite vote of the members of NYMEX
pursuant to Section 908 of the NPCL and the members of the Company pursuant to
Section 256 of the DGCL.

Section 3.3. Notices. All notices, requests, claims, demands and other
communications under this Agreement shall be in writing and shall be deemed
given if delivered personally, sent by overnight courier (providing proof of
delivery) to the parties or sent by telecopy (providing confirmation of
transmission) at the following addresses or telecopy numbers (or at such other
address or telecopy number for a party as shall be specified by like notice):

(a) if to the Company:

New York Mercantile Exchange
One North End Avenue
World Financial Center
New York, New York 10282-1101
Attn:
Fax: (212)

with a copy to:

Clifford Chance Rogers & Wells LLP
200 Park Avenue
New York, New York 10166
Attn: John A. Healy
Fax: (212) 878-8375

(b) if to NYMEX:

New York Mercantile Exchange
One North End Avenue
World Financial Center
New York, New York 10282-1101
Attn:
Fax: (212)

with a copy to:

Clifford Chance Rogers & Wells LLP
200 Park Avenue
New York, New York 10166
Attn: John A. Healy
Fax: (212) 878-8375

Section 3.4. Amendments. The Boards of Directors of each of the Company
and NYMEX may amend this Agreement at any time prior to the filing of the
Certificate of Merger with the Secretary of State of the State of Delaware,
provided that an amendment made subsequent to the adoption of the Agreement by
the members of NYMEX and the members of the Company shall not: (1) alter or
change the amount or kind of memberships, shares, securities, cash, property
and/or rights to be received in exchange for or on conversion of all or any of
the memberships of any class or series thereof of either NYMEX or the Company,
(2) materially alter or change any term of the Charter to be effected by the
Merger or (3) alter or change any of the terms and conditions of this

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<PAGE> 116

Agreement, in each case if such alteration or change would adversely affect the
holders of any memberships of either NYMEX or the Company.

Section 3.5. Counterparts. This Agreement may be executed in any number of
counterparts and by the different parties on separate counterparts, and each
such counterpart shall be deemed to be an original but all such counterparts
shall together constitute one and the same Agreement.

Section 3.6. Entire Agreement; No Third-Party Beneficiaries. This
Agreement and the other agreements entered into in connection with the
transactions (a) constitute the entire agreement and supersede all prior
agreements and understandings, both written and oral, between the parties with
respect to the subject matter of this Agreement and (b) except for the
provisions of Section 3.1 are not intended to confer upon any person other than
the parties hereto any rights or remedies.

Section 3.7. GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY, AND
CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF DELAWARE, WITHOUT GIVING
EFFECT TO CONFLICTS OF LAWS PRINCIPLES THEREOF.

IN WITNESS WHEREOF, each of the Company and NYMEX has executed this
Agreement, or has caused this Agreement to be executed on its behalf by a
representative duly authorized, all as of the day and year first above written.

NEW YORK MERCANTILE EXCHANGE, INC.

By:
--------------------------------------
Name:
Title:

NEW YORK MERCANTILE EXCHANGE

By:
--------------------------------------
Name:
Title:

A-4
<PAGE> 117

EXHIBIT A

FORM OF CERTIFICATE OF INCORPORATION OF THE SURVIVING CORPORATION

i
<PAGE> 118

EXHIBIT B

FORM OF BYLAWS OF THE SURVIVING CORPORATION

ii
<PAGE> 119

EXHIBIT C

DIRECTORS OF THE SURVIVING CORPORATION

CLASS I (TERM EXPIRES 2001)

CLASS II (TERM EXPIRES 2002)

CLASS III (TERM EXPIRES 2003)

iii
<PAGE> 120

ANNEX B

AGREEMENT AND PLAN OF MERGER

DATED AS OF , 2000

BY AND BETWEEN

NEW YORK MERCANTILE EXCHANGE, INC.,

NYMEX HOLDINGS, INC.

AND

NYMEX MERGER SUB, INC.
<PAGE> 121

This AGREEMENT AND PLAN OF MERGER ("Agreement"), dated as of ,
2000 is by and between NEW YORK MERCANTILE EXCHANGE, INC. (the "Company"), a
not-for-profit, nonstock corporation organized and existing under the Delaware
General Corporation Law (the "DGCL"), NYMEX HOLDINGS, INC. ("NYMEX Holdings"), a
for-profit, stock corporation organized and existing under the DGCL, and NYMEX
MERGER SUB, INC. ("Merger Sub"), a for-profit, nonstock corporation organized
and existing under the DGCL, which is a wholly-owned subsidiary of NYMEX
Holdings.

RECITALS

A. The Company is a party to an Agreement and Plan of Merger, dated the
same date as this Agreement, by and between the New York Mercantile Exchange
("NYMEX"), a corporation organized under the New York Not-for-Profit Corporation
Law, and the Company, which provides for a merger (the "First Merger") in which
NYMEX will merge with and into NYMEX Exchange.

B. The Boards of Directors of the Company, Merger Sub and NYMEX Holdings
each has determined that it is advisable and in the best interests of their
respective companies, members and stockholders that upon the terms and subject
to the conditions set forth in this Agreement, immediately following the First
Merger, Merger Sub will merge with and into the Company (the "Second Merger"),
with the Company being the surviving entity of the Second Merger.

AGREEMENT

In consideration of the representations, warranties, covenants and
agreements contained in this Agreement, the parties agree as follows:

ARTICLE I

THE MERGER

Section 1.1. The Second Merger.

(a) Upon the terms and subject to the conditions set forth in this
Agreement, at the Effective Time (as defined in Section 1.2), Merger Sub shall
be merged with and into the Company in accordance with the DGCL, whereupon the
separate corporate existence of Merger Sub shall cease and the Company shall be
the surviving company in the merger (the "Surviving Corporation").

(b) The Second Merger shall have the effects set forth in the DGCL.
Accordingly, from and after the Effective Time, the Surviving Corporation shall
possess all the rights, privileges, powers and franchises and be subject to all
of the restrictions, disabilities, liabilities and duties of the Company and
Merger Sub.

Section 1.2. Effective Time. The parties shall execute and file a
Certificate of Merger or other appropriate documents in accordance with the
DGCL, and shall make all other filings or recordings required with respect to
the Second Merger under the DGCL. The Second Merger shall become effective at
the time of acceptance for filing by the Secretary of State of the State of
Delaware of the Certificate of Merger, but in no event prior to the First Merger
(the "Effective Time").

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Section 1.4. Directors. The persons who immediately prior to the Effective
Time of the Second Merger are the directors of the Company shall be the
Directors of the Surviving Corporation from and after the Effective Time and
shall hold office until their respective successors are duly elected or
appointed and qualified in the manner provided in the Charter and Bylaws of the
Surviving Corporation, or as otherwise provided by law.

Section 1.5. Officers. The persons who immediately prior to the effective
time of the Merger are the officers of the Company shall be the officers of the
Surviving Corporation (each to hold the same office or offices) from and after
the Effective Time and shall hold office until their respective successors are
duly elected or appointed and qualified in the manner provided in the Charter
and Bylaws of the Surviving Corporation, or as otherwise provided by law.

Section 1.6. Additional Actions. If, at any time after the Effective Time,
the Surviving Corporation determines that any deeds, bills of sale, assignments,
assurances or any other acts or things are necessary or desirable (a) to vest,
perfect or confirm, of record or otherwise, in the Surviving Corporation, its
right, title or interest in, to or under any of the rights, properties or assets
of Merger Sub by reason of, or as a result of, the Merger, or (b) otherwise to
carry out the purposes of this Agreement, then the Surviving Corporation and its
proper officers and directors shall be authorized to execute and deliver, in the
name and on behalf of Merger Sub, all such deeds, bills of sale, assignments and
assurances and to do, in the name and on behalf of Merger Sub, all such other
acts and things necessary or desirable to vest, perfect or confirm any and all
right, title or interest in, to or under such rights, properties or assets in
the Surviving Corporation or otherwise to carry out the purposes of this
Agreement.

Section 1.7. Amendment to NYMEX Holdings Charter.

(a) It shall be a condition precedent to the consummation of the Second
Merger that prior to the Effective time of the Second Merger the certificate of
incorporation of Holdings (the "Holdings Charter") shall have been duly amended
to conform substantially to the form set forth in Exhibit C hereto. NYMEX
Holdings shall use its best efforts to cause the amendment to be duly authorized
and implemented.

(b) The list of Directors contained in paragraph (a) of Article SIXTH of
the Holdings Charter shall be completed so that: (i) the Chairman and Vice
Chairman of NYMEX immediately prior to the effective time of the First Merger
shall be the initial Chairman and Vice Chairman of the Surviving Corporation;
(ii) the classes and categories of the initial Directors of the Surviving
Corporation (other than the Chairman, the Vice Chairman and the Public
Directors) shall correspond as closely as practicable to the classes and
categories of the directors of NYMEX occupying comparable positions on the board
of directors of NYMEX immediately prior to the effective time of the First
Merger; and (iii) the persons who immediately prior to the effective time of the
First Merger served as "Public Directors" of NYMEX pursuant to NYMEX's By-Laws
as then in effect shall be the initial Public Directors of the Surviving
Corporation, and shall be appointed to such classes as shall have been
designated by the board of directors of NYMEX by vote duly adopted prior to the
effective time of the First Merger.

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<PAGE> 123

ARTICLE II

EFFECTS OF THE MERGER

Section 2.1. Effect on Membership.

(a) Memberships of Merger Sub Owned by Merger Sub. As of the Effective
Time, any memberships of Merger Sub that are owned by Merger Sub automatically
shall be cancelled and retired and all rights with respect thereto shall cease
to exist, and no consideration shall be delivered in exchange therefor.

(b) Memberships of the Company Owned by Merger Sub. As of the Effective
Time, any memberships of the Company that are owned by Merger Sub automatically
shall be cancelled and retired and all rights with respect thereto shall cease
to exist, and no consideration shall be delivered in exchange therefor.

(c) Conversion of Company Class B Memberships Into NYMEX Holdings' Common
Stock. At the Effective Time, each issued and outstanding Class B membership of
the Company shall be converted by virtue of the Merger, automatically and
without any action on the part of the holder thereof, into one fully paid and
non-assessable share of NYMEX Holdings' common stock.

(d) Class A Memberships to Remain Outstanding. At the Effective Time, each
issued and outstanding Class A membership of the Company shall remain
outstanding and continue in effect as a Class A membership of the Surviving
Corporation on the terms set forth from time to time in the Charter.

(e) Conversion of NYMEX Holdings' Membership in Merger Sub Into Company
Class B Membership. At the Effective Time, NYMEX Holdings' membership in Merger
Sub shall be converted by virtue of the Merger, automatically and without any
action on the part of the holder thereof, into one Company Class B membership.

ARTICLE III

MISCELLANEOUS

Section 3.1. Termination. This Agreement may be terminated and abandoned
by action of the Board of Directors of each of the Company, Merger Sub and NYMEX
Holdings at any time prior to the Effective Time, whether before or after
approval by the members of the Company, the members of Merger Sub and the
shareholders of NYMEX Holdings.

Section 3.2. Approval. The respective obligation of each party to effect
the Merger is subject to adoption by the requisite vote of the members of Merger
Sub, the members of the Company and the shareholders of NYMEX Holdings pursuant
of Section 255 of the DGCL.

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<PAGE> 124

numbers (or at such other address or telecopy number for a party as shall be
specified by like notice):

(a) if to the Company:

New York Mercantile Exchange
One North End Avenue
World Financial Center
New York, New York 10282-1101
Attn:
Fax: (212)
with a copy to:
Clifford Chance Rogers & Wells LLP
200 Park Avenue
New York, New York 10166
Attn: John A. Healy
Fax: (212) 878-8375

(b) if to Merger Sub:

New York Mercantile Exchange
One North End Avenue
World Financial Center
New York, New York 10282-1101
Attn:
Fax: (212)

with a copy to:

Clifford Chance Rogers & Wells LLP
200 Park Avenue
New York, New York 10166
Attn: John A. Healy
Fax: (212) 878-8375

Section 3.4. Amendments. The Boards of Directors of each of the Company,
Merger Sub and NYMEX Holdings may amend this Agreement at any time prior to the
filing of the Certificate of Merger with the Secretary of State of the State of
Delaware, provided

B-4
<PAGE> 125

that an amendment made subsequent to the adoption of the Agreement by the
members of Merger Sub, the members of the Company and the shareholders of NYMEX
Holdings shall not: (1) alter or change the amount or kind of memberships,
shares, securities, cash, property and/or rights to be received in exchange for
or on conversion of all or any of the memberships of any class or series thereof
of either Merger Sub, the Company or NYMEX Holdings, (2) materially alter or
change any term of the Charter to be effected by the Merger or (3) alter or
change any of the terms and conditions of this Agreement, in each case if such
alteration or change would adversely affect the holders of any memberships of
either Merger Sub or the Company or any shareholder interest in NYMEX Holdings.

Section 3.7. GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY, AND
CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF DELAWARE, WITHOUT GIVING
EFFECT TO CONFLICTS OF LAWS PRINCIPLES THEREOF.

B-5
<PAGE> 126

IN WITNESS WHEREOF, each of the Company, Merger Sub and NYMEX Holdings has
executed this Agreement, or has caused this Agreement to be executed on its
behalf by a representative duly authorized, all as of the day and year first
above written.

NEW YORK MERCANTILE EXCHANGE, INC.

By:
-----------------------------------
Name:
Title:

NYMEX HOLDINGS, INC.

By:
-----------------------------------
Name:
Title:

NYMEX MERGER SUB, INC.

By:
-----------------------------------
Name:
Title:

B-6
<PAGE> 127

EXHIBIT A

FORM OF CERTIFICATE OF INCORPORATION FOR THE SURVIVING CORPORATION

i
<PAGE> 128

EXHIBIT B

FORM OF BYLAWS FOR THE SURVIVING CORPORATION

ii
<PAGE> 129

EXHIBIT C

FORM OF AMENDED AND RESTATED CERTIFICATE OF
INCORPORATION OF NYMEX HOLDINGS

iii
<PAGE> 130

ANNEX C

CERTIFICATE OF INCORPORATION

NYMEX HOLDINGS, INC.

FIRST: The name of the corporation is NYMEX Holdings, Inc. (the
"Corporation").

SECOND: The address of the Corporation's registered office in the State of
Delaware is 1013 Centre Road, Wilmington, New Castle County, Delaware
19805-1297. The name of the registered agent at such address is Corporation
Service Company.

THIRD: The purpose of the Corporation is to engage in any lawful act or
activity for which corporations may be organized under the General Corporation
Law of the State of Delaware (the "DGCL").

FOURTH: The Corporation shall have the authority to issue 816 shares of
common stock, $.01 par value per share.

FIFTH:

(a) Subject to paragraph(b) of this Article FIFTH, upon surrender to the
Corporation or to any transfer agent of the Corporation of a certificate for
shares duly endorsed or accompanied by proper evidence of succession, assignment
or authority to transfer, the Corporation or its transfer agent shall issue a
new certificate to the person entitled thereto, cancel the old certificate and
record the transaction upon the Corporation's books.

(b) Until such time as this Certificate of Incorporation is duly amended to
eliminate the restriction on transfer contained in this paragraph (b), the
shares of common stock of the Corporation shall be transferable only together
with Class A memberships (each an "Exchange Membership") issued by New York
Mercantile Exchange, Inc., a Delaware nonstock corporation (the "Exchange").
Accordingly, notwithstanding the provisions of paragraph (a) of this Article
FIFTH, so long as this paragraph (b) remains in effect: (i) the shares of common
stock of the Corporation shall not be transferable, and shall not be transferred
on the books of the Corporation, unless a simultaneous transfer is made by the
same transferor to the same transferee of a number of Exchange Memberships equal
to the number of shares of common stock being transferred; (ii) each certificate
evidencing ownership of shares of common stock of the Corporation shall be
deemed to evidence the same number of Exchange Memberships and shall bear a
legend prominently noting that fact and the restrictions on transfer contained
in this Article FIFTH; and (iii) any attempted or purported transfer in
violation of the provisions of this Article FIFTH shall be void. For purposes of
the restrictions on transfer contained in this Article FIFTH, the term
"transfer" shall be deemed not to include a lease of an Exchange Membership made
in accordance with the bylaws and rules of the Exchange.

SIXTH: Until such time as this Certificate of Incorporation is duly amended
to eliminate the restriction on transfer contained in paragraph (b) of Article
FIFTH:

(a) The Board of Directors shall consist of 22 members. The names and
addresses (and designations as Class I, Class II or Class III directors for
purposes of paragraph (b) of this Article SIXTH, as Chairman or Vice Chairman
for purposes of paragraph (c) of this Article SIXTH, as members of categories
(i) through (v) for purposes of
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paragraph (d) of this ARTICLE SIXTH and as Public Directors for purposes of
paragraph (e) of this Article SIXTH) of the persons who are to serve as
directors until their successors have been elected and qualified are as follows:

<TABLE>
<CAPTION>
NAME ADDRESS CLASS(1) CATEGORY(2)
---- ------- -------- -----------
<S> <C> <C> <C>
</TABLE>

- ---------------
(1) I, II or III.

(2) Chairman/Vice Chairman/Floor Broker/Floor/Trade/Local/At Large/Public.

(b) The directors shall be divided into three classes, designated Class I,
Class II and Class III (the designations of the initial directors at the time
this Certificate of Incorporation takes effect being as specified in paragraph
(a) of this Article SIXTH). Each class shall consist, as nearly as may be
possible, of one-third of the total number of directors constituting the entire
Board of Directors. The terms of the Class I directors shall first expire at the
annual meeting of stockholders held in 2001; the terms of the Class II directors
shall first expire at the annual meeting of stockholders held in 2002; and the
terms of the Class III directors shall first expire at the annual meeting of
stockholders held in 2003. At each annual meeting of stockholders, the
successors to the class of directors whose term expires shall be elected for a
three-year term. If the number of directors is changed, any increase or decrease
shall be apportioned so as to maintain the number of directors in each class as
nearly equal as possible and any additional director of any class elected to
fill a vacancy resulting from an increase in such class shall hold office for a
term that shall coincide with the remaining term of that class, but in no case
shall a decrease in the number of directors shorten the term of any incumbent
director. A director shall hold office until the annual meeting of stockholders
for the year in which the director's term expires and until the director's
successor shall be elected and shall qualify, subject, however, to prior death,
resignation, retirement, disqualification or removal from office.

(c) The Board of Directors shall have a Chairman and a Vice Chairman who
shall be designated as Chairman or Vice Chairman by the stockholders of the
Corporation and who shall, when so designated, become members of the At Large
category of Directors as described below. The Chairman shall be a member of
Class I and the Vice Chairman shall be a member of Class II. The term of each of
them shall expire at the expiration of the term of the applicable class.
Successors to each of them shall be elected at the annual meeting of
stockholders at which his or her term expires. In order to be designated as
Chairman or Vice Chairman, a candidate for election to the Board must notify the
Corporation in writing that the candidate is seeking election to the Board
subject to the candidate's designation as Chairman or Vice Chairman, as
applicable, whereupon that candidate will be eligible for election to the Board
at the applicable meeting of stockholders only if the stockholders designate the
candidate as Chairman or Vice Chairman, as applicable, and only if the candidate
receives more votes for designation in that capacity than any other candidate
seeking designation as Chairman or Vice Chairman, as applicable. If, as a result
of this process, a candidate fails to be designated as Chairman or Vice
Chairman, as applicable, then that candidate shall also not be eligible for
election as a director of the Corporation at the applicable meeting of
stockholders. The initial designations of the Chairman and Vice Chairman are set
forth in paragraph (a) of this

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<PAGE> 132

Article SIXTH. The Chairman and the Vice Chairman each shall have the power,
authority and responsibilities provided in the bylaws of the Corporation.

(d) Each Class of directors shall consist of at least one member from each
of the categories indicated below:

(i) Floor Broker Group, which consists of holders or lessees of
Exchange Memberships whose principal commodity-related business is acting
as a floor broker on the floor of the Exchange;

(ii) Futures Commission Merchant Group, which consists of holders or
lessees of Exchange Memberships who are either officers, directors or
partners of a corporation, partnership, association or sole proprietorship,
the principal commodity-related business of which is the solicitation or
acceptance of orders for commodity futures and/or options transactions from
customers, and in connection therewith accepts money, securities or other
property to margin or guarantee such transactions and, which is registered
with the Commodity Futures Trading Commission as a Futures Commission
Merchant;

(iii) Trade Group, which consists of holders or lessees of Exchange
Memberships who are either officers, directors or partners of a
corporation, partnership, association or sole proprietorship, the principal
commodity-related business of which is the production, processing or
commercial use of, or is a merchant dealing in, one or more commodities
traded on the Exchange;

(iv) Local Trader Group, which consists of holders or lessees of
Exchange Memberships whose principal commodity-related business is
executing trades in Exchange contracts on the floor of the Exchange for
their personal accounts; and

(v) At Large Group, which consists of holders or lessees of Exchange
Memberships.

In addition, the directors designated as the Chairman and Vice Chairman of the
Board shall become members of the At Large category of directors.

The initial designations to the categories described in clauses (i) through
(v) above are set forth in paragraph (a) of this Article SIXTH. In order to be
elected at a meeting of stockholders held after this provision first becomes
effective to one of the categories described in clauses (i) through (v) above, a
candidate for election to the Board must notify the Corporation in writing that
the candidate is seeking election in that category only, whereupon that
candidate will be eligible for election at the applicable meeting of
stockholders only as a member of the category specified in the notice, and only
if the candidate receives more votes for election in that category than any
other candidate seeking election in the same category. If, by reason of a change
in the business of a Director, such Director no longer falls within the category
set forth in subclauses (i) through (v) above in which he was elected, the term
of such Director shall automatically expire effective at the next annual meeting
of stockholders and a successor to such Director shall thereupon be elected for
the remainder of the term of the class to which such successor Director
succeeds. In the event of a dispute as to the category of any Director, the
Board of Directors shall make a final determination upon such data as it, in its
discretion, determines is necessary, relevant or material.

(e) The Board of Directors shall also have five Public Directors who shall
be directly elected by the stockholders. Two Public Directors shall be members
of Class I, one Public
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<PAGE> 133

Director shall be a member of Class II and two Public Directors shall be members
of Class III. The term of each Public Director shall expire at the expiration of
the term of the applicable class. Successors to each of them shall be elected at
the annual meeting of stockholders at which his or her term expires. In order to
qualify as a Public Director, a person must be knowledgeable of futures trading
or financial regulation or otherwise capable of contributing to the
deliberations of the Board of Directors and may not be a member of the Exchange
or affiliated with any member of the Exchange or an employee of the Exchange. No
Public Director who has served as a Public Director for two consecutive terms
shall be eligible for election as a Public Director until one year has elapsed
from the date of the expiration of such person's last term. The initial
designations of the Public Directors are set forth in paragraph (a) of Article
SIXTH.

(f) Not more than one partner, officer, director, employee or affiliate of
a member of the Exchange or of any member firm of the Exchange, or of any
affiliate of a member of the Exchange or of a member firm of the Exchange, shall
be eligible to serve as a Director at one time. If, by reason of a change in
affiliation of a Director, election of a Director at any time, or by reason of
merger, sale or consolidation of two or more member firms of the Exchange, more
than one officer, director, employee, partner, or affiliate of a member firm of
the Exchange is a Director, at least one such Director shall resign so that
there shall be only one Director who is an officer, director, employee, partner,
affiliate of such member of the Exchange or member firm of the Exchange or of
its affiliate. If one such Director shall fail to resign the term of all such
Directors shall automatically expire and the vacancy or vacancies shall
thereafter be filled by the Board, provided, however, that if one such Director
is the Chairman or the Vice Chairman, only the term of the other such Director
or Directors shall expire; further provided, that if two of such Directors are
Chairman and Vice Chairman, respectively, the term of the Vice Chairman shall
expire as aforesaid. No person shall be permitted to stand for election to the
Board of Directors if the election and qualification of such person could result
in more than one person who is a partner, officer, director, employee or
affiliate of a member of the Exchange or of any member firm of the Exchange or
any affiliate of a member of the Exchange or of a member firm of the Exchange
serving on the Board of Directors.

The term "affiliate" as used in this clause (f) shall include the power,
whether directly or indirectly, to control a firm or other business entity as
well as the direct or indirect ownership of 10% or more of the voting securities
of a corporation or ownership of a partnership interest in a partnership.

In the event that there is a controversy as to the status of the business
affiliation of a Director, Director elect, or Director nominee, at the written
request of the Chairman or the President, the Executive Committee of the Board
shall make a final determination upon such data as it, in its discretion,
determines is necessary, relevant or material.

(g) No person shall be permitted to stand for election for more than one
position on the Board at a single meeting of stockholders.

SEVENTH: The Board of Directors shall not adopt, amend or delete any bylaw
without the approval of the stockholders of the Corporation in the manner
provided by the bylaws of the Corporation.

EIGHTH: No director will have any personal liability to the Corporation or
its members for monetary damages for any breach of fiduciary duty as a director,
except (i) for any breach of the director's duty of loyalty to the Corporation
or its stockholders,

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<PAGE> 134

(ii) for acts or omissions not in good faith or that involve intentional
misconduct or a knowing violation of law, (iii) under Section 174 of the DGCL,
as amended or (iv) for any transaction from which the director obtained an
improper personal benefit.

NINTH: Pursuant to Section 211(e) of the DGCL, directors shall not be
required to be elected by written ballot.

TENTH: Any or all of the directors may be removed for cause or without
cause by vote of the holders of a majority of the outstanding shares of each
class of voting stock of the Corporation voting as a class.

ELEVENTH: In the event that a holder of an Exchange membership is expelled
from membership in the Exchange pursuant to the rules of the Exchange, then all
shares of common stock of the Corporation held by such holder shall be
automatically redeemed at a redemption price per share payable in cash equal to
$.01; provided, that immediately following any such redemption, the Corporation
has outstanding one or more shares of common stock.

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<PAGE> 135

ANNEX D

BYLAWS

NYMEX HOLDINGS, INC.

A DELAWARE CORPORATION
ADOPTED , 2000

ARTICLE I

OFFICES

SECTION 1. The registered office of the Corporation shall be in the City of
Wilmington, County of New Castle, State of Delaware.

SECTION 2. The Corporation may also have offices at such other places,
within or outside of the State of Delaware, as the Board of Directors may from
time to time determine or the business of the Corporation may require.

ARTICLE II

MEETINGS OF STOCKHOLDERS

SECTION 1. All meetings of stockholders shall be held at the registered
office of the Corporation, or at such other place within or outside of the State
of Delaware as may be fixed from time to time by the Board of Directors.

SECTION 2. Commencing with the year 2001, annual meetings of stockholders
shall be held on the third Tuesday in March of each year, or if that day is a
legal holiday, on the next following business day, at the offices of the
Corporation, or at such other date and time as may be fixed by the Board of
Directors. At each annual meeting of stockholders, the stockholders shall elect
directors and transact such other business as may properly be brought before the
meeting.

SECTION 3. Written notice of each annual meeting of stockholders, stating
the place, date and hour of the meeting, shall be given in the manner set forth
in Article VI of these Bylaws. Such notice shall be given not less than 10 nor
more than 50 days before the date of the meeting to each stockholder entitled to
vote at the meeting.

SECTION 4. Special meetings of stockholders may be called at any time for
any purpose or purposes by the Board of Directors or by the Chairman of the
Board of Directors, and shall be called by the Chairman of the Board of
Directors or the Secretary upon the written request of the majority of the
directors or upon the written request of the holders of at least 10% of all
outstanding shares entitled to vote on the action proposed to be taken. Such
written requests shall state the time, place and purpose or purposes of the
proposed meeting and the special meeting so called shall be limited too the
purpose set forth in the demand. A special meeting of stockholders called by the
Board of Directors or the Chairman of the Board of Directors, other than one
required to be called by reason of a written request of stockholders, may be
canceled by the Board of Directors at any time not less than 24 hours before the
scheduled commencement of the meeting.

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SECTION 5. Written notice of each special meeting of stockholders shall be
given in the manner set forth in Article VI of these Bylaws. Such notice shall
be given not less than 10 nor more than 50 days before the date of the meeting
to each stockholder entitled to vote at the meeting. Each such notice of a
special meeting of stockholders shall state the place, date and hour of a
meeting and the purpose or purposes for which the meeting is called.

SECTION 6. Except as otherwise required by law or the Certificate of
Incorporation, the presence in person or by proxy of holders of a majority of
the shares entitled to vote at a meeting of stockholders shall be necessary, and
shall constitute a quorum, for the transaction of business at such meeting. If a
quorum is not present or represented by proxy at any meeting of stockholders,
then the holders of a majority of the shares entitled to vote at the meeting who
are present in person or represented by proxy may adjourn the meeting from time
to time until a quorum is present. An adjourned meeting may be held later
without notice other than announcement at the meeting, except that if the
adjournment is for more than 30 days, or if after the adjournment a new record
date is fixed for the adjourned meeting, notice of the adjourned meeting shall
be given in the manner set forth in Article VI to each stockholder of record
entitled to vote at the adjourned meeting.

SECTION 7. At any meeting of stockholders, each stockholder having the
right to vote shall be entitled to vote in person or by proxy. Except as
otherwise provided by law or in the Certificate of Incorporation, each
stockholder shall be entitled to one vote for each share of stock entitled to
vote standing in his name on the books of the Corporation. All elections of
Directors shall be determined by plurality votes. Except as otherwise provided
by law or in the Certificate of Incorporation or Bylaws, any other matter shall
be determined by the vote of a majority of the shares that are voted with regard
to it at a meeting where a valid quorum is present.

SECTION 8. Whenever the vote of stockholders at a meeting is required or
permitted in connection with any corporate action, the meeting and vote may be
dispensed with if the action taken has the written consent of the holders of
shares having at least the minimum number of votes required to authorize the
action at a meeting at which all shares entitled to vote were present and voted.

ARTICLE III

BOARD OF DIRECTORS

SECTION 1. The Board of Directors shall manage the business of the
Corporation, except as otherwise provided by law, the Certificate of
Incorporation or these Bylaws.

SECTION 2. Any or all of the directors may be removed for cause or without
cause by vote of the holders of a majority of the outstanding shares of each
class of voting stock of the Corporation voting as a class.

SECTION 3. Newly-created directorships resulting from an increase in the
number of directors and vacancies occurring in the Board may be filled by vote
of a majority of the directors then in office, even if less than a quorum
exists. A director elected to fill a vacancy, including a vacancy created by a
newly-created directorship, shall serve until the next succeeding annual meeting
of stockholders and until his successor is elected and qualified. In the event
that a Director is elected or appointed to fill a vacancy in the office of Vice
Chairman, and provided that such Director's term would not have expired at the

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next annual meeting of stockholders, such Director may, if he does not choose to
run for the office of Chairman or Vice Chairman, resume his position as Director
upon the election and qualification of his successor as Vice Chairman. The
decision not to run for Vice Chairman or Chairman, but to resume the position as
Director, must be communicated to the Board of Directors no later than eight
weeks prior to the date of the annual meeting of stockholders. The failure to
make such notification will be deemed a waiver of the right to resume the term
as Member Director.

SECTION 4. The books of the Corporation, except such as are required by law
to be kept within the State of Delaware, may be kept at such place or places
within or outside of the State of Delaware as the Board of Directors may from
time to time determine.

SECTION 5. The Board of Directors, by the affirmative vote of a majority of
the directors then in office, and irrespective of any personal interest of any
of its members, may establish reasonable compensation of any or all directors
for services to the Corporation as directors or officers or otherwise.

SECTION 6. In connection with each meeting of stockholders, or action by
written consent, involving the election of one or more Directors meeting the
qualifications for Public Directors contained in the Certificate of
Incorporation and these Bylaws, the Board of Directors is authorized to nominate
persons meeting such qualifications and to submit such nominees to the
stockholders for their approval at the meeting of stockholders or as part of the
consent solicitation.

ARTICLE IV

MEETINGS OF THE BOARD OF DIRECTORS

SECTION 1. The first meeting of each newly-elected Board of Directors shall
be held immediately following the annual meeting of stockholders. If the meeting
is held at the place of the meeting of stockholders, then no notice of the
meeting need be given to the newly-elected directors. If the first meeting is
not held at that time and place, then it shall be held at a time and place
specified in a notice given in the manner provided for notice of special
meetings of the Board of Directors.

SECTION 2. Regular meetings of the Board of Directors may be held upon such
notice, or without notice, at such times and at such places within or outside of
the State of Delaware as shall from time to time be determined by the Board of
Directors.

SECTION 3. Special meetings of the Board of Directors may be called by the
Chairman of the Board on at least 24 hours' notice to each director and shall be
called by the Chairman on like notice at the written request of any five
directors.

SECTION 4. Whenever notice of a meeting of the Board of Directors is
required, the notice shall be given in the manner set forth in Article VI of
these Bylaws and shall state the place, date and hour of the meeting. Except as
provided by law, the Certificate of Incorporation or other provisions of these
Bylaws, neither the business to be transacted at, nor the purpose of, any
regular or special meeting of the Board of Directors need be specified in the
notice or waiver of notice of the meeting.

SECTION 5. Except as otherwise required by law or the Certificate of
Incorporation or other provisions of these Bylaws, one-third of the entire Board
of Directors shall constitute a quorum for the transaction of business, and the
vote of a majority of the

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directors present at any meeting at which a quorum is present shall be the act
of the Board of Directors. If a quorum is not present at any meeting of
directors, then a majority of the directors present at the meeting may adjourn
the meeting from time to time, without notice of the adjourned meeting other
than announcement at the meeting. To the extent permitted by law, a director
participating in a meeting by conference telephone or similar communications
equipment by which all persons participating in the meeting can hear each other
will be deemed present in person at the meeting and all acts taken by him during
his participation shall be deemed taken at the meeting.

SECTION 6. Any action of the Board of Directors may be taken without a
meeting if written consent to the action signed by all members of the Board of
Directors is filed with the minutes of the Board of Directors.

ARTICLE V

COMMITTEES

SECTION 1. The Board of Directors may designate from among its members an
Executive Committee and other committees, each consisting of two or more
directors, and may also designate one or more of its members to serve as
alternates on these committees. The Chairman of the Board shall be an ex-officio
member of all committees. To the extent permitted by law, the Executive
Committee shall have all the authority of the Board of Directors, except as the
Board of Directors otherwise provides, and the other committees shall have such
authority as the Board of Directors grants them. The Board of Directors shall
have power at any time to change the membership of any committees, to fill
vacancies in their membership and to discharge any committees. All resolutions
establishing or discharging committees, designating or changing members of
committees or granting or limiting authority of committees, may be adopted only
by the affirmative vote of a majority of the entire Board of Directors.

SECTION 2. Each committee shall keep regular minutes of its proceedings and
report to the Board of Directors as and when the Board of Directors shall
require. Unless the Board of Directors otherwise provides, a majority of the
members of any committee may determine its actions and the procedures to be
followed at its meetings (which may include a procedure for participating in
meetings by conference telephone or similar communications equipment by which
all persons participating in the meeting can hear each other), and may fix the
time and place of its meetings.

SECTION 3. Any action of a committee may be taken without a meeting if
written consent to the action signed by all the members of the committee is
filed with the minutes of the committee.

ARTICLE VI

NOTICES

SECTION 1. Any notice to a stockholder shall be given personally or by
mail. If mailed, then a notice will be deemed given when deposited in the United
States mail, postage prepaid, directed to the stockholder at his address as it
appears on the records of stockholders.

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SECTION 2. Any notice to a director may be given personally, by telephone
or by mail, facsimile transmission, telex or similar instrumentality. A notice
will be deemed given when actually given in person or by telephone; when
transmitted by a legible transmission, if given by facsimile transmission; when
transmitted, answerback received, if given by telex; on the day when delivered
to a cable or similar communications company; one business day after delivery to
an overnight courier service; or on the third business day after the day when
deposited with the United States mail, postage prepaid, directed to the director
at his business address, facsimile number or telex number or at such other
address, facsimile number or telex number as the director may have designated to
the Secretary in writing as the address or number to which notices should be
sent.

SECTION 3. Any person may waive notice of any meeting by signing a written
waiver, whether before or after the meeting. In addition, attendance at a
meeting will be deemed a waiver of notice unless the person attends for the
purpose, expressed to the meeting at its commencement, of objecting to the
transaction of any business because the meeting is not lawfully called or
convened.

ARTICLE VII

OFFICERS

SECTION 1. The officers of the Corporation shall be a President, a
Secretary and a Treasurer. In addition, the stockholders shall designate one
Director as Chairman of the Board and one Director as Vice Chairman of the
Board. Each of the Chairman and Vice Chairman of the Board shall be a member of
New York Mercantile Exchange, Inc. and shall have been a member for at least one
year prior to his election. The Board of Directors may elect one or more Vice
Presidents (one or more of whom may be designated an Executive Vice President or
a Senior Vice President), one or more Assistant Secretaries or Assistant
Treasurers, and such other officers as it may from time to time deem advisable.
Any two or more offices, except for the offices of Secretary and Treasurer, may
be held by the same person. No officer except the Chairman of the Board, the
Vice Chairman and the Treasurer need be a director of the Corporation.

SECTION 2. Each officer, other than the Chairman and the Vice Chairman,
shall be elected by the Board of Directors and shall hold office for such term,
if any, as the Board of Directors shall determine. Any officer may be removed at
any time, either with or without cause, by the vote of a majority of the entire
Board of Directors.

SECTION 3. Any officer may resign at any time by giving written notice to
the Board of Directors or to the President. Such resignation shall take effect
at the time specified in the notice or, if no time is specified, at the time of
receipt of the notice, and the acceptance of such resignation shall not be
necessary to make it effective.

SECTION 4. The compensation of officers shall be fixed by the Board of
Directors or in such manner as it may provide.

SECTION 5. The Chairman of the Board shall preside at all meetings of the
stockholders and of the Board of Directors and shall have such other duties as
from time to time may be assigned to him by the Board of Directors.

SECTION 6. The Chairman of the Board shall be the Chief Executive Officer
of the Corporation and shall have general charge of the management of the
business and affairs

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of the Corporation. The Vice Chairman shall preside over any meetings of the
stockholders of the Board of Directors at which the Chairman is not present.

SECTION 7. The officers of the Corporation, other than the Chairman of the
Board, shall have such powers and perform such duties in the management of the
property and affairs of the Corporation, subject to the control of the Board of
Directors and the Chairman of the Board, as customarily pertain to their
respective offices, as well as such powers and duties as from time to time may
be prescribed by the Board of Directors.

SECTION 8. The Corporation may secure the fidelity of any or all of its
officers or agents by bond or otherwise. In addition, the Board of Directors may
require any officer, agent or employee to give security for the faithful
performance of his duties.

ARTICLE VIII

CERTIFICATES FOR SHARES

SECTION 1. The shares of stock of the Corporation shall be represented by
certificates, in such form as the Board of Directors may from time to time
prescribe, signed by the President or a Vice President and by the Treasurer or
an Assistant Treasurer, or the Secretary or an Assistant Secretary and bearing
any legends as may be prescribed by the Certificate of Incorporation.

SECTION 2. Any or all signatures upon a certificate may be a facsimile.
Even if an officer, transfer agent or registrar who has signed or whose
facsimile signature has been placed upon a certificate shall cease to be that
officer, transfer agent or registrar before the certificate is issued, that
certificate may be issued by the Corporation with the same effect as if he or it
were that officer, transfer agent or registrar at the date of issue.

SECTION 3. The Board of Directors may direct that a new certificate be
issued in place of any certificate issued by the Corporation that is alleged to
have been lost, stolen or destroyed. When doing so, the Board of Directors may
prescribe such terms and conditions precedent to the issuance of the new
certificate as it deems expedient, and may require a bond sufficient to
indemnify the Corporation against any claim that may be made against it with
regard to the allegedly lost, stolen or destroyed certificate or the issuance of
the new certificate.

SECTION 4. The Corporation or a transfer agent of the Corporation, upon
surrender to it of a certificate representing shares, duly endorsed and
accompanied by proper evidence of lawful succession, assignment or authority of
transfer, shall issue a new certificate to the person entitled thereto, and
shall cancel the old certificate and record the transaction upon the books of
the Corporation.

SECTION 5. The Board of Directors may fix a date as the record date for
determination of the stockholders entitled (i) to notice of, or to vote at, any
meeting of stockholders, (ii) to express consent to, or dissent from, corporate
action in writing without a meeting, or (iii) to receive payment of any dividend
or other distribution or allotment of any rights or to take or be the subject of
any other action. The record date must be on or after the date on which the
Board of Directors adopts the resolution fixing the record date and in the case
of (i), above, must be not less than 10 nor more than 60 days before the date of
the meeting, in the case of (ii), above, must be not more than 10 days after the
date on which the Board of Directors fixes the record date, and in the case of
(iii), above,

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must be not more than 60 days prior to the proposed action. If no record date is
fixed, then the record date will be as provided by law. A determination of
stockholders entitled to notice of, or to vote at, any meeting of stockholders
that has been made as provided in this Section will apply to any adjournment of
the meeting, unless the Board of Directors fixes a new record date for the
adjourned meeting.

SECTION 6. The Corporation shall for all purposes be entitled to treat a
person registered on its books, as the owner of shares, as the owner of those
shares, with the exclusive right, among other things, to receive dividends and
to vote with regard to those shares, and the Corporation shall be entitled to
hold a person registered on its books as the owner of shares liable for calls
and assessments, if any may legally be made, and shall not be bound to recognize
any equitable or other claim to, or interest in, shares of its stock on the part
of any other person, whether or not the Corporation shall have express or other
notice of the claim or interest of the other person, except as otherwise
provided by the laws of Delaware.

ARTICLE IX

INDEMNIFICATION

SECTION 1. Suits by Third Parties. The Corporation shall indemnify any
person who was or is made a party or is threatened to be made a party to any
threatened, pending or completed action, suit or proceeding, whether civil,
criminal, administrative or investigative (other than an action by or in the
right of the Corporation) by reason of the fact that the person is or was a
director, officer, employee or agent of the Corporation, or is or was serving at
the request of the Corporation as a director, officer, employee or agent of
another corporation, partnership, joint venture, trust or other enterprise,
against expenses (including attorneys' fees), judgments, fines and amounts paid
in settlement actually and reasonably incurred by him in connection with such
action, suit or proceeding if the person acted in good faith and in a manner the
person reasonably believed to be in or not opposed to the best interests of the
Corporation, and, with respect to any criminal action or proceeding, had no
reasonable cause to believe the conduct was unlawful. The termination of any
action, suit or proceeding by judgment, order, settlement, conviction, or upon a
plea of nolo contendere or its equivalent shall not, of itself, create a
presumption that the person did not act in good faith and in a manner that the
person reasonably believed to be in or not opposed to the best interests of the
Corporation, and, with respect to any criminal action or proceeding, had
reasonable cause to believe that the conduct was unlawful.

SECTION 2. Derivative Suits. The Corporation shall indemnify any person
who was or is a party or is threatened to be made a party to any threatened,
pending or completed action or suit by or in the right of the Corporation to
procure a judgment in its favor by reason of the fact that the person is or was
a director, officer, employee or agent of the Corporation, or is or was serving
at the request of the Corporation as a director, officer, employee or agent of
another corporation, partnership, joint venture, trust or other enterprise
against expenses (including attorneys' fees) actually and reasonably incurred by
the person in connection with the defense or settlement of such action or suit
if the person acted in good faith and in a manner the person reasonably believed
to be in or not opposed to the best interests of the Corporation, except that no
indemnification shall be made in respect of any claim, issue or matter as to
which such person shall have been adjudged to be liable to the Corporation
unless and only to the extent that the Delaware Court of Chancery or the court
in which such action or suit was brought shall determine upon

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application that, despite the adjudication of liability but in view of all the
circumstances of the case, such person is fairly and reasonably entitled to
indemnity for such expenses that the Court of Chancery or such other court shall
deem proper.

SECTION 3. Indemnification as of Right. To the extent that a director,
officer, employee or agent of the Corporation has been successful on the merits
or otherwise in defense of any action, suit or proceeding referred to in
Sections 1 and 2 of this Article, or in defense of any claim, issue or matter
therein, the person shall be indemnified against expenses (including attorneys'
fees) actually and reasonably incurred by the person in connection therewith.

SECTION 4. Determination that Indemnification is Proper. Any
indemnification under Sections 1 and 2 of this Article (unless ordered by a
court) shall be made by the Corporation only as authorized in the specific case
upon a determination that indemnification of the director, officer, employee or
agent is proper in the circumstances because he has met the applicable standard
of conduct set forth in Sections 1 and 2. Such determination will be made (1) by
the Board of Directors by a majority vote of a quorum consisting of directors
who were not parties to such action, suit or proceeding, or (2) if such a quorum
is not obtainable, or, even if obtainable and a quorum of disinterested
directors so directs, by independent legal counsel (compensated by the
Corporation) in a written opinion or (3) by the stockholders.

SECTION 5. Advance of Funds. Expenses incurred by an officer, director,
employee or agent in defending a civil, criminal, administrative or
investigative action, suit or proceeding, or threat thereof, may be paid by the
Corporation in advance of the final disposition of such action, suit or
proceeding as authorized by the Board of Directors in the specific case upon
receipt of an undertaking by or on behalf of the director, officer, employee or
agent to repay such amount if it shall ultimately be determined that the person
is not entitled to be indemnified by the Corporation as authorized in this
Article.

SECTION 6. Non-Exclusivity. The indemnification and advancement of
expenses provided by, or granted pursuant to, the other Sections of this Article
shall not be deemed exclusive of any other rights to which those seeking
indemnification or advancement of expenses may be entitled under any agreement,
vote of stockholders or disinterested directors or otherwise, both as to action
in his official capacity and as to action in another capacity while holding such
office.

SECTION 7. Insurance Premiums. The Corporation may purchase and maintain
insurance on behalf of any person who is or was a director, officer, employee or
agent of the Corporation, or is or was serving at the request of the Corporation
as a director, officer, employee or agent of another corporation, partnership,
joint venture, trust or other enterprise against any liability asserted against
the person and incurred by him in any such capacity, or arising out of the
person's status as such, whether or not the Corporation would have the power to
indemnify him against such liability under the provisions of this Article.

SECTION 8. References to "Corporation." References in this Article to "the
Corporation" will include, in addition to the resulting corporation, any
constituent corporation (including any constituent of a constituent) absorbed in
a consolidation or merger that, if its separate existence had continued, would
have had power and authority to indemnify its directors, officers and employees
or agents so that any person who is or was a director, officer, employee or
agent of such constituent corporation, or is or was

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serving at the request of such constituent corporation as a director, officer,
employee or agent of another corporation, partnership, joint venture, trust or
other enterprise, will stand in the same position under the provisions of this
Article with respect to the resulting or surviving corporation as such person
would have with respect to such constituent corporation if its separate
existence had continued.

SECTION 9. References to Certain Terms. For purposes of this Article,
references to "other enterprises" will include employee benefit plans;
references to "fines" will include any excise taxes assessed on a person with
respect to an employee benefit plan; references to "serving at the request of
the Corporation" shall include any service as a director, officer, employee or
agent of a subsidiary of the Corporation and any service as a director, officer,
employee or agent of the Corporation which imposes duties on, or involves
services by, such director, officer, employee or agent with respect to an
employee benefit plan, its participants or beneficiaries; and a person who acted
in good faith and in a manner he reasonably believed to be in the interest of
the participants and beneficiaries of an employee benefit plan will be deemed to
have acted in a manner "not opposed to the best interests of the Corporation" as
referred to in this Article.

SECTION 10. Successors and Assigns. The indemnification and advancement of
expenses provided by, or granted pursuant to, this Article shall, unless
otherwise provided, when authorized or ratified continue as to a person who has
ceased to be a director, officer or agent and shall inure to the benefit of the
heirs, executors and administrators of such person.

ARTICLE X

GENERAL PROVISIONS

SECTION 1. The corporate seal shall have inscribed on it the name of the
Corporation, the year of its creation, the words "CORPORATE SEAL DELAWARE," and
such other appropriate legend as the Board of Directors may from time to time
determine. Unless prohibited by the Board of Directors, a facsimile of the
corporate seal may be affixed or reproduced in lieu of the corporate seal
itself.

SECTION 2. The fiscal year of the Corporation shall be determined by
resolution of the Board of Directors.

ARTICLE XI

AMENDMENTS

SECTION 1. These Bylaws may be amended or repealed, and new Bylaws may be
adopted, amended or repealed at any regular or special meeting of stockholders.
The Board of Directors has no power to amend the Bylaws.

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ANNEX E

CERTIFICATE OF INCORPORATION

NEW YORK MERCANTILE EXCHANGE, INC.

FIRST: The name of the corporation is New York Mercantile Exchange, Inc.
(the "Corporation").

SECOND: The address of the Corporation's registered office in the state of
Delaware is 1013 Centre Road, Wilmington, New Castle County, Delaware
19805-1297. The name of the registered agent at such address is Corporation
Service Company.

THIRD: The purpose of the Corporation is to engage in any lawful act or
activity for which corporations may be organized under the General Corporation
Law of the State of Delaware (the "DGCL").

FOURTH: The Corporation shall not have the authority to issue capital
stock. The membership interests that the Corporation shall have authority to
issue initially shall consist of Class A memberships and a Class B membership.
The Class B membership initially shall be held by NYMEX Holdings, Inc., a
Delaware stock corporation ("NYMEX Holdings"). The holders of Class A
memberships are sometimes hereinafter referred to as "Class A members" and the
holder of the Class B membership is sometimes hereinafter referred to as the
"Class B member." The Board of Directors of the Corporation shall have the
authority to create additional classes of memberships with such rights and
limitations as the Board determines; provided, however, that no such additional
class of membership, other than the Class B membership, shall have voting or
other rights equal to or greater than the Class A memberships. Except to the
extent provided in this Certificate of Incorporation, the conditions of
membership in the Corporation shall be as set forth in the bylaws of the
Corporation.

FIFTH: Until such time as the certificate of incorporation of NYMEX
Holdings is amended to eliminate the restrictions on transfer contained in
paragraph (b) of Article FIFTH thereof, Class A memberships shall be
transferable only together with shares of common stock of NYMEX Holdings ("NYMEX
Holdings Common Stock"). Accordingly, until that time: (i) the Class A
memberships shall not be transferable, and shall not be transferred on the books
of the Corporation, unless a simultaneous transfer is made by the same
transferor to the same transferee of a number of shares of NYMEX Holdings Common
Stock equal to the number of Class A memberships being transferred; (ii) each
Certificate evidencing ownership of shares of NYMEX Holdings Common Stock shall
be deemed to evidence the same number of Class A memberships; and (iii) any
attempted or purported transfer in violation of the provisions of this Article
FIFTH shall be void. For purposes of the restrictions on transfer contained in
this Article FIFTH, the term "transfer" shall be deemed not to include a lease
of a member's trading privileges made in accordance with the bylaws and rules of
the Corporation.

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SIXTH: The terms, conditions, preferences and rights of the Class A
memberships and the Class B membership shall be as set forth in the bylaws of
the Corporation; provided, however, that:

(a) Except as set forth in Article EIGHTH, the Class A members shall
have no voting rights;

(b) Except as set forth in Article EIGHTH, the Class B member
exclusively shall exercise full voting rights with respect to any matter on
which members are permitted to vote by Delaware law, this Certificate of
Incorporation or the bylaws of the Corporation; and

(c) The Class A members shall have no interest in the profits of the
Corporation. The Class B member exclusively shall be entitled to all
dividends and other distributions of any type (including upon liquidation)
made by the Corporation.

SEVENTH: So long as the provisions of paragraph (a) of Article SIXTH remain
in effect, (i) it shall be a qualification for each director of the Corporation
that such director is also a director of NYMEX Holdings; (ii) the Class B member
shall elect any person who becomes a director of NYMEX Holdings as a director of
the Corporation; (iii) the Class B member shall designate the Chairman and Vice
Chairman of NYMEX Holdings to also serve as the Chairman and Vice Chairman of
the Corporation and (iv) any director of the Corporation who ceases to be a
director of NYMEX Holdings shall immediately cease to be a director of the
Corporation.

EIGHTH: The board of directors shall not adopt, amend or delete any bylaw
without the approval of the memberships of the Corporation in the manner
provided by the bylaws of the Corporation.

NINTH: No director will have any personal liability to the Corporation or
its members for monetary damages for any breach of fiduciary duty as a director,
except (i) for any breach of the director's duty of loyalty to the Corporation
or its members, (ii) for acts or omissions not in good faith or that involve
intentional misconduct or a knowing violation of law, (iii) under Section 174 of
the DGCL, as amended or (iv) for any transaction from which the director
obtained an improper personal benefit.

TENTH: Directors shall not be required to be elected by written ballot.

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ANNEX F

NEW YORK MERCANTILE EXCHANGE, INC.
BYLAWS

ARTICLE 1

MEMBERSHIP

SEC. 100. Classes of Membership; Number of Memberships; Additional Classes
of Memberships

(A) Membership shall consist of the following two classes:

(1) Class A, and

(2) Class B.

(B) The number of Class A Memberships is limited to 816 and the number of
Class B Memberships is limited to one.

(C) The Board may create additional classes of members with such rights and
limitations as the Board determines, provided however, that no such additional
class of Membership, other than the Class B Membership, shall have voting or
other rights equal to or greater than the Class A Memberships.

SEC. 101. Eligibility Criteria and Procedures

(A) The Board may adopt, from time to time, Rules relating to criteria for
eligibility for membership and procedures for becoming a member and any
requirements or procedures for the acquisition or transfer of a membership as it
may determine.

(B) The Board may adopt, from time to time, Rules relating to eligibility
and application procedures for Floor Members as it shall determine.

SEC. 102. Financial Standards

(A) The Board may adopt, from time to time, Rules relating to financial
standards applicable to Class A Members and Member Firms as a condition to
becoming a Class A Member and continuing as a Class A Member. Such financial
standards may differ among different categories of membership as determined by
the Board in its discretion.

(B) Any Class A Member who is registered with the Commission shall comply
with such rules and regulations as the Commission adopts relating to financial
requirements.

SEC. 103. Dues

The annual dues of Class A Members shall be fixed by the Board at any
meeting of the Board and are payable at such time as the Board may determine.
The Board may waive the payment of dues by all Class A Members or by individual
Class A Members as it shall determine. Dues are payable by the Class A Member in
whose name a membership is registered.

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SEC. 104. Assessments

From time to time the Board may levy such assessments as it determines to
be necessary. All assessments are due and payable at such time as the Board may
determine. All assessments are payable by the Member in whose name the
membership is registered.

SEC. 105. Fees

From time to time the Board may establish fees, in such amounts as it
determines, on contracts traded on the Exchange.

SEC. 106. Failure to Pay Dues, Assessments and Fees

(A) If a Class A Member fails to pay any dues, assessments or fees when due
and such failure is not cured within 30 days after written notice to the Class A
Member by the Exchange that such dues, assessments or fees are due, then such
Class A Member shall be suspended automatically from all rights and privileges
of membership. Such suspension shall continue in effect until the failure is
cured. The Executive Committee, upon written application received prior to the
expiration of such period, may extend the 30 day period, in its sole discretion.

(B) If a Class A Member who is suspended under subsection (A) of this
Section 106 fails to pay any dues, assessments or fees within 30 days of the
suspension, then the Class A Member shall be expelled from membership. The Board
or the Executive Committee, upon written application received prior to the
expiration of such 30 day period, and for good cause, may extend the 30 day
period.

(C) Any Class A Member who fails to pay any dues, assessments or fees after
written notice to the Class A Member that such dues, assessments or fees are
payable, shall pay a penalty, in addition to the sanctions imposed by this
Section 106, as fixed from time to time by the Board but not less than 20% of
the amount due.

SEC. 107. Notice of Dues and Assessments

(A) Notice of all dues and assessments shall be published by the Exchange
and shall be given personally by delivery to a postal box located on the
Exchange premises or by first class mail, postage prepaid and addressed to the
Class A Member at the address such Class A Member has filed with the Exchange.
Notice, when mailed in accordance with this Section 107, shall be effective when
mailed.

(B) Non-receipt of the notice shall not operate to relieve the Class A
Member from payment, to extend the time for payment or to relieve any Class A
Member from the imposition of penalties for failing to pay dues and assessments.

SEC. 108. Effect of Suspension or Expulsion of Membership

(A) A Class A Member or Member Firm whose rights and privileges of
membership have been suspended shall continue to be:

(1) subject to the Bylaws and Rules of the Exchange;

(2) liable for all dues, assessments, fees and fines imposed by the
Exchange; and

(3) obligated to the Exchange and to its Members for all contracts,
obligations and liabilities entered into or incurred before, during and
after such suspension.

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(B) A Class A Member or Member Firm who has been expelled from the rights
and privileges of membership shall continue to be:

(1) subject to the disciplinary and arbitration rules of the Exchange;

(2) liable for all dues, assessments, fees and fines imposed by the
Exchange prior to such expulsion; and

(3) obligated to the Exchange and its Members for all contracts,
obligations, liabilities, fines and penalties entered into or incurred
prior to or after such expulsion.

SEC. 109. Transfer of Membership

Membership in the Exchange is a personal privilege, only transferable
pursuant to the terms and conditions established by the Bylaws, Rules and
Charter. No Member may transfer a membership when the Member or the Member Firm
upon which such Member has conferred such membership privileges is the subject
of any disciplinary proceeding or investigation by the Exchange under the Bylaws
or Rules.

A Member who is the subject of any disciplinary proceeding or investigation
by the Exchange may transfer a membership pursuant to the terms and conditions
established by the Bylaws, Rules and Charter notwithstanding that such Member or
the Member Firm upon which such Member conferred such membership privileges is
the subject of any investigation by the Exchange, if the Member or Member Firm
submits a written agreement, acceptable to the Board, by which the Member or
Member Firm submits to the continuing jurisdiction of the Exchange.

SEC. 110. Disclosure of Information

The Exchange shall not disclose to any person any information regarding the
financial condition of a Class A Member or Member Firm or the transactions or
positions of any Class A Member or Member Firm or any person except:

(1) to any committee, officer, director, employee or agent of the
Exchange authorized to receive such information within the scope of its or
such person's duties;

(2) to any duly authorized representative of the Commission requesting
such information or to any duly authorized representative of any other
regulatory or self-regulatory organization with which the Exchange, as
approved by the Board, has entered into an information sharing agreement;

(3) as required by law;

(4) when the Class A Member or Member Firm requests or consents to
such disclosure; or

(5) that the Exchange may release such information in connection with
any litigation involving the Exchange when, in the opinion of the Exchange,
the information is relevant or the release of the information is necessary
and appropriate to the conduct of such litigation.

SEC. 150. Establishment of Associate Membership

There is hereby established a category of associate members known as
"Commercial Associate Members" whose election to membership and whose rights,
privileges and obligations shall be as set forth in Sections 150 through 155.

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SEC. 151. Number of Commercial Associate Memberships

The number of Commercial Associate Members shall be limited to 28.

SEC. 152. Election

Any person who was a member in good standing of International Commercial
Exchange, Inc. may be qualified as a Commercial Associate Member of the Exchange
by complying with the following provisions:

(a) he shall have filed an application for membership as a Commercial
Associate Member in the form prescribed by the Exchange on or before
December 31, 1973; and

(b) the application shall have been accompanied by a statement of the
President or a Vice President of International Commercial Exchange, Inc.
that the applicant was a member in good standing of said Exchange and that
his application was approved.

SEC. 153. Obligations of Commercial Associate Members

A Commercial Associate Member shall be subject to all of the provisions of
the Bylaws and Rules of the Exchange applicable to Members including, without
limitation, the obligations for dues, assessments and fines, except the
following:

(a) those that are not applicable to the nature of his membership such
as the provisions respecting compliance with requirements for election to
membership, provisions for transfer of membership and the like; and

(b) those that are inconsistent with the provisions of Sections 150
through 155.

SEC. 154. Rights and Privileges of Commercial Associate Members

A Commercial Associate Member shall have the following rights and
privileges:

(a) the right to confer the membership privileges on a partnership or
corporation in accordance with such rules as may be established for that
purpose;

(b) the right to act as a floor trader in transactions in all
contracts traded on the Exchange only for his own account; and

SEC. 155. Limitations of Rights of Commercial Associate Members

Notwithstanding any other provision of Sections 150 through 155 and the
subdivisions thereunder, a Commercial Associate Member shall not have any of the
following rights or privileges:

(a) to transfer his membership voluntarily (nor shall any such
membership be transferred by operation of law);

(b) to vote;

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(d) to clear contracts or to confer the right to become a Clearing
Member on a partnership or a corporation;

(e) to participate in the distribution of any assets of the Exchange;
and

(f) to become a member of the Board of Governors.

ARTICLE 2

MEETINGS OF MEMBERS

SEC. 200. Time and Place of Meetings of Members

All meetings of Members shall be held at such place within or without the
State of New York and at such time as the Board shall designate.

SEC. 201. Annual Meeting of Members

The Members shall hold an annual meeting at the offices of the Exchange on
the third Tuesday in March of each year to elect directors of the Exchange in
accordance with the Bylaws and to transact such other business as may come
before the meeting. If such day is not a business day, then the annual meeting
shall be held on the next succeeding business day.

SEC. 202. Special Meetings of Members

(A) Special meetings of Members may be called by the Board or by the
Chairman in their discretion.

(B) A special meeting shall be called by the Chairman or by the Secretary
upon receipt by the Chairman or by the Secretary of a written demand of a
majority of the Board or of Members entitled to cast 10% of the total number of
votes entitled to be cast at such meeting. Any such written demand shall specify
the purpose of such special meeting and the special meeting so called shall be
limited to the purpose so set forth. The written demand shall also specify the
date of such special meeting that shall be a business day not less than 60 nor
more than 90 days from the date of such written demands.

SEC. 203. Notice of Meeting

(A) Notice of the annual meeting of Members shall state the place, date and
time of such meeting.

(B) Notice of any special meeting of Members shall state the place, date
and time of such special meeting, the purposes for which such meeting is called
and shall indicate that it is being issued by or at the direction of the person
or persons calling the special meeting.

(D) A copy of Notice of any meeting of Members shall be given personally or
by delivery to a postal box located on the Exchange premises or by first class
mail, postage prepaid and addressed to each Member at his address as it appears
in the records of the Exchange. Notice of a meeting, when mailed in accordance
with this Section 203(D), shall be effective when mailed. Notice of any meeting
of Members shall be given not less than 10 nor more than 50 days prior to the
date of the meeting.

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SEC. 204. Quorum of Members

One hundred fifty Members, whether present in person or by proxy, shall
constitute a quorum for the transaction of any business at any meeting of
Members. A majority of the Members present may adjourn a meeting despite the
absence of a quorum.

SEC. 205. Voting

(A) Each Member shall be entitled to one vote for each Membership owned of
record by such Member on all matters with regard to which Members are entitled
to vote, as set forth in the Charter. On all matters as to which all Members are
entitled to vote, the Members shall vote together as a single class.
Notwithstanding the foregoing, no Member shall be entitled to vote on any matter
while any dues, assessments, fees or fines remain unpaid or during any period of
suspension.

(B) Member Directors, the Chairman and the Vice Chairman shall be elected
by a plurality of votes cast at a meeting of Members. To the extent permitted by
law, any action of the Exchange taken by a vote of the Members requires a vote
of a majority of the votes cast at a meeting of Members by the Members entitled
to vote thereon. Blank ballots or abstentions shall not be counted in the number
of votes cast.

(C) In order that the Exchange may determine the members entitled to notice
of or to vote at any meeting of members or any adjournment thereof, the Board of
Directors may fix a record date, which record date shall not precede the date
upon which the resolution fixing the record date is adopted by the Board of
Directors, and which record date shall not be more than fifty nor less than ten
days before the date of such meeting. If no record is fixed by the Board of
Directors, the record date for determining members entitled to notice of or to
vote at a meeting of members shall be at the close of business on the day next
preceding the day on which notice is given, or, if notice is waived, at the
close of business on the day next preceding the day on which the meeting is
held. A determination of members of record entitled to notice of or to vote at a
meeting of members shall apply to any adjournment of the meeting; provided,
however, that the Board of Directors may fix a new record date for the adjourned
meeting.

SEC. 206. Proxies

(A) A Member entitled to vote at a meeting of Members may authorize another
Member to act for him by proxy.

(B) Every proxy must be in writing and signed by the Member.

(C) The Board may establish, from time to time, such terms and conditions
as it deems appropriate to regulate voting by proxy.

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ARTICLE 3

GOVERNMENT AND ADMINISTRATION

SEC. 300. Composition of Board

(A) The governance of the Exchange shall be vested in a Board of Directors,
which shall consist of 22 persons. Directors of the Exchange shall include:

(1) a Chairman of the Board and a Vice Chairman of the Board;

(2) 15 directors who are Members ("Member Directors"); and

(3) 5 persons ("Public Directors") who are not Members or employees of
the Exchange.

SEC. 301. Powers of the Board

(A) The Exchange shall be managed by a Board of Directors, which is vested
with all powers necessary and proper for the government of the Exchange, the
regulation and conduct of Members and Member Firms, and for the promotion of the
welfare, objects and purposes of the Exchange. The Board shall have control over
and management of, the property, business and finances of the Exchange. The
Board may also adopt, amend, rescind or interpret the Rules of the Exchange and
impose such fees, charges, dues and assessments, all as it deems necessary and
appropriate.

(B) Without limiting the generality of the foregoing, the Board shall have
the following powers:

(1) the Board may make such expenditures as it deems necessary for the
best interests of the Exchange;

(2) the Board may fix, from time to time, the fees or other
compensation to members of the Board and to members of any committee for
services rendered in performing these duties as such. The compensation for
Public Directors may differ from the compensation for other Directors;

(3) the Board shall have the power to take such action as may be
necessary to effectuate any final order or decision of the Commission taken
under authority of the Act and necessary to comply in all respects with any
requirements applicable to the Exchange under such Act; and

(4) the Board shall have the power to adopt arbitration rules for the
settlement of claims, grievances, disputes and controversies.

(C) The Board may designate by resolution, from time to time, such
committees as it may deem necessary or appropriate, and delegate to such
committees the authority of the Board to the extent provided in these Bylaws or
in such resolution, subject to any applicable provision of law.

SEC. 302. Chairman of the Board of Directors

(A) The Chairman shall be designated as Chairman by the Class B Member from
among the elected members of the Board to serve until his successor is elected
and qualified. The Chairman shall be a member at the time of his nomination and
shall have been a Member for at least one year prior to his nomination.

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(B) The Chairman shall be the chief executive officer of the Exchange and
shall preside at all meetings of the Members and of the Board. He may appoint
such experts and professional advisors as he deems appropriate.

(D) The Chairman shall have such authority and perform such duties as are
incident to his office. He shall present any reports of the Board at meetings of
Members. Whenever he deems it appropriate, the Chairman may communicate to the
Board or to the Members any ideas and suggestions that tend, in his opinion, to
promote the welfare and usefulness of the Exchange. The Chairman shall have a
vote on all questions at all meetings of the Board or of the Members.

SEC. 303. Vice Chairman of the Board of Directors

(A) The Vice Chairman shall be designated as Vice Chairman by the Class B
Member from among the elected members of the Board to serve until his successor
is elected and qualified. The Vice Chairman shall be a member at the time of his
nomination and shall have been a Member for at least one year prior to his
nomination.

(B) If the Chairman is absent or unable to perform his duties, then the
Vice Chairman shall exercise and shall perform the duties of the Chairman. If
both the Chairman and the Vice Chairman are absent or unable to perform the
duties of Chairman, then the Treasurer shall exercise and perform the duties of
the Chairman. If the Chairman, Vice Chairman and Treasurer are all absent or
unable to perform the duties of Chairman, then a quorum of the Board, by
majority vote, may chose an Acting Chairman from the remaining Directors.

SEC. 304. Resignation and Removal of Directors

(A) Any Director, other than the Chairman of the Board, may resign at any
time by tendering written notice of his resignation to the Chairman of the
Board. The Chairman of the Board may resign at any time by tendering written
notice of his resignation to a quorum of the Board. Any resignation under this
Bylaw, unless conditioned on acceptance, will be effective on the date stated in
the notice or, if no date is stated, on the date given.

(B) In the event of the refusal, failure, neglect or inability of a
Director, other than the Chairman or the Vice Chairman, to discharge his duties,
or for any cause adversely affecting the best interests of the Exchange, or if a
Director, other than the Chairman or Vice Chairman, shall absent himself from
three successive regular or special meetings and fail to justify such absences
to the satisfaction of the Board, then the Class B member shall have the power
to remove such Director.

(C) In the event of the refusal, failure, neglect or inability of the
Chairman or the Vice Chairman to discharge his duties, or for any cause
adversely affecting the best interests of the Exchange, or if the Chairman or
the Vice Chairman shall absent himself from three successive regular or special
meetings and fail to justify such absences to the satisfaction of the Board,
then the Board shall have the power to suspend the powers of such Chairman or
Vice Chairman arising from his designation as such by an affirmative vote of the
Directors provided there is a quorum of not less than a majority present at the
meeting (regular or special) at which such action is taken. If the Board
suspends a Chairman or Vice Chairman pursuant to this Section 307(C), then it
shall call a special meeting of Members to be held within 30 days of such
suspension, to vote on the removal or the termination of the suspension of the
powers of such Chairman or Vice Chairman.

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SEC. 305. Filling of Vacancies

(A) In the event there is a vacancy among the directors caused by the
death, removal or resignation of a Director, such vacancy shall be filled by a
vote of the Class B Member.

(B) A Director appointed to fill a vacancy under this Bylaw, shall hold
office until the next annual meeting of Members and until his successor is
elected or appointed and qualified. Such successor, and any person elected to
fill an unfilled vacancy or to replace a Director resigning, shall be elected
for a term of such length as would have remained in the term of the Director
whose death, removal or resignation had caused the vacancy. If no time would
have remained in such term, then such successor shall be elected for a full
term.

(D) In the event of the death, resignation or vacancy in the office of the
Vice Chairman, the Board, by vote of a majority of the Directors then in office,
shall elect a Vice Chairman from among the other Directors.

(E) A Chairman or a Vice Chairman appointed or elected pursuant to this
Section 305 shall hold office until the next annual meeting of Members and until
his successor is elected and qualified. Such successor shall be elected for a
term of such length as would have remained in the term of the Chairman or Vice
Chairman whose death, removal or resignation had caused the vacancy. If no time
would have remained in such term, then such successor shall be elected for a
full term.

SEC. 306. Meetings of the Board

(A) Regular meetings of the Board shall be held monthly on such date and at
such time and place as fixed by the Board.

(B) The Chairman may call a special meeting of the Board whenever he deems
necessary. The Chairman shall call a special meeting when a written demand of
not less than five Directors is received.

(C) Notice of a meeting may be given in writing, by telephone or by other
means of communication and shall be effective when so given. No special meeting
may be called on notice of less than one hour. Notice of any meeting may be
waived by a Director in writing or by his attendance at a meeting without
protest of the lack of notice to him either before, or at the commencement of,
the meeting.

(D) Notice of a regular meeting need not specify the purpose of any
meeting.

(E) Notice of a special meeting shall specify the purpose of such meeting.

SEC. 307. Quorum

One-third of the entire Board of Directors shall constitute a quorum. A
majority of Directors present, whether or not a quorum exists, may adjourn any
meeting to another time or place. Unless specifically provided otherwise in the
Bylaws or any applicable law, any action taken by a vote of a majority of the
Directors present at a meeting at which there is a quorum shall be the act of
the Board.

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SEC. 308. Action by Consent

Any action required or permitted to be taken by the Board may be taken
without a meeting if all of the Directors consent in writing to the adoption of
a resolution authorizing such action. The resolution and the written consents of
the Directors shall be filed with the minutes of the proceedings of the Board.

SEC. 309. Telephone Participation

One or more Directors may participate in a meeting of the Board by means of
conference telephone or similar communications devices allowing all persons
participating at the meeting to hear each other at the same time. Such
participation shall constitute presence in person at the meeting.

SEC. 310. Procedure for Election of Directors

In order to be eligible for election as the Chairman, Vice Chairman or a
Member Director, a Member must be nominated by written petition of the
membership in accordance with the Rules of the Exchange.

SEC. 311. Rules of Order

The Board shall have the authority to make rules governing its own conduct
and proceedings. In the absence of such rules, all meetings of the Board shall
be conducted in accordance with the then current edition of Robert's Rules of
Order.

SEC. 350. Officers

The Board shall appoint a President, a Secretary and a Treasurer. The Board
may appoint one or more Vice Presidents, and may classify such Vice Presidents,
and may appoint such other officers as the Board may determine. Any officer
appointed under this Section may be removed by the Board, with or without cause.
Any person may hold two or more offices, except the offices of Chairman of the
Board, Vice Chairman of the Board, President, Secretary and Treasurer.

SEC. 351. President

(A) The President shall be the chief administrative officer of the
Exchange, responsible to the Board for the management and administration of all
Exchange activities. He shall not engage in any other business during his
incumbency, nor shall he trade, directly or indirectly, for his own account or
for the account of anyone else, in any commodity futures or options contract. He
shall, by his acceptance of the office of President, be obliged to uphold the
Charter, Bylaws, Rules and Regulations of the Exchange. He shall attend all
meetings of the Board and may attend, in person or by representative, all
committee meetings. He may be called upon for information or advice at such
Board and committee meetings, but he shall not have the right to vote at any
meeting of the Board or of any committees. He shall engage such employees as he
may determine are required for the efficient management and operation of the
Exchange and shall fix the duties, responsibilities and terms and conditions of
their employment; provided, however, that the President shall not enter into any
contracts of employment on behalf of the Exchange unless authorized to do so by
the Board.

(B) In addition to all other powers and duties set forth in the Bylaws and
Rules, the President shall perform all functions delegated to him by the Board
or by the Chairman of the Board and shall facilitate the activities of Exchange
committees.

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(C) The duties of the President may be performed by a Vice President or by
other persons designated by the Chairman of the Board or by the President.

(D) The President shall make an annual report to the Board that shall
analyze the effectiveness of the Exchange's Compliance and Disciplinary Program.
Such report shall include the following:

(1) Compliance and Disciplinary Program expenditures relative to the
volume of trading in each contract;

(2) description of compliance staff size, organization, duties, and
responsibilities, investigations commenced and completed, disciplinary
actions commenced and completed and other activities;

(3) description of the actions of Exchange Disciplinary Committee;
and,

(4) recommendations for any Bylaw, Rule, procedure, staff or operating
changes. The President's report shall become a permanent part of the
Exchange's compliance records and shall be presented to the Board and any
Exchange committee responsible for the Compliance budget and expenditures.

SEC. 352. Executive Vice President

The Vice President, who is designated Executive Vice President, shall have
such duties and authority as provided in the Bylaws, Rules or by the Board. If
the President is absent or unable to perform his duties, then the Executive Vice
President shall perform the duties of the President. Subject to the approval of
the Board, the Executive Vice President may delegate all or any part of his
authority to others.

SEC. 353. Vice Presidents

Each Vice President shall have the authority and shall perform such duties
as provided in the Bylaws, Rules or by the Board. If the President and Executive
Vice President are absent or unable to perform their duties, then such Vice
President as determined by the President, the Executive Vice President or the
Chairman shall perform the duties of the President. Subject to the approval of
the Board, any Vice President may delegate all or any part of his authority to
others.

SEC. 354. Secretary; Assistant Secretary

The Secretary and any Assistant Secretary shall attend all meetings of the
Board and of Members and keep an official record of the proceedings; give notice
of meetings of Members or of the Board as provided in the Bylaws and Rules or as
required by law; give all other notices required to be given; be the custodian
of the books, records and corporate seal of the Exchange and attest, on behalf
of the Exchange all contracts and other documents requiring authentication; and
shall have such other authority and perform such other duties as provided in the
Bylaws and Rules or by the Board. Subject to the approval of the Board, the
Secretary may delegate to others all or any part of his authority.

SEC. 355. Treasurer

The Treasurer, who shall be a Member Director, shall be the chief financial
officer of the Exchange and shall be responsible to the Board for proper
accounting and reporting of the funds of the Exchange. The Treasurer shall be
the Chairman of the Finance Committee.

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SEC. 356. Assistant Treasurer

Any Assistant Treasurer shall have such authority and perform such duties
as prescribed by the Bylaws and Rules, the Board, the President or the
Treasurer.

SEC. 360. Indemnification of Directors, Officers and Employees

(A) The Exchange shall indemnify to the maximum extent provided by law
including, but not limited to, indemnification for judgments, fines, amounts
paid in settlement, and reasonable expenses, including attorney's fees, any
person made or threatened to be made a party to any action or proceeding,
whether civil, criminal or administrative, by reason of the fact that such
person, such person's testator or intestate is or was an officer, director,
employee, member of any committee of the Exchange or served at the request of
the Exchange in any capacity with any other corporation, any partnership, joint
venture, trust, employee benefit plan, or other enterprise, provided that such
person did not act in bad faith, and provided that in criminal actions or
proceedings, in addition, such person had no reasonable cause to believe that
his conduct was unlawful.

(B) Except as specifically permitted by applicable law, no person who is or
was an officer, director, employee, member of any committee of the Exchange
shall be indemnified in any way if such person has brought the action or
proceeding against the Exchange, its officers, directors, employees or any
committee of the Exchange.

ARTICLE 4

COMMITTEES

SEC. 400. Committee Designation

(A) The Exchange shall have such Standing Committees, Special Committees
and Regular Committees as are provided in the Bylaws or Rules. The Chairman of
the Board may appoint, with the consent of the Board, Regular Committees in
addition to those named in the Bylaws or Rules.

(B) The Chairman of the Board shall appoint, with the approval of the
Board, the following Regular Committees: an Adjudication Committee, an Appeals
Committee, an Arbitration Committee, a Business Conduct Committee, a Bylaws
Committee, a Control Committee, a Finance Committee, a Floor Committee and a
Membership Committee.

SEC. 401. Executive Committee

(A) The Board shall appoint an Executive Committee that shall be a Standing
Committee and shall consist of the Chairman of the Board, the Vice Chairman of
the Board, the Treasurer, if he is a director, and two additional Directors
appointed by the Board at its first meeting after the annual meeting of Members.
The Chairman of the Board shall be the Chairman of the Executive Committee and
the Vice Chairman of the Board shall be the Vice Chairman of the Executive
Committee. If the Treasurer is not a Director, he shall be authorized and
entitled to attend all meetings and to provide advice to the Committee.

(B) The Executive Committee shall have and may exercise the authority of
the Board. The Executive Committee shall have the power to perform other duties
as are specified by the Board or as are provided in the Bylaws and Rules.

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(C) Any action taken by the Executive Committee shall be submitted to the
Board at its next meeting for ratification. Except to the extent that the rights
of third parties acquired by such action may be impaired, the Board may amend or
rescind any such action.

SEC. 402. Powers of Committees

(A) A Standing Committee shall have the authority of the Board to the
extent provided in the Bylaws, Rules or any resolutions of the Board and subject
to applicable provisions of law.

(B) A Special Committee shall have only the powers specifically delegated
to it by the Board and shall not have any powers that a Standing Committee may
not exercise under applicable provisions of law.

(C) A Regular Committee shall have such powers as may be delegated to it in
the Bylaws or Rules or by the Board; provided, however, that such powers shall
in no case exceed the powers that the Board might delegate lawfully to an
officer of the Exchange.

(D) All Committees shall have all powers necessary incident to the
discharge of their duties.

SEC. 403. Composition of Committees

(A) A Standing Committee shall consist of at least three members, all of
whom shall be Directors. The Board, by resolution adopted by a majority of the
entire Board, may designate Standing Committees from among its members.

(B) A Special Committee shall consist of as many members of the Board as
the Chairman of the Board, with the consent of the Board, shall appoint. All
members of a Special Committee shall be members of the Board.

(C) A Regular Committee shall be composed of such persons as the Chairman
of the Board with the consent of the Board shall appoint or as the Class B
Member may elect as provided in the Bylaws or Rules.

(D) Except as otherwise provided in the Bylaws or Rules, the Chairman of
the Board shall appoint a Chairman of each committee and may appoint such Vice
Chairmen as he deems desirable.

SEC. 404. Term of Committees

Unless otherwise specifically provided in the Bylaws or Rules, members of
any committee shall hold office until the first meeting of the Board following
the annual meeting of Members and until their successors are appointed.

SEC. 405. Removal, Resignation and Vacancies

(A) Members of Committees hold office subject to the pleasure of the Board.
A member of a Committee elected or appointed by the Board may be removed with or
without cause.

(B) A member of a Committee or of any subcommittee may resign at any time
by tendering written notice of his resignation to the Chairman of the Board.
Unless contingent upon acceptance, such resignation will be effective on the
date specified, or if no date is

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specified, on the date tendered. A member of a Standing or Special Committee
shall cease to be a committee member upon the termination of his membership on
the Board.

(C) The Chairman of the Board may remove with the consent of the Board,
with or without cause, any Chairman, Vice Chairman or any member of a committee
whom he has appointed.

(D) In the event there is a vacancy on a Standing Committee, the Board may
fill such vacancy. In the event there is a vacancy on a Special Committee or a
Regular Committee, the Chairman of the Board, with the consent of the Board, may
fill such vacancy.

SEC. 406. Meetings of Committees

(A) Unless otherwise specifically provided in the Rules, regular meetings
of committees and subcommittees shall be held on such date and at such time as
the committee or subcommittee shall determine.

(B) The chairman of any committee or any subcommittee shall have the
authority to call a special meeting of such committee or subcommittee to be held
on such date and at such time as the chairman shall determine.

(C) Notice of all meetings of committees and subcommittees may be in
writing, by telephone, or by other means of communication. Such notice shall be
made not less than one hour before such meeting.

(D) Any action required or permitted to be taken by a committee or
subcommittee may be taken without a meeting if all the members of the committee
or subcommittee consent in writing to the adoption of a resolution authorizing
such action.

(E) Any one or more members of a committee or subcommittee may participate
in a meeting by means of a conference telephone or similar communications device
allowing all persons participating in the meeting to hear each other at the same
time. Participation by such means shall constitute presence in person at a
meeting.

SEC. 407. Quorum; Vote

(A) Unless otherwise specifically provided in the Bylaws or Rules,
one-third of the members of a committee or any subcommittee shall constitute a
quorum for the transaction of business.

(B) Unless otherwise specifically provided in the Bylaws or Rules, any
action taken by a majority of members of a committee or subcommittee present at
a meeting at which a quorum is present shall be a valid action of the committee
or subcommittee.

SEC. 408. Subcommittees Authorized

The Board may designate, at any time, from its members, a subcommittee, or
subcommittees, as it may deem necessary or appropriate. Each subcommittee shall
have all of the authority of the committee to the extent provided in such
designation, in the Bylaws or in the Rules subject to any applicable provision
of Law.

SEC. 409. Alternates

(A) The Board may designate one or more Directors as alternate members of
any standing committee.

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(B) The Chairman of the Board may designate one or more Directors as
alternate members of any special committee.

(C) The Chairman, with the consent of the Board, may designate one or more
persons as alternate members of a regular committee.

(D) Any alternate or alternate committee member appointed or elected
pursuant to this Section 409 may replace one or more absent members of any such
committee.

ARTICLE 5

AMENDMENTS TO BYLAWS AND RULES

SEC. 500. Amendment of Bylaws

(A) Any Bylaw may be adopted, amended or deleted by the Board with the
approval of the Memberships. After approval by the Board by a vote of two-thirds
of the entire Board at any regular or special meeting thereof, a proposed Bylaw,
amendment or deletion of the Bylaws shall be voted upon by the Memberships at
any meeting of Members. The proposed Bylaws, amendment or deletion shall be
adopted by the affirmative vote of a majority of the Memberships, voting
together as a single class, at such meeting. Notice of the proposed Bylaw,
amendment or deletion must be given in accordance with Section 203 and shall
specifically set forth the entire Bylaw, amendment or deletion proposed.

SEC. 501. Amendment of Rules

Any Rule may be added, amended or deleted by a vote of a majority of the
entire Board.

SEC. 502. Amendments Affecting Existing Contracts

Unless provided to the contrary in the Bylaws or Rules or in the resolution
adopting an amendment, or deletion of the Bylaws or Rules, any amendment or
deletion of the Bylaws or of the Rules that relates to contracts traded on the
Exchange shall be binding on contracts entered into before and after such
amendment or deletion. Unless provided to the contrary in a resolution adopting
an amendment, or deletion that affects the amount of money to be paid, or grade,
quality or quantity of merchandise to be received, under any contract shall be
effective only with respect to the delivery month immediately following the last
delivery month in which there is an open position on the date such amendment or
deletion becomes effective.

SEC. 503. Effective Date of Amendments

All Bylaws, Rules and amendments thereto are effective and binding on
Members and shall govern all matters to which they are applicable ten days
following receipt of prior approval from the Commission or following receipt of
notification that such prior approval is unnecessary or at such date as is fixed
by the Board.

SEC. 504. Technical Amendments

The Board, by majority vote at any meeting, may change the numbers and
captions of the Bylaws and Rules or amend the Bylaws and Rules to correct
references to Bylaws, Rules, statutes, regulations or to correct typographical
errors of similar matters. The Board may make such changes effective
immediately.

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ARTICLE 6

CLEARING DEPARTMENT

SEC. 600. Purpose

All contracts for the purchase and sale of commodities for future delivery,
and all options contracts, made in accordance with the Bylaws and Rules of the
Exchange, shall be cleared through the Clearing Department of the Exchange or a
Clearing facility designated by the Board.

SEC. 601. Qualifications

The Clearing Department or a facility designated by the Board shall
prescribe the qualifications of its own members. No person shall be eligible to
clear Exchange contracts who is not a Member or Member Firm of the Exchange.

SEC. 602. Principle of Substitution

When a contract in commodities is cleared through the Clearing Department,
the Clearing Department shall be deemed substituted as Seller to the Buyer, and
as Buyer to the Seller, and thereupon shall have all the rights and be subject
to all the liabilities of the Buyer and Seller with respect to such contract.

ARTICLE 7

EMERGENCIES

SEC. 700. Definitions

As used in this Article 7 of the Bylaws:

(A) The term "emergency" shall mean any occurrence, circumstance or event
as defined by the Commission in accordance with the applicable provisions of the
Act that in the opinion of the Board requires immediate action and threatens or
may threaten such things as the fair and orderly trading or liquidation of any
commodity futures or options contract traded on the Exchange. Occurrences,
circumstances or events that the Board may deem emergencies are limited to:

(1) any manipulative activity or attempted manipulative activity;

(2) any actual, attempted or threatened corner, squeeze, congestion or
undue concentration of positions;

(3) any circumstance or circumstances that may materially affect the
performance of futures or options contracts traded on the Exchange;

(4) any action taken by or against the government of the United
States, any foreign government, any state or local government, or by any
other Exchange, any board of trade or trade association, whether foreign or
domestic, which action may have a direct impact on trading on the Exchange;

(5) any circumstance that may have a severe, adverse effect on the
physical functions of the Exchange including, for example, fires or other
casualties, bomb threats, substantial inclement weather, power failures,
communication or transportation

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breakdowns, computer system breakdowns, screen-based trading system
breakdowns and malfunctions of plumbing, heating, ventilation and air
conditioning systems;

(6) the bankruptcy or insolvency of any Class A Member or Member Firm
or the imposition or service of any lien, attachment, execution or other
levy or an injunction or other restraint against a Class A Member or Member
Firm or their assets by any governmental agency, court, arbitrator or
judgment creditor which event may affect the ability of the Class A Member
or Member Firm to perform on its contracts or otherwise to engage in
business;

(7) the occurrence of a "Reportable Emergency Event" or "Financial
Emergency" with respect to a Class A Member or Member Firm, as defined in
Section 850(C) or (D) of the Bylaws;

(8) any circumstance in which it appears, in the judgment of the
Board, that a Class A Member or Member Firm: (i) has failed to perform on
its futures or options contracts, or (ii) is insolvent or is in such
financial or operational condition or is conducting its business in such a
manner that such Class A Member or Member Firm cannot be allowed to
continue its business without jeopardizing the safety of customer funds, of
Class A Members or of the Exchange; or

(9) any other unusual, unforeseeable and adverse circumstance with
respect to which it is not practicable for the Exchange to submit, in
timely fashion, a rule to the Commission for prior review.

(B) The term "two-thirds vote of the Board" shall mean the affirmative vote
of members of the Board constituting two-thirds of the Board, either (i)
physically present and voting at which a quorum of the Board is physically in
attendance or (ii) voting in any manner other than at a meeting at which a
quorum is physically in attendance as permitted by applicable state corporation
law.

(C) The term "physical emergency" shall mean, in addition to those events
that are set forth in this Section 700(A)(5), any computer malfunction, backlog
or delay in clearing trades or in processing any documents relating to clearing
trades, any floor occurrences that threaten an orderly market, or any similar
events.

(D) The term "temporary emergency rule" shall mean a rule or resolution
adopted, under this Article 7 of the Bylaws, to meet an emergency.

SEC. 701. Emergency Action

(A) In the event of an emergency, the Exchange, by two-thirds vote of the
Board and subject to the applicable provisions of the Act, as it may be amended,
and to the applicable rules and regulations promulgated thereunder, may adopt
and place into immediate effect a temporary emergency rule.

(B) A temporary emergency rule, including any modification thereof, may not
extend beyond the duration of the emergency as determined by the Board. In no
event, however, shall such a temporary emergency rule, or any modification
thereof, extend for more than 90 days after the temporary emergency rule is
placed in effect.

(C) Any temporary emergency rule may provide for, or may authorize the
Exchange, the Board or any Committee of the Exchange to undertake actions that,
in the sole

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discretion of the Board or of any Committee of the Exchange, are necessary or
appropriate to meet the emergency including, but not limited to, such actions
as:

(1) limiting trading to liquidation only, in whole or in part, or
limiting trading to liquidation only except for new transactions in futures
or options contracts by parties who have the commodity to deliver pursuant
to such sales;

(2) extending or shortening the expiration date for trading in futures
or options contracts;

(3) extending the time of delivery under futures contracts or
expiration of futures or options contracts;

(4) changing delivery points, the manner of delivery or the means of
delivery;

(5) modifying price limits;

(6) modifying circuit breakers;

(7) ordering the liquidation of futures and/or options contracts, the
fixing of a settlement price or the reduction of positions held by or for
any or all Class A Members, Member Firms or customers;

(8) ordering the transfer of futures and/or options contracts and the
money, securities and property securing such contracts held by or on behalf
of customers by a Class A Member or Member Firm to another Class A Member
or Member Firm or to other Class A Members or Member Firms willing or
obligated to assume such contracts;

(9) extending, limiting or changing hours of trading;

(10) suspending trading; and

(11) modifying or suspending any provision of the rules of the
contract market, including any contract market prohibition against dual
trading.

SEC. 702. Action by Board

(A) In an emergency, or to determine whether an emergency exists, a meeting
of the Board may be convened without notice.

(B) In the event of an emergency where a quorum of the Board is
unavailable, all trading on the Exchange may be suspended by an affirmative vote
of two-thirds of the members of the Board present. In the event of an emergency
in which no other member of the Board is present, the Chairman, or in his
absence, the Vice Chairman, or in their absences any one Director present, or in
their absences, the President, or in all their absences, the Executive Vice
President, or in all their absences, any Vice President, may order suspension of
trading for such period as in their or his judgment is necessary.

SEC. 703. Physical Emergencies

(A) In the event that the physical functioning of the Exchange is, or is
threatened to be, severely and adversely affected by a physical emergency, the
Chairman, or in his

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absence the Vice Chairman, or in their absences the President, or in all their
absences the Executive Vice President, or in his absence any Senior Vice
President, or in their absences any member of the Executive Committee, or in
their absences any Board member present, or in all their absences any Vice
President, may take any action that in his opinion, is necessary or appropriate
to deal with the physical emergency. Such action may include, but is not limited
to, the suspension of trading in any or all contracts, a delay in the opening of
trading in any or all contracts, the extension of trading in the time of trading
in any or all futures and options contracts or the extension of trading in the
last day of trading in any or all futures and options contracts.

(B) No action taken under this Section 703 shall continue in effect for
more than five days unless an extension of time has been granted by the
Commission in accordance with the applicable provisions of the Act. Any action
taken under this Section 703 shall be subject to review and to modification by
the Board.

(C) The officials designated in Section 703(A) may order the removal of any
restriction imposed under this Section 703 if, in their judgment, the physical
emergency has abated sufficiently to permit the physical functioning of the
Exchange to continue in an orderly manner absent such restriction.

ARTICLE 8

DISCIPLINARY AND SUMMARY PROCEEDINGS

SEC. 800. Members Subject to Disciplinary Proceedings

(A) The Exchange may impose such fines, penalties and other sanctions on
Class A Members, Member Firms and employees of Class A Members and Member Firms
that violate the Bylaws or Rules of the Exchange or any resolution or order of
the Board or Committee of the Exchange.

(B) In this Article 8 of the Bylaws and in the Rules relating to
Disciplinary Proceedings, the term "Rule" means the Bylaws or rules of the
Exchange or any resolution or order of the Board or Committee of the Exchange.

(C) A Class A Member is responsible for the acts of his employees and any
Member Firm upon which the Class A Member has conferred privileges. A Member
Firm is responsible for the acts of its partners, its directors, its officers
and its employees.

SEC. 801. Disciplinary Proceedings

The Board shall adopt rules establishing procedures whereby Class A
Members, Member Firms and employees of Class A Members and Member Firms may be
subjected to fines, penalties and other sanctions for violations by the Bylaws
and Rules.

SEC. 802. Failure to Pay Fine

(A) If a Class A Member or Member Firm defaults in the payment of any fine
on the date due, then such Class A Member or Member Firm shall be suspended
automatically without further action of the Exchange, and shall remain suspended
until such fine is paid in full and the Class A Member or Member Firm is
reinstated as provided in Section 862.

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(B) If such Class A Member or Member Firm is suspended as provided in
Section 802(A) and continues in default of the payment of any fine for a period
of 30 days, then the Class A Member or Member Firm shall be expelled
automatically and without further notice by the Exchange and the membership of
such Class A Member or by which such Member Firm is conferred privileges shall
be sold and the proceeds for such sale paid and applied as provided in Section
861.

(C) If an employee of a Class A Member or of a Member Firm defaults in the
payment of any fine, then the Class A Member or Member Firm shall be responsible
for its full and complete payment. A failure of the Class A Member or Member
Firm to pay such a fine shall result in the suspension or expulsion of such
Class A Member or Member Firm as set forth in this Section 802.

SEC. 850. Definitions

As used in Sections 850 through 863, the following terms have the meanings
set forth in this Section 850;

(A) the term "Claimant" shall mean a person who has filed a Notice of
Claim;

(B) the term "Notice of Claim" shall mean a notice of claim against the
proceeds of a sale of a membership;

(1) the filing of a petition, answer or other document, or the taking
of any other action, by such Class A Member with respect to itself or
against such Class A Member, seeking liquidation, reorganization or other
relief from creditors under the provisions of the Bankruptcy Code of the
United States (11 U.S.C. sec. sec. 101 et seq.), as it may be amended, or
under the provisions of any other state or federal law for the relief of
insolvent debtors;

(2) the dissolution of such Class A Member;

(3) the insolvency (as defined by any applicable state or federal
statute) of such Class A Member;

(4) the failure of such Class A Member to meet any applicable
financial requirements of the Exchange, any self-regulatory organization or
any state or federal regulatory agency;

(5) the failure of such Class A Member to meet, when due, any margin
call issued by the Clearing Department, any clearing organization of any
other Exchange, or any person;

(6) the failure or inability of such Class A Member to comply with any
of his contracts or the default by such Class A Member under any commodity
contracts on the Exchange; or

(7) the imposition or service of any lien, attachment, execution or
other levy or any injunction or other restraint against such Class A Member
or Member Firm or their assets by any court, government agency, arbitrator
or judgment creditor, which injunction or restraint may affect the ability
of such Class A Member to perform his contracts or otherwise to engage in
business.

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(D) the term "Financial Emergency" shall mean, with respect to any Class A
Member, any situation in which, in the sole discretion of the Executive
Committee, the financial condition of such Class A Member is not adequate for
such Class A Member to meet his financial obligations or otherwise to engage in
business; or, is such that it would not be in the best interests of the Exchange
for such Class A Member to continue in business; and

(E) the term "Class A Member" shall include, as applicable, Class A Members
and Member Firms and employees of Class A Members and of Member Firms.

SEC. 851. Duty to Report Emergency Event

If a Reportable Emergency Event occurs with respect to any Class A Member,
then such Class A Member shall advise the Exchange of the occurrence of the
Reportable Emergency Event by the fastest available means of communication and
shall also immediately deliver to the Exchange by the fastest available means, a
written notice. Such notice shall specify:

(1) the nature of the Reportable Emergency Event;

(2) the date and time of occurrence;

(3) whether such Class A Member consents to a summary suspension
pursuant to this Article and, if so, whether such Class A Member waives a
hearing with respect thereto; and

(4) whether such Class A Member consents to a suspension that includes
a prohibition against employment by another Class A Member as a floor
employee.

SEC. 852. Summary Suspension; Action by the President

If a Class A Member consents to a summary suspension as provided in Section
851, either orally or in writing, then the President shall immediately suspend
such Class A Member in accordance with the terms of the consent and notify the
membership of such suspension.

SEC. 853. Summary Suspension; Action of the Executive Committee

(A) If at any time the Executive Committee determines, in its sole
discretion, that there is a substantial question whether a Financial Emergency
exists with respect to any Class A Member, or, if at any time, the Exchange
receives a notice of a Reportable Emergency Event from a Class A Member, then
the Executive Committee may suspend, or take any other action against, such
Class A Member, any Class A Member upon which such Class A Member has conferred
member privileges, any Class A Member guaranteed by such Class A Member, or any
Class A Member guaranteeing such Class A Member, as it deems appropriate to
protect the Exchange and its Class A Members. The Executive Committee may take
such action regardless of whether the Class A Member has advised the Exchange as
provided in Section 851, whether such Class A Member has consented to a
suspension or whether such Class A Member has waived a hearing.

(B) Any action taken under the authority of this Section 853 may be taken
without notice or a hearing where the Class A Member waives notice or hearing,
or when the Executive Committee determines, in its sole discretion, that the
furnishing of notice, and an opportunity for a hearing before such action is
taken, or both, is not practicable under the circumstances.

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(C) In any case where the Executive Committee has taken action against a
Class A Member without prior notice or hearing because of impracticability, the
Exchange shall give promptly to such Class A Member the notice required by
Section 854(B) and an opportunity to be heard.

(D) The powers and duties of the Executive Committee under this Article 8,
including the obligation to hold a hearing, if requested, may be delegated to a
subcommittee of any two or more members of the Executive Committee or to any
other committee of the Exchange as the Chairman of the Executive Committee may
decide in his sole discretion.

SEC. 854. Notice

(A) Any notice to a Class A Member given before action is taken under
Section 853 shall state (1) the Financial Emergency or other situation that is
believed to cause the need for summary action by the Executive Committee and (2)
the date, time and place of the hearing.

(B) Any notice to a Class A Member given after action is taken under
Section 853 shall state (1) the action taken, (2) a brief summary of the reason
for the action, (3) the effective time, date and duration of the action and (4)
that upon written request by a date certain, a hearing will be held.

SEC. 855. Hearing Decision

(A) The Executive Committee, or other Committee, as provided in Section
853(D), shall render a decision as provided in this Bylaw. The decision shall be
final and may not be appealed.

(B) A hearing, if requested, shall be fair and shall be conducted in
accordance with procedures adopted by such committee for any hearing before it;
but, during such hearing,

(1) the formal rules of evidence shall not apply;

(2) the Compliance Department of the Exchange shall present the case
or the charges and penalties that are the subject of the hearing;

(3) the Class A Member shall be permitted to appear personally and
shall have the right to be represented by counsel or other person of his
choice;

(4) the Class A Member and the Compliance Department shall be entitled
to cross-examine any persons appearing as witnesses at the hearing;

(5) the Class A Member may call witnesses and present such evidence as
may be relevant to the charges;

(6) the committee shall be the sole judge of the relevancy of such
evidence;

(7) the Exchange shall require persons who are within its jurisdiction
and who are called as witnesses to appear and produce evidence or testify
and shall make reasonable efforts to secure the presence of all other
persons called as witnesses whose testimony would be relevant; and

(8) the committee may impose a summary penalty upon any person whose
actions impede the progress of the hearing.

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(C) Promptly following the close of hearings, the Executive Committee shall
render a decision in writing, based on the weight of the evidence. The decision
shall include:

(1) a description of, and the reasons for, the summary action;

(2) a brief summary of the evidence produced at the hearing;

(3) findings and conclusions;

(4) where action has already been taken under Section 853, a
determination that such action be affirmed, modified or reversed; and

(5) a description of any final action taken by the Executive
Committee, its effective date and duration.

SEC. 856. Obligations of Insolvent Class A Members

A Class A Member who is insolvent shall provide to the President, within 30
days of his insolvency and in addition to the Notice provided for in Section
851, a statement of his business affairs as they existed at the time of his
insolvency.

SEC. 857. Creditors of Insolvent Class A Members

(A) Unless the Executive Committee shall direct otherwise, all futures and
options contracts traded on the Exchange, made with or carried for a Class A
Member suspended under this Article 8 of the Bylaws shall be liquidated by the
party carrying the contracts. Such liquidation shall take place in the open
market. If such contracts cannot be liquidated due to the closing of the
Exchange for any reason, then such contracts shall be liquidated on the next day
on which the Exchange is open. The period within which such contracts must be
liquidated shall not include any period during which the provisions of the Rules
limiting price fluctuations would prevent such liquidations.

(B) Within 10 days of the announcement of suspension of a Class A Member,
any Class A Member who has a claim against such suspended Class A Member shall
deliver to the President a Notice of Claim that details all contracts liquidated
under this Section 857 and the net debit or credit balance resulting therefrom
and that details any other claims that such Class A Member may have against the
suspended Class A Member.

(C) Failure to file a Notice of Claim within such period shall bar such
Class A Member from participating in any proceeds that result from any sale of
the membership of the suspended Class A Member.

SEC. 858. Establishment of Valid Claims

(A) The President shall furnish the suspended Class A Member and all Class
A Members who have filed Notices of Claim as required by Section 857 with copies
of all Notices of Claim filed under Section 857 and the sworn statement of the
suspended Class A Member filed under Section 856. The President shall also
specify a date not more than 10 business days from the date on which such
Notices of Claim are furnished to such Class A Members by which the suspended
Class A Member or any claimant Class A Member may file an objection to any
claim.

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(B) If a suspended Class A Member or any claimant Class A Member fails to
file an objection to a claim before the date set by the President, then that
Class A Member shall have waived all rights to object to such claim or claims.

(C) In the event that any claim is disputed, the validity of such claim
shall be determined by arbitration in accordance with Chapter 5 of the Rules.
The arbitration shall proceed as if the objecting Class A Member has filed a
Demand for Arbitration. The objecting Class A Member shall pay the fee
prescribed in Rule sec. 5.37. The arbitrators shall determine whether and to
what extent such claim is valid; and, whether and to what extent a claimant is
entitled to participate in the proceeds of a sale of the membership of such
suspended Class A Member.

SEC. 859. Expelled Class A Member

All memberships held by a Class A Member who is expelled from the Exchange
shall be sold and the proceeds paid and applied as provided in Sections 860 and
861.

SEC. 860. Sale of Membership

(A) If within 10 business days from the date of the decision of the
Arbitration Committee or from the last date established by the President for
filing of objections to Notices of Claim, whichever is later, a Class A Member
suspended under this Article 8 of the Bylaws does not pay all valid claims, then
the membership of the suspended Class A Member shall be sold in accordance with
this Section 860 and the proceeds of the sale of such membership shall be
distributed in accordance with Section 861.

(B) When a membership is sold pursuant to this Section 860, written notice
of such sale stating the date and time of such sale shall be sent to the Class A
Member and the membership 10 days prior to such sale.

(C) All sales should be made by the President or his designee on the floor
of the Exchange to the highest bidder at open outcry but in no event less than
the highest bid then posted at the Exchange for the transfer of a membership.
Any Class A Member may purchase such membership. Any membership so purchased
shall be free from and clear of any claims, liens or attachments. Such sale
shall be final and binding and not subject to challenge. Payment for the
purchase of such membership shall be made to the Exchange.

SEC. 861. Disposition of Proceeds

The proceeds of any sale of a membership shall be paid and applied in the
following order of priority:

(1) to the Exchange in full satisfaction of any amounts due to the
Exchange;

(2) the balance, if any, to Class A Members on allowed claims arising
out of transactions in Exchange futures and options contracts and/or any
other Exchange business of such Class A Members, pro rata; provided that no
partner shall share in the proceeds in the sale of a membership of one of
his partners until all claims of other Class A Members have been satisfied
in full;

(3) the remaining balance, if any, to persons who have financed the
purchase of the membership provided that documentation regarding such
purchase was filed with the Membership Committee prior to the financing of
such purchase; and

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(4) the balance, if any, to the Class A Member whose membership was
sold or to his legal representative, except that, notwithstanding any other
provision of the Bylaws or Rules, for purposes of this subsection four the
term Class A Member shall not include lessees, but shall mean the
beneficial owner of such membership.

SEC. 862. Reinstatement of Suspended Class A Member

(A) A Class A Member suspended under Sections 852, 853 or 855 may apply for
reinstatement at any time prior to the sale of his membership.

(B) When a Class A Member applies for reinstatement, he shall deliver to
the President a schedule of all of his creditors, a statement of the amounts
owed, the nature of the settlement by which claims of a creditor were paid, and
such other information as the President may request.

(C) Written notice of the time and place of the meeting of the Board at
which the application for reinstatement is to be considered shall be sent to the
suspended Class A Member and to the membership not less than five days prior to
the meeting.

(D) The vote of a majority of the Board present and voting is required to
reinstate the suspended Class A Member. Where a Class A Member has failed,
however, to give timely the notice required by Section 851, a vote of two-thirds
of the entire Board is required to reinstate the suspended Class A Member.

(E) If a Class A Member suspended under this Article 8 of the Bylaws is not
reinstated within one year from the date of his suspension, then such Class A
Member may not be reinstated.

SEC. 863. Death of a Class A Member

Upon receiving due notice of the death of a Class A Member, the President
or his designee shall announce such death to the Members and shall post a notice
of such fact on the floor of the Exchange for five days. Any Class A Member or
Member Firm holding open futures or options contracts for such deceased Class A
Member shall liquidate such open futures or options contracts in accordance with
the provisions of Section 857.

ARTICLE 9

DEFINITIONS

SEC. 900. Singular Number; Gender

Unless the context otherwise requires, words importing the singular number
include the plural; and words importing the masculine gender include the
feminine and neuter gender as appropriate.

SEC. 901. Act

The term "Act" shall mean the Commodity Exchange Act.

SEC. 902. Association

The term "Association" shall mean the New York Mercantile Exchange, a
corporation organized and existing under the Not-for-Profit Corporation Law of
the State of New York.

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SEC. 903. Board

The term "Board" shall mean the Board of Directors of the Exchange.

SEC. 904. Business Day

The term "business day" shall mean any day on which the Exchange is open
for trading.

SEC. 905. Bylaws

The term "Bylaws" shall mean the Bylaws of the Exchange adopted by members
for the regulation and management of the Exchange.

SEC. 906. Charter

The term "Charter" shall mean the Certificate of Incorporation of the
Exchange.

SEC. 907. Class A Member

The term "Class A Member" shall mean those members of the Exchange holding
a Class A membership in the Exchange.

SEC. 908. Class B Member

The term "Class B Member" shall mean NYMEX Holdings.

SEC. 909. Clearing Association or Clearing House

The terms "Clearing Association," "Clearing House" or "Clearing Department"
shall mean the department of the Exchange or any corporation, organization or
other entity authorized by the Board to clear commodity futures and options
contracts executed on the Exchange.

SEC. 910. Commission

The term "Commission" shall mean the Commodity Futures Trading Commission.

SEC. 911. Commodity

The term "commodity" shall mean any or all goods, articles, services,
rights and interests in which contracts for future delivery, or options on such
contracts, are presently or in the future dealt in, or are subject to the Rules.

SEC. 912. Customer

The term "customer" shall mean a person, including another Member, for whom
a Member or Member Firm carries an account.

SEC. 913. Exchange

The term "Exchange" shall mean New York Mercantile Exchange, Inc., a
corporation organized and existing under the General Corporation Law of the
State of Delaware.

SEC. 914. Firm

The term "Firm" shall mean a corporation, partnership, association or sole
proprietorship.

F-26
<PAGE> 172

SEC. 915. Floor Broker

The term "Floor Broker" shall mean any Member who has been granted floor
trading privileges pursuant to the Bylaws and Rules and who, pursuant to said
Bylaws and Rules, buys and sells any commodity futures or options contract on
the Exchange for any person other than himself.

SEC. 916. Floor Member

The term "Floor Member" shall mean any Class A Member who is either a Floor
Broker or a Floor Trader.

SEC. 917. Floor Trader

The term "Floor Trader" shall mean any Member who has been granted floor
trading privileges pursuant to the Bylaws and Rules and who, pursuant to said
Bylaws and Rules, buys and sells any commodity futures or options contract on
the Exchange for his own account.

SEC. 918. Futures Contract

The term "futures contract" shall mean any contract for the purchase or
sale of a commodity for future delivery which is traded on or subject to the
Bylaws and Rules of the Exchange.

SEC. 919. Futures Commission Merchant

The term "futures commission merchant" shall mean a person who is or is
required to be registered with the Commission as a futures commission merchant.

SEC. 920. NYMEX Holdings

The term "NYMEX Holdings" shall mean NYMEX Holdings, Inc., a corporation
organized and existing under the General Corporation Law of the State of
Delaware.

SEC. 921. Holiday

The term "holiday" shall mean any day which the Board may designate as an
Exchange holiday on which day the Exchange shall be closed.

SEC. 922. Member

The term "Member" shall mean Class A Members and Class B Members.

SEC. 923. Member Firm

The term "Member Firm" shall mean any firm upon which membership privileges
on the Exchange have been conferred by a Class A Member.

SEC. 924. Membership

The term "Membership" shall mean a membership of any class of membership of
New York Mercantile Exchange, Inc. created pursuant to the Charter and Bylaws.

SEC. 925. Non-Member

The term "non-member" shall mean any person who is not a Member of the
Exchange.

F-27
<PAGE> 173

SEC. 926. Options Contract

The term "Options Contract" shall mean any transaction or agreement in
interstate commerce which is or is held out to be of the character of, or is
commonly known to the trade as, an "option," "privilege," "indemnity," "bid,"
"offer," "put," "advance guaranty," or "decline guaranty," and which is subject
to Regulation under the Act.

SEC. 927. Person

The term "person" shall mean an individual or firm.

SEC. 928. President

The term "President" shall mean the President of the Exchange or his
authorized representative.

SEC. 929. Rule

The term "Rule" shall mean any Rule of the Exchange adopted by the Board.

SEC. 930. Trading Member

The term "Trading Member" shall mean a Floor Member.

SEC. 931. Trade

The term "trade" shall mean any purchase or sale of any contract made in
accordance with Exchange Bylaws or Rules.

SEC. 932. Buyer and Seller

For the purpose of these Bylaws, the terms "Buyer" and "Seller" shall mean
the long Clearing Member and the short Clearing Member, respectively.

F-28
<PAGE> 174

PART II

INFORMATION NOT REQUIRED IN PROSPECTUS

ITEM 20. INDEMNIFICATION OF DIRECTORS AND OFFICERS

Section 145 of the Delaware General Corporation Law permits a corporation,
under specified circumstances, to indemnify its directors, officers, employees
or agents in connection with actions suits or proceedings brought against them
by a third party or in the right of the corporation by reason of the fact that
they were or are such directors, officers, employees or agents, against expenses
incurred in any such action, suit or proceeding. NYMEX Holdings' bylaws provide
for the indemnification of the directors, officers, employees, and agents of
NYMEX Holdings and its subsidiaries to the fullest extent that may be permitted
by Delaware law from time to time, and provide for various procedures relating
thereto. Certain provisions of NYMEX Holdings' certificate of incorporation
protect its directors against personal liability for monetary damages resulting
from breaches of their fiduciary duty of care, except as set forth below. NYMEX
Holdings' directors, however, will remain liable for breaches of their duty of
loyalty to NYMEX Holdings and its stockholders, as well as for acts or omissions
not in good faith or that involve intentional misconduct or a knowing violation
of law and transactions from which a director obtained improper personal
benefit. NYMEX Holdings' certificate of incorporation also will not absolve
directors of liability under Section 174 of the DGCL, which makes directors
personally liable for unlawful dividends or unlawful stock repurchases or
redemptions in certain circumstances and expressly sets forth a negligence
standard with respect to such liability.

Under Delaware law, directors, officers, employees, and other individuals
may be indemnified against expenses (including attorneys' fees), judgments,
fines and amounts paid in settlement in connection with specified actions, suits
or proceedings, whether civil, criminal, administrative or investigative (other
than an action by or in the right of the corporation - a "derivative action") if
they acted in good faith and in a manner they reasonably believed to be in or
not opposed to the best interests of NYMEX Holdings and, with respect to any
criminal action or proceeding, had no reasonable cause to believe their conduct
was unlawful. A similar standard of cure is applicable in the case of a
derivative action, except that indemnification only extends to expenses
(including attorneys' fees) incurred in connection with defense or settlement of
such an action and Delaware law requires court approval before there can be any
indemnification of expenses where the person seeking indemnification has been
found liable to the Company.

In addition, the board of directors of NYMEX Holdings has not entered into
indemnification agreements with the directors or officers.

II-1
<PAGE> 175

ITEM 21. EXHIBITS AND FINANCIAL STATEMENT SCHEDULE

The following exhibits are filed as a part of this Registration Statement:

<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION OF EXHIBIT
------- ----------------------
<C> <S>
2.1 -- Form of Agreement and Plan of Merger (between New York
Mercantile Exchange and New York Mercantile Exchange, Inc.)
(included as Annex A to the proxy statement and prospectus).
2.2 -- Form of Agreement and Plan of Merger (between New York
Mercantile Exchange, Inc., the Registrant Holdings, Inc. and
NYMEX Merger Sub, Inc.) (included as Annex B to the proxy
statement and prospectus).
3.1 -- Form of Certificate of Incorporation of the Registrant
(included as Annex C to the proxy statement and prospectus).
3.2 -- Bylaws of the Registrant (included as Annex D to the proxy
statement and prospectus).
3.3 -- Certificate of Incorporation of NYMEX Exchange, Inc.
(included as Annex E to the proxy statement and prospectus).
3.4 -- Bylaws of NYMEX Exchange, Inc. (included as Annex F to the
proxy statement and prospectus).
4.1 -- Specimen Stock Certificate representing shares of common
stock.*
5.1 -- Opinion of Clifford Chance Rogers & Wells LLP, counsel to
the Registrant, regarding the legality of the securities to
be issued.*
8.1 -- Opinion of Clifford Chance Rogers & Wells LLP, counsel to
the Registrant, relating to certain tax matters.*
10.1 -- Material Contracts*
23.1 -- Consent of Deloitte & Touche LLP.
23.2 -- Consent of Clifford Chance Rogers & Wells LLP (included in
Exhibit 5.1).
24.1 -- Power of Attorney (included in the signature pages hereto).
27.1 -- Financial Data Schedule
99.1 -- Form of Proxy and Ballot
</TABLE>

- ---------------

* To be filed by amendment.

II-2
<PAGE> 176

ITEM 22. UNDERTAKINGS

(a) The undersigned registrant hereby undertakes:

(1) To file, during any period in which offers or sales are being made,
a post-effective amendment to this registration statement:

(i) to include any prospectus required by Section 10(a)(3) of the
Securities Act;

(ii) to reflect in the prospectus any facts or events arising
after the effective date of the registration statement (or
the most recent post-effective amendment thereof) which,
individually or in the aggregate, represent a fundamental
change in the information set forth in the registration
statement. Notwithstanding the foregoing, any increase or
decrease in volume of securities offered (if the total dollar
value of securities offered would not exceed that which was
registered) and any deviation from the low or high end of the
estimated maximum offering range may be reflected in the form
of prospectus filed with the Commission pursuant to Rule
424(b) if, in the aggregate, the changes in volume and price
represent no more than 20 percent change in the maximum
aggregate offering price set forth in the "Calculation of
Registration Fee" table in the affective registration
statement; and

(iii) to include any material information with respect to the plan
of distribution not previously disclosed in the registration
statement or any material change to such information in the
registration statement.

(2) That, for the purpose of determining any liability under the
Securities Act, each such post-effective amendment shall be deemed
to be a new registration statement relating to the securities
offered therein, and the offering of such securities at that time
shall be deemed to be the initial bone fide offering thereof.

(3) To remove from registration by means of a post-effective amendment
any of the securities being registered which remain unsold at the
termination of the offering.

(b) (1) The undersigned Registrant hereby undertakes as follows: that prior
to any public reoffering of the securities registered hereunder through use of a
prospectus which is a part of this registration agreement, by any person or
party who is deemed to be an underwriter within the meaning of Rule 145(c), the
issuer undertakes that such reoffering prospectus will contain the information
called for by the applicable registration form with respect to reofferings by
persons who may be deemed underwriters, in addition to the information called
for by the other items of the applicable form.

(2) The Registrar undertakes that every prospectus: (i) that is filed
pursuant to paragraph (1) immediately preceding or (ii) that
purports to meet the requirements of Section 10(a)(3) of the
Securities Act and is used in connection with an offering of
securities subject to Rule 415, will be filed as a part of an
amendment to the Registration Statement and will not be used until
such amendment is effective, and that, for purpose of determining
ant liability under the Securities Act, each such post-effective
amendment shall be deemed to be a new registration statement
relating to the securities

II-3
<PAGE> 177

offered therein, and the offering of such securities at that time
shall be deemed to be the initial bone fide offering thereof.

(c) Insofar as indemnification for liabilities arising under the Securities
Act may be permitted to directors, officers and controlling persons of the
registrant pursuant to the foregoing provisions, or otherwise, the registrant
has been advised that in the opinion of the Securities and Exchange Commission
such indemnification is against public policy as expressed in the Securities Act
and is, therefore, unenforceable. In the event that a claim for indemnification
against such liabilities (other than the payment by the registrant of expenses
incurred or paid by a director, officer or controlling person in the successful
defense of any action, suit or proceeding) is asserted by such director, officer
or controlling person in connection with the securities being registered, the
registrant will, unless in the opinion of its counsel the matter has been
settled by controlling precedent, submit to a court of appropriate jurisdiction
the question of whether such indemnification by it is against public policy as
expressed in the Securities Act and will be governed by the final adjudication
of such issue.

(d) The undersigned registrant hereby undertakes to respond to requests for
information that is incorporated by reference into the prospectus pursuant to
Items 4, 10(b), 11, or 13 of this form, within one business day of receipt of
such request, and to send the incorporated documents by first class mail or
other equally prompt means. This includes information contained in documents
filed subsequent to the effective date of the registration statement through the
date of responding to this request.

(e) The undersigned registrant hereby undertakes to supply by means of a
post-effective amendment all information concerning a transaction, and the
company being acquired involved therein, that was not the subject of and
included in the registration statement when it became effective.

II-4
<PAGE> 178

SIGNATURES

Pursuant to the requirements of the Securities Act of 1933, as amended, the
Registrant has duly caused this Registration Statement to be signed on its
behalf by the undersigned, thereunto duly authorized, in the City of New York,
State of New York on the 14th day of February 2000.

By: /s/ DANIEL RAPPAPORT
-----------------------------------
Name: Daniel Rappaport
Title: Chairman

POWER OF ATTORNEY

KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears
below hereby constitutes and appoints Daniel Rappaport and R. Patrick Thompson
and each of them (with full power to each of them to act alone), his true and
lawful attorneys-in-fact and agents, with full power of substitution and
resubstitution, for him and in his name, place and stead, in any and all
capacities, to sign any and all amendments (including post-effective amendments)
to this Registration Statement, and to file the same, with all exhibits thereto,
and other documents in connection therewith, with the Securities and Exchange
Commission, granting unto each of such attorneys-in-fact and agents full power
and authority to do and perform each and every act and thing requisite and
necessary to be done in connection with such matters, as fully to all intents
and purposes as he might or could do in person, hereby ratifying and confirming
all that each of such attorneys-in-fact and agents or his substitute or his
substitutes may lawfully do or cause to be done by virtue hereof.

Pursuant to the requirements of the Securities Act of 1933, as amended,
this Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.

<TABLE>
<CAPTION>
SIGNATURES NAME AND TITLE DATE
---------- -------------- ----
<C> <S> <C>

/s/ DANIEL RAPPAPORT Chairman of the Board February 14, 2000
- ------------------------------------ (Principal Executive Officer)
Daniel Rappaport

/s/ ALBERT H. HELMIG, JR. Vice Chairman February 10, 2000
- ------------------------------------
Albert H. Helmig, Jr.

/s/ PATRICK F. CONROY Senior Vice President -- Finance February 10, 2000
- ------------------------------------ (Principal Financial and
Patrick F. Conroy Accounting Officer)
</TABLE>

II-5
<PAGE> 179

<TABLE>
<CAPTION>
SIGNATURES NAME AND TITLE DATE
---------- -------------- ----
<C> <S> <C>
/s/ STEPHEN ARDIZZONE Director February 10, 2000
- ------------------------------------
Stephen Ardizzone

/s/ MADELINE BOYD Director February 10, 2000
- ------------------------------------
Madeline Boyd

/s/ NEIL CITRONE Director, Secretary February 10, 2000
- ------------------------------------
Neil Citrone

/s/ ROBERT COAKLEY Director February 10, 2000
- ------------------------------------
Robert Coakley

/s/ GARY COHN Director February 10, 2000
- ------------------------------------
Gary Cohn

/s/ CHARLES NAPIER COLLYNS Director February 10, 2000
- ------------------------------------
Charles Napier Collyns

/s/ JOHN CONHEENEY Director February 10, 2000
- ------------------------------------
John Conheeney

/s/ THOMAS COSTANTINO Director February 10, 2000
- ------------------------------------
Thomas Costantino

/s/ ANTHONY GEORGE GERO Director February 10, 2000
- ------------------------------------
Anthony George Gero

/s/ E. BULKELEY GRISWOLD Director February 8, 2000
- ------------------------------------
E. Bulkeley Griswold

/s/ SCOTT HESS Director February 10, 2000
- ------------------------------------
Scott Hess

/s/ STEVEN KARVELLAS Director February 10, 2000
- ------------------------------------
Steven Karvellas
</TABLE>

II-6
<PAGE> 180

<TABLE>
<CAPTION>
SIGNATURES NAME AND TITLE DATE
---------- -------------- ----
<C> <S> <C>
/s/ HARLEY LIPPMAN Director February 10, 2000
- ------------------------------------
Harley Lippman

/s/ KEVIN MCDONNELL Director February 14, 2000
- ------------------------------------
Kevin McDonnell

/s/ GARY RIZZI Director February 10, 2000
- ------------------------------------
Gary Rizzi

/s/ RICHARD SAITTA Director February 10, 2000
- ------------------------------------
Richard Saitta

/s/ RICHARD SCHAEFFER Director, Treasurer February 10, 2000
- ------------------------------------
Richard Schaeffer

/s/ ROBERT STEELE Director February 7, 2000
- ------------------------------------
Robert Steele

/s/ MITCHELL STEINHAUSE Director February 10, 2000
- ------------------------------------
Mitchell Steinhause

/s/ DAVID WENDER Director February 9, 2000
- ------------------------------------
David Wender
</TABLE>

II-7
<PAGE> 181

EXHIBIT INDEX

- ---------------

* To be filed by amendment.

<PAGE> 1

EXHIBIT 23.1

INDEPENDENT AUDITORS' CONSENT

We consent to the use in this Registration Statement of NYMEX Holdings, Inc. on
Form S-4 of our report dated March 19, 1999 (January 5, 2000 as to Notes 14 and
15) relating to the consolidated financial statements of the New York Mercantile
Exchange and subsidiaries, appearing in the Prospectus, which is part of this
Registration Statement.

We also consent to the reference to us under the heading "Experts" in such
Prospectus.

DELOITTE & TOUCHE LLP

New York, New York
February 11, 2000

<ARTICLE> 5
<LEGEND>
THE AMOUNTS DISCLOSED IN THE FINANCIAL DATA SUMMARY SHOULD BE READ IN
CONJUNCTION WITH THE CONSOLIDATED FINANCIAL STATEMENTS AND THE NOTES THERETO.
</LEGEND>
<MULTIPLIER> 1,000

<S> <C> <C>
<PERIOD-TYPE> 9-MOS YEAR
<FISCAL-YEAR-END> SEP-30-1999 DEC-31-1998
<PERIOD-START> JAN-01-1999 JAN-01-1998
<PERIOD-END> SEP-30-1999 DEC-31-1998
<CASH> 37,309 14,353<F1>
<SECURITIES> 87,575 92,259
<RECEIVABLES> 15,043 9,715
<ALLOWANCES> 0 0
<INVENTORY> 0 0
<CURRENT-ASSETS> 146,463 128,002
<PP&E> 257,440 244,552
<DEPRECIATION> 31,737 21,552
<TOTAL-ASSETS> 395,443 374,936
<CURRENT-LIABILITIES> 2,770 15,861
<BONDS> 100,000 100,000
0 0
0 0
<COMMON> 0 0
<OTHER-SE> 0 0
<TOTAL-LIABILITY-AND-EQUITY> 395,443 374,936
<SALES> 0 0
<TOTAL-REVENUES> 108,959 130,459
<CGS> 0 0
<TOTAL-COSTS> 0 0
<OTHER-EXPENSES> 86,156 114,085
<LOSS-PROVISION> 0 2,814
<INTEREST-EXPENSE> 5,778 7,958
<INCOME-PRETAX> 20,389 12,341
<INCOME-TAX> 9,787 6,263
<INCOME-CONTINUING> 10,602 6,078
<DISCONTINUED> 0 0
<EXTRAORDINARY> 0 0
<CHANGES> 0 0
<NET-INCOME> 10,602 6,078
<EPS-BASIC> 0 0
<EPS-DILUTED> 0 0

<FN>
<F1>INCLUDES CASH AND CASH EQUIVALENTS
</FN>

</TABLE>

<PAGE> 1

Exhibit 99.1
[proxy]

NEW YORK MERCANTILE EXCHANGE

SPECIAL MEETING OF MEMBERS OF THE
NYMEX DIVISION - , 2000

PROXY

I hereby constitute and appoint with full power of
substitution, as my proxy or proxies, to appear for me in my name, place and
stead, to cast my ballot with regard to the demutualization of the New York
Mercantile Exchange at the Special Meeting of Members of the NYMEX Division of
the New York Mercantile Exchange to be held on , 2000 and at any
adjournment thereof, all as more fully described in the proxy statement and
prospectus accompanying this proxy. My ballot is enclosed.

------------------------------
Signature of Member

----------------------- ------------------------------
Date Print Name of Member

If no direction is given on the ballot or if no ballot is enclosed, an
executed proxy will be voted for the demutualization.

<PAGE> 2

[ballot]

NEW YORK MERCANTILE EXCHANGE

SPECIAL MEETING OF MEMBERS

OF THE NYMEX DIVISION - , 2000

The Undersigned hereby votes as indicated below on the following matter:

Approval and adoption of the demutualization of the New York Mercantile Exchange
("NYMEX"), as more fully described in the proxy statement and prospectus
accompanying this ballot, in which:

1. NYMEX will merge with and into New York Mercantile Exchange,
Inc., a Delaware nonstock corporation, which will survive this
merger.

AND

2. Immediately thereafter, New York Mercantile Exchange, Inc.
will merge with NYMEX Merger Sub, Inc., a Delaware corporation
and a wholly-owned subsidiary of NYMEX Holdings, Inc. New York
Mercantile Exchange, Inc. will survive this merger.

/ / FOR / / AGAINST

THE BOARD OF DIRECTORS OF NYMEX RECOMMENDS

THAT YOU VOTE "FOR" THE PROPOSED DEMUTUALIZATION