NYMEX HOLDINGS INC, S-4/A, 2000-05-01

NYMEX HOLDINGS INC
S-4/A, 2000-05-01
SECURITY & COMMODITY BROKERS, DEALERS, EXCHANGES & SERVICES

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<PAGE> 1

AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON MAY 1, 2000

REGISTRATION NO. 333-30332
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------

AMENDMENT NO. 2

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 13-4098266
(State or other jurisdiction (Primary Standard Industrial (I.R.S. Employer
of Classification Code Number) Identification Number)
incorporation or organization)
</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)

COPIES 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. [ ]
------------------------
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 MAY 1, 2000

PROXY STATEMENT AND PROSPECTUS

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 demutualization will involve a two-step merger. In the demutualization,
each NYMEX Division membership will be converted into two pieces--one share of
common stock in NYMEX Holdings, Inc., a Delaware for-profit holding company, and
one Class A membership in New York Mercantile Exchange, Inc., a Delaware
non-stock corporation and wholly owned subsidiary of NYMEX Holdings. The common
stock will represent an equity interest in NYMEX Holdings. The Class A
membership will represent the trading privileges currently associated with a
NYMEX Division membership.

We encourage you to read the accompanying proxy statement and prospectus
carefully. PLEASE READ THE SECTION OF THE PROXY STATEMENT AND PROSPECTUS
ENTITLED "RISK FACTORS" BEGINNING ON PAGE 11 FOR A DISCUSSION OF RISKS THAT YOU
SHOULD CONSIDER IN EVALUATING THE DEMUTUALIZATION.

The demutualization plan requires the approval of at least 66 2/3% of the
votes cast at the special meeting, whether in person or by proxy, so long as at
least 150 members vote in favor of the demutualization. Owners of record of
NYMEX memberships are entitled to one vote per member regardless of the number
of memberships owned.

We do not have any current plans to list the common stock of NYMEX Holdings
on an exchange or other trading system. Furthermore, transfers of common stock
and Class A memberships will be subject to transfer restrictions that are
described in this proxy statement and prospectus.

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 MAY 1, 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
NYMEX 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
you be represented at the meeting. Whether or not you plan to attend the special
meeting, please sign, date and return the enclosed ballot and proxy card in the
accompanying postage-paid envelope. If you attend the meeting, you may vote in
person, which will revoke any ballot and signed proxy you have already
submitted. You may also revoke your ballot and proxy at any time before the
meeting by notifying us in writing.

NYMEX must receive your ballot and 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.
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TABLE OF CONTENTS

<TABLE>
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PAGE
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<S> <C>
QUESTIONS AND ANSWERS ABOUT THE DEMUTUALIZATION............. 1
SUMMARY..................................................... 6
RISK FACTORS................................................ 11
NYMEX SPECIAL MEETING....................................... 16
THE DEMUTUALIZATION......................................... 18
WHERE YOU CAN FIND MORE INFORMATION......................... 21
NYMEX....................................................... 22
SELECTED FINANCIAL INFORMATION.............................. 48
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS................................. 49
CAPITALIZATION.............................................. 58
MANAGEMENT.................................................. 59
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.............. 68
DESCRIPTION OF CAPITAL STOCK OF NYMEX HOLDINGS.............. 69
DESCRIPTION OF MEMBERSHIPS OF NYMEX EXCHANGE................ 70
CERTIFICATE OF INCORPORATION AND BYLAW PROVISIONS OF NYMEX
HOLDINGS, INC. AND NYMEX EXCHANGE......................... 77
COMPARISON OF RIGHTS OF NYMEX MEMBERS BEFORE AND AFTER THE
DEMUTUALIZATION........................................... 79
FEDERAL INCOME TAX CONSEQUENCES OF THE DEMUTUALIZATION...... 86
LEGAL MATTERS............................................... 88
EXPERTS..................................................... 88
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>

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When we refer to NYMEX members or simply members throughout this document,
we are referring to owners of record 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.

When we refer to the NYMEX Division we are referring to New York Mercantile
Exchange excluding its wholly owned subsidiary Commodity Exchange, Inc. When we
refer to the COMEX Division we are referring to Commodity Exchange, Inc.
------------------------

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> 5

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 8.

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. One change is 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 79.

3. Q: WHAT IS THE PURPOSE OF 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.

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<PAGE> 6

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. As is typical of a holding company structure, the holding
company, NYMEX Holdings, will control the voting power of its operating
subsidiary, NYMEX Exchange, with regard to most items that require a vote
of NYMEX Exchange's members. In addition, the holding company will be the
primary vehicle for capital raising and strategic transactions. Purely
exchange matters, such as trading and non-over-the-counter clearing, will
be concentrated at the NYMEX Exchange level. Because the rules governing
these activities are in large part addressed in NYMEX Exchange's bylaws,
any amendment to those bylaws must be approved by holders of at least a
majority of the memberships of NYMEX Exchange. Furthermore, NYMEX
Exchange will have the authority under Delaware law to assess members to
recoup financial losses because it is a non-stock membership
organization. This assessment authority will be similar to the assessment
authority that NYMEX has today. This assessment authority 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 and offer different products
and business lines from within one organization through the use of
separate subsidiaries.
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.

2
<PAGE> 7

7. Q: ARE THERE ANY RESTRICTIONS ON MY ABILITY TO SELL COMMON STOCK AND CLASS A
MEMBERSHIPS?

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 because Class A memberships can only be owned by
persons with membership privileges.

The staple feature can only be eliminated with the approval of holders of
at least a majority of the shares of common stock of NYMEX Holdings.

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

A: NYMEX Holdings would likely seek the unstapling of the Class A
memberships and 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. 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: 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 79.

10. 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.

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<PAGE> 8

11. 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.

12. 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 vote
to unstaple NYMEX Holdings common stock from the Class A memberships of
NYMEX Exchange.

13. 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 vote to unstaple the Class A
memberships and common stock.

14. 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.

15. Q: WILL THE DEMUTUALIZATION AFFECT THE RULES FOR QUALIFICATION AS A MEMBER
OF THE EXCHANGE?

A: No. The rules for the qualification of members of NYMEX Exchange will be
the same as the current rules for the qualification of members of NYMEX.

16. Q: WHAT WILL HAPPEN TO THE 84 CURRENTLY AUTHORIZED BUT UNISSUED NYMEX
MEMBERSHIPS?

A: NYMEX currently has 900 authorized memberships. 816 of these memberships
are outstanding. The remaining 84 authorized but unissued NYMEX
memberships, commonly referred to as "treasury memberships," will be
cancelled without consideration upon the effectiveness of the
demutualization.

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 IRS to issue a ruling on key aspects
of the demutualization. We expect to receive a response from the IRS in
June or July of this year.

18. Q: WHEN WILL THE DEMUTUALIZATION BE COMPLETED?

A: The demutualization will be completed as soon as practicable after the
conditions to demutualization are satisfied, including approval of the
demutualization by the members, receipt of appropriate "contract market"
designations from the Commodity Futures Trading Commission and receipt of
a favorable tax ruling from the Internal Revenue Service. We anticipate
that these conditions will be satisfied and that the demutualization will
be completed in June or July of this year.

4
<PAGE> 9

19. 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 upon the effectiveness of the demutualization.

20. Q: WHAT WILL HAPPEN IF MEMBERS DO NOT APPROVE THE DEMUTUALIZATION?

A: If members do not approve the demutualization, or if the demutualization
is not completed for any reason, the board of directors of NYMEX
presently intends to continue to operate NYMEX in its current form.

21. 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> 10

SUMMARY

This summary highlights information contained elsewhere in this proxy
statement and prospectus. This summary 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 summary together with 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 that it is able to respond promptly and
effectively to competitive and technological developments. These changes in the
exchange environment could reduce NYMEX's ability to offer trading volume and
open interest and, therefore, its ability to offer liquidity to market
participants. NYMEX believes that demutualization will position it to enter into
transactions that could enhance its ability to offer liquidity to market
participants.
6
<PAGE> 11

DEMUTUALIZATION OF NYMEX

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--a right to dividends and liquidation proceeds.

- In the first merger, each of the 84 authorized but unissued NYMEX
memberships will be cancelled without consideration.

Second Merger

- Immediately after the first merger is completed, NYMEX Exchange will
merge with a subsidiary, named NYMEX Merger Sub, Inc., 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:

- each NYMEX Division membership will become one Class A membership in
NYMEX Exchange and one share of common stock of NYMEX Holdings;

- NYMEX Holdings will hold the sole outstanding Class B membership in
NYMEX Exchange;

- NYMEX Exchange will be a subsidiary of NYMEX Holdings; and

- both NYMEX Exchange and NYMEX Holdings will be organized under Delaware
law.
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<PAGE> 12

The diagrams below show the ownership structure of NYMEX both before and
after the demutualization.

[Demutualization Chart]
[Graphic: A before and after demutualization graphic consisting of two columns.
The first column consists of an oval above a rectangle with an arrow pointing
from the oval down to the rectangle. Inscribed in the oval is "New York
Mercantile Exchange Members" and inscribed in the rectangle is "New York
Mercantile Exchange (New York not-for-profit corporation)". Written beside of
the arrow is "816 Outstanding Memberships," "84 Unissued Memberships," "900
Authorized Memberships". The second column consists of an oval and two
rectangles in succession below it with an arrow pointing from the oval to the
first rectangle, and from the first rectangle to the second rectangle.
Separately, there is an arrow pointing from the oval to the second rectangle.
Inscribed in the oval is "Former New York Mercantile Exchange Members,"
inscribed in the first rectangle is "NYMEX Holdings, Inc. (Delaware stock
corporation)", and inscribed in the second rectangle is "New York Mercantile
Exchange, Inc. (Delaware non-stock corporation)". Written beside the arrow
pointing from the oval to the first rectangle is "816 Shares of Common Stock
(representing equity component)". Written beside the arrow pointing from the
first rectangle to the second rectangle is "One Class B Membership (representing
equity component)". Written beside the arrow pointing from the oval directly to
the second rectangle below is "816 Class A Memberships (representing trading
privileges)".]

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. These
transactions 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 each organized as a for-profit
corporation.

- 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.
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<PAGE> 13

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

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 and will be members of 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 11 for a description of the risks
associated with the demutualization.

CHANGES IN GOVERNANCE OF NYMEX

One of the guiding principles in structuring the demutualization 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.
However, due primarily to the fact that NYMEX Holdings and NYMEX Exchange are
organized under Delaware law, as opposed to New York law, some changes will be
made to the governance mechanics. The material changes include the following:

<TABLE>
<CAPTION>
PRE-DEMUTUALIZATION POST-DEMUTUALIZATION
------------------- --------------------
<S> <C>
- - Members vote on the basis of one member - - Each NYMEX membership is represented by
one vote, regardless of the number of one share of common stock and one Class A
memberships owned. membership. Common stockholders vote on
the basis of one vote per share of common
stock. 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 holders of at least a
votes at a meeting held to approve such a majority of the outstanding shares of
transaction, provided that at least 150 common stock of NYMEX Holdings.
members vote in favor of the transaction.
</TABLE>

9
<PAGE> 14

<TABLE>
<CAPTION>
PRE-DEMUTUALIZATION POST-DEMUTUALIZATION
------------------- --------------------
<S> <C>
- - Member directors serve staggered terms of - The board of NYMEX Holdings is divided
three years each. The chairman and vice into three classes. Each director serves a
chairman serve staggered terms of two term of three years. The board of NYMEX
years each. Public directors serve Exchange must mirror the board of NYMEX
staggered terms of two years each. Holdings.

- - The quorum requirement for meetings of - The quorum requirement for meetings of
the board is six. the board of NYMEX Holdings and NYMEX
Exchange is eight, which is one-third of
the 22 total directors.

- - NYMEX cannot pay dividends except in - NYMEX Holdings and NYMEX Exchange may pay
certain limited circumstances. dividends when, as and if declared by
their respective boards of directors.
</TABLE>

RECOMMENDATION OF THE NYMEX BOARD

THE BOARD OF DIRECTORS OF NYMEX UNANIMOUSLY RECOMMENDS THAT MEMBERS VOTE
FOR APPROVAL OF THE DEMUTUALIZATION PLAN.

VOTES REQUIRED TO APPROVE THE DEMUTUALIZATION

The demutualization requires the affirmative vote of 66 2/3% of the votes
cast at the special meeting held to approve the demutualization, so long as at
least 150 members vote in favor of the demutualization. NYMEX directors are
entitled to exercise [17] votes representing [2.6]% of the votes entitled to be
cast in the demutualization.

CONDITIONS TO THE MERGER

The mergers will not be consummated unless:

- the mergers are approved by the requisite vote of NYMEX members;

- NYMEX Exchange receives the appropriate "contract market" designations
from the Commodity Futures Trading Commission; and

- NYMEX receives a favorable ruling from the Internal Revenue Service
regarding certain Federal income tax aspects of the demutualization.

ABSENCE OF APPRAISAL OR DISSENTERS' RIGHTS

Members who object to the demutualization will have no appraisal or
dissenters' rights under applicable law.
10
<PAGE> 15

RISK FACTORS

This section discusses the material risks associated with the
demutualization that you should consider when deciding whether to vote in favor
of the demutualization.

RISKS RELATED TO THE DEMUTUALIZATION

WE MAY NOT BE SUCCESSFUL IN RUNNING A FOR-PROFIT ENTERPRISE.

NYMEX has historically operated as a not-for-profit corporation. As a
result, our current management does not at present have experience in running
NYMEX as a for-profit enterprise. We have no operating history as a for-profit
business by which our management decisions and financial results can be
evaluated. It is possible that operating losses may be incurred in the future
and that profitability may never be achieved or sustained.

THE ABSENCE OF AN ACTIVE TRADING MARKET FOR OUR SHARES OR THE LACK OF
LIQUIDITY IN ANY TRADING MARKET THAT MAY DEVELOP FOR OUR SHARES MAY PREVENT
YOU FROM SELLING OUR SHARES WHENEVER YOU DESIRE.

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. Nor can we assure you that an active trading market will
develop for our shares or that, if a trading market for our common stock
develops, there will be liquidity in that market. Therefore, you may not be able
to sell your shares at the times that you would like to sell them.

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.

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 filed a request for a ruling with the IRS on January 31, 2000 that
neither NYMEX nor NYMEX members will recognize gain or loss as a result of
either the first merger or the second merger. Even if the IRS issues the
requested ruling, there can be no assurance that the IRS will not, in the
future, challenge our characterization of the demutualization and determine that
the demutualization is a taxable transaction to NYMEX and its members. In that
event, each member would likely be required to recognize a gain or loss. For
further information regarding the amount of such gain or loss or other
information regarding federal income tax consequences of the demutualization,
see "Federal Income Tax Consequences of the Demutualization" beginning on page
86.

11
<PAGE> 16

RISKS RELATED TO A FUTURE UNSTAPLING OF COMMON STOCK AND CLASS A MEMBERSHIPS

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.
Any transaction of this type would have to be approved by holders of 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 an unstapling would be that non-members of NYMEX Exchange would become
stockholders of NYMEX Holdings. It is even possible that non-member stockholders
will one day control NYMEX Holdings thereby effectively controlling NYMEX
Exchange and its operations.

THE BOARD OF DIRECTORS OF NYMEX HOLDINGS WILL BE REQUIRED TO ACT ON BEHALF
OF THE STOCKHOLDERS OF NYMEX HOLDINGS.

The board of directors of NYMEX Holdings will be required under Delaware
law to make decisions and take actions designed to maximize profits and
stockholder value. While the common stock and Class A memberships are stapled,
the members of NYMEX Exchange and the stockholders of NYMEX Holdings are the
same. If the common stock and Class A membership are unstapled, particularly if
the unstapling is done in connection with an initial public offering, then the
stockholder and member groups will diverge and the board of NYMEX Holdings will
be required by its fiduciary duties to act in the best interest of the
stockholders. These interests may not always be consistent with the interests of
members of NYMEX Exchange.

FAILURE TO RECEIVE APPROVALS FROM THE CFTC MAY PREVENT MEMBERS FROM
REALIZING THE FULL EQUITY VALUE OF THEIR MEMBERSHIPS.

We may 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
entity. No assurance can be given that we will receive any required approvals
from the CFTC. If CFTC approvals were required but were not obtained, we would
not be able to complete these transactions and members may not be able to
realize the full benefits of the demutualization.

RISKS RELATED TO OUR BUSINESS

WE FACE COMPETITION FROM OTHER EXCHANGES WHO PROVIDE SERVICES SIMILAR TO
OUR OWN.

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 the
open outcry and electronic trading 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, represent a significant source of existing and potential
competition for NYMEX. For more information regarding our competitive
environment see "NYMEX -- NYMEX's Competitive Environment" on page 28.

12
<PAGE> 17

FAILURE TO ADAPT TO RAPID TECHNOLOGICAL AND OTHER CHANGES COULD HAVE A
MATERIAL ADVERSE EFFECT ON OUR BUSINESS.

The markets in which we compete are characterized by rapidly changing
technology, evolving industry standards, frequent enhancements to existing
services and products, the introduction of new services and products and
changing customer demands. These market characteristics are heightened by the
increasing use of the Internet and the trend for companies from many industries
to offer Internet-based products and services. The widespread adoption of new
Internet, networking or telecommunications technologies or other technological
changes could require us to incur substantial expenditures to modify or adapt
our services or infrastructure. Our future success will depend on our ability to
respond to changing technologies on a timely and cost-effective basis. Our
operating results may be adversely affected if we cannot successfully develop,
introduce or market new services and products. In addition, any failure by us to
anticipate or respond quickly to changes in technology and customer preferences,
or any significant delays in other product development efforts, could have a
material adverse effect on our business, financial condition and operating
results.

THE TREND TOWARDS ELECTRONIC TRADING AND AWAY FROM OPEN OUTCRY TRADING
COULD DIVERT VOLUME AWAY FROM NYMEX'S OPEN OUTCRY TRADING SYSTEM.

Both newly-formed organizations and established exchanges are increasingly
employing electronic trading systems that provide fast, low cost execution of
trades. These organizations and exchanges are routing order flow away from
exchanges employing traditional open-outcry trading systems. Many market
participants believe that these electronic trading systems represent a threat to
the continued viability of the open-outcry method of trading. Futures exchanges
such as the London International Financial Futures Exchange and the Sydney
Futures Exchange have closed traditional trading systems and replaced them with
electronic systems. NYMEX provides electronic trading of futures and options
contracts through the NYMEX ACCESS(R) system. These electronic trading systems
may divert volume away from NYMEX's open-outcry trading system. We may
experience reduced volume on our open-outcry trading system, and therefore incur
lower clearing and transaction fees, as a result of the continued development of
electronic trading systems. For further information regarding the trend toward
electronic trading systems, see the heading "NYMEX -- Technology -- Open-Outcry
versus Electronic Trading" on page 41. For further information regarding the
NYMEX ACCESS(R) system see "NYMEX -- Technology -- NYMEX ACCESS(R)" on page 42.

WE MAY NOT BE SUCCESSFUL IN EXECUTING OUR INTERNATIONAL STRATEGY.

To date, we have taken steps to internationalize our customer base as
further described under "NYMEX -- Strategy -- International Strategy" on page
26. There can be no assurance that we will be able to succeed in marketing and
operating our products and developing localized services in international
markets. We may experience difficulty in managing our international operations
because of, among other things, competitive conditions overseas, difficulties in
supervising foreign operations, managing currency risk, language and cultural
differences, political instability and unexpected changes in regulatory
requirements or the failure to obtain requested regulatory approvals overseas.
Any of these could have a material adverse effect on the success of our
international operations and, consequently, on our business.

13
<PAGE> 18

WE CANNOT PREDICT OUR FUTURE CAPITAL NEEDS OR OUR ABILITY TO SECURE
ADDITIONAL FINANCING.

We anticipate, based on management's experience and current industry
trends, that our existing cash resources will be sufficient to meet our
anticipated working capital and capital expenditure requirements for at least
the next twelve months. However, we may need to raise additional funds to:

- support more rapid growth;

- develop new or enhanced services and products;

- respond to competitive pressures;

- acquire or develop complementary technologies; and

- respond to unanticipated requirements.

We cannot assure you that we will be able to obtain additional financing on
acceptable terms.

THE LOSS OF OUR LARGEST MARKET DATA VENDORS COULD HAVE A MATERIAL ADVERSE
EFFECT ON OUR BUSINESS, FINANCIAL CONDITION AND RESULT OF OPERATIONS.

Of the 59 vendors through whom we distribute market data, nine represented
approximately 80% of our market data revenue in 1999. Market data revenue
represented approximately 24% of our consolidated operating revenues for 1999.
The termination of some or all of our agreements with these vendors without
customers entering new subscription agreements with another vendor, could have a
material adverse effect on our business, financial condition and results of
operations.

OUR REVENUES MAY BE ADVERSELY IMPACTED IF THE VALUE OF OUR MARKET DATA
DECLINES OR IF WE BECOME SUBJECT TO LEGISLATION OR REGULATION LIMITING THE
PRICES THAT WE CAN CHARGE FOR OUR MARKET DATA.

We derive a significant percentage of our revenues from sales of market
data. The proliferation of competing trading systems may result in competing
streams of similar market data which may diminish the value of our market data
and the prices that we can charge for it. We could also become subject to
legislation or regulation limiting the prices that we can charge for market
data. Any limitations on the prices we may charge for market data could have a
material adverse effect on our business, financial condition and operating
results.

A DECLINE IN THE TRADING VOLUME OF LIGHT SWEET CRUDE OIL OR HENRY HUB
NATURAL GAS CONTRACTS COULD ADVERSELY AFFECT OUR RESULTS OF OPERATIONS.

Light sweet crude oil futures and options and Henry Hub natural gas futures
and options accounted for 42% and 21%, respectively, of our total 1999 trading
volume. Therefore, we are particularly affected by declines in trading volumes
of these contracts. Downturns in trading volumes of these contracts could have a
material adverse affect on our revenues and, therefore, on our profitability and
results of operations.

THE BOARD OF DIRECTORS OF NYMEX EXCHANGE HAS THE POWER TO DETERMINE THE
ELIGIBILITY CRITERIA FOR MEMBERSHIP.

NYMEX Exchange will be governed by rules which are substantially identical
to the rules which govern NYMEX today. Accordingly, the board of directors of
NYMEX

14
<PAGE> 19

Exchange, like the board of directors of NYMEX, will have the power to determine
the eligibility criteria for membership in NYMEX Exchange and the fees and rules
attached to that membership. Therefore the board will continue to have the
discretion to determine or change the standards for membership privileges and
financial requirements for member firms at any time without a vote of members.

SYSTEM LIMITATIONS AND FAILURES COULD HARM OUR BUSINESS.

Our business depends on the integrity and performance of the computer and
communications systems supporting it. If our systems cannot be expanded to keep
pace with increased demand or fail to perform, we could experience: (1)
unanticipated disruptions in service; (2) slower response times; and (3) delays
in the introduction of new products and services. These consequences could
result in lower trading volumes, financial losses, decreased customer service
and satisfaction, litigation or customer claims and regulatory sanctions. We
have experienced occasional systems failures and delays in the past and could
experience systems failures and delays in the future.

Our systems and operations also are vulnerable to damage or interruption
from human error, natural disasters, power loss, sabotage, computer viruses,
intentional acts of vandalism and similar events. Any system failure that causes
an interruption in service or decreases the responsiveness of service could
impair our reputation, damage our brand name and negatively impact our revenues.
We also rely on a number of third parties for systems support. Any interruption
in these third-party services or a deterioration in the performance of these
services could also be disruptive to our business and have a material adverse
effect on our business, financial condition and operating results.

RISKS RELATED TO REGULATION

AMENDMENTS TO THE COMMODITY EXCHANGE ACT OR AMENDMENTS TO CFTC REGULATIONS
MAY ADVERSELY AFFECT OUR ABILITY TO CONDUCT OUR BUSINESS.

We are regulated by the CFTC under the authority given by the federal
Commodity Exchange Act. The CFTC is a sunset agency. This means that it must be
periodically reauthorized by legislation. Congress is presently reviewing the
Commodity Exchange Act in the context of its regular reauthorization process. It
is possible that Congress could amend the Commodity Exchange Act or that the
CFTC could amend its regulations in a manner which will adversely affect our
ability to conduct our business by changing regulatory requirements or by
reducing regulatory requirements and thereby permitting additional competition
from existing or new markets or from dealers in derivative instruments.

WE MAY NOT BE ABLE TO MAINTAIN OUR SELF REGULATORY RESPONSIBILITIES.

It is uncertain whether the CFTC will change its regulatory scheme in
response to the demutualizations of exchanges. It is possible that the CFTC will
take the position that exchanges, organized as for-profit corporations, are not
as capable as membership organizations in maintaining adequate compliance and
surveillance programs. This position could lead to new CFTC regulations that
would require us to modify or restructure our regulatory functions. We believe
that our regulatory programs and capabilities contribute significantly to our
brand name and reputation. Although we believe that we will retain these
responsibilities, we cannot assure you that we will not be required to rely on a
third party to perform these responsibilities. If we are required to rely on a
third party to perform regulatory and oversight functions, we may incur
substantial expenses and suffer severe harm to our reputation if the regulatory
and oversight services are inadequate.

15
<PAGE> 20

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 7).

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 7).

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 a quorum of members vote in favor of the demutualization. Under
the NYMEX bylaws, the presence, either in person or by proxy of 150 members
represents a quorum.

Owners of record of NYMEX memberships are entitled to one vote per member,
regardless of the number of memberships owned, 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.

VOTING PROCEDURES

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 ballot and proxy and returning it in the
envelope provided. When a ballot and proxy card is returned properly signed and
dated, the vote of the NYMEX member will be

16
<PAGE> 21

cast in accordance with the instructions on the ballot. If a member does not
return a signed proxy card, no vote will be cast on behalf of that member.

Members are urged to mark the box on the ballot to indicate how their vote
is to be cast. If a member returns a signed proxy card but does not return a
ballot or does not indicate on the ballot 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.

17
<PAGE> 22

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.

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.

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.

EXCHANGE OF MEMBERSHIPS

As a result of the mergers, each membership in NYMEX will be converted
automatically into one Class A membership in NYMEX Exchange and one share of
common stock of NYMEX Holdings. No exchange or transfer of any certificates
representing memberships will be necessary to effectuate the conversion.

EFFECTIVENESS 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
described below have been satisfied.

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 appropriate "contract
market" designations 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" on page 86.

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<PAGE> 23

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. The board may terminate the merger
agreements if the conditions to the demutualization are not satisfied or it
determines, for any reason, that the demutualization would not be in the best
interests of NYMEX or its members.

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" on page 86 for a discussion of important tax matters.

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. The NYMEX Division is
designated as a contract market for each of the 27 futures and options contracts
it currently lists for trading. These contracts are listed on the chart on page
37. In addition, the NYMEX Division has been designated as a contract market for
Central Appalachian coal futures, Middle East sour crude oil futures and
Mid-Columbia electricity futures. The NYMEX Division also has been designated as
a contract market for eight futures contracts that are currently delisted and
would require CFTC approval to relist. It will be necessary for either NYMEX to
obtain approval before the demutualization from the CFTC to transfer those
designations to NYMEX Exchange or NYMEX Exchange to obtain new designations for
each of the futures and options contracts noted above.

19
<PAGE> 24

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.

20
<PAGE> 25

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
SEC. 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.

NYMEX Holdings filings are available to the public at the SEC's web site at
http://www.sec.gov.

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<PAGE> 26

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.

OVERVIEW

NYMEX is the largest commodity exchange for trading energy futures and
options contracts, including contracts for crude oil, heating oil, unleaded
gasoline, propane, natural gas and electricity, based upon data reported by the
Futures Industry Association. NYMEX is also the second largest commodity
exchange for trading platinum group metals contracts, including futures
contracts for platinum and palladium and options contracts for platinum. Through
NYMEX's subsidiary, Commodity Exchange, Inc., also known as COMEX, NYMEX is the
largest commodity exchange for trading precious metals futures and options
contracts, including contracts for gold and silver, based upon data reported by
the Futures Industry Association. COMEX also provides for trading of copper and
aluminum futures and options contracts, FTSE Eurotop 100(R) stock index futures
and options and FTSE Eurotop 300(R) stock index futures. The FTSE Eurotop
contracts are based on an index designed to measure the collective performance
of a sector of the European equities market.

According to information provided by the Futures Industry Association,
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. Physical commodity based futures
exchanges are exchanges that primarily trade futures contracts based upon a
physical commodity such as crude oil or gold. Futures exchanges include physical
commodity based futures exchanges as well as exchanges that primarily trade
futures contracts based upon financial instruments. The two U.S. futures
exchanges with greater volume, the Chicago Board of Trade and the Chicago
Mercantile Exchange, trade primarily futures contracts based upon financial
instruments such as stock indices or fixed income products. Similarly, on a
worldwide level, those futures exchanges which had greater trading volume in
1999, including the Chicago Board of Trade and the Chicago Mercantile Exchange,
traded primarily equity based and fixed income based financial instruments.

22
<PAGE> 27

The chart below indicates NYMEX's annual trading volume of futures and
options contracts for each of the five years in the period ended December 31,
1999:

ANNUAL TRADING VOLUMES

[Five Year Comparison of Four Most Active Contracts]
[Graphic: Bar graph showing NYMEX's annual trading volume of futures and options
contracts from 1995 to 1999 for each of five categories listed from top to
bottom in a legend to the right of the bar chart including: Light Sweet Crude
Oil, Henry Hub Natural Gas, Gold, Heating Oil, and All Other. Below the
horizontal axis, each year for which trading volume is measured is written in
chronological order from left to right. The categories from top to bottom are
reflected in the bar chart as five bars above each year from left to right. The
vertical axis indicates the number of contracts traded, in thousands, beginning
with zero and increasing, in intervals of ten thousand, to fifty thousand. Each
of the five bars for each category is shaded differently as follows: dots for
Light Sweet Crude Oil, diagonal lines from bottom left to top right for Henry
Hub Natural Gas, white for Gold, diagonal lines from bottom right to top left
for Heating Oil and black for all other. Light Sweet Crude Oil contracts were
traded at a rate of 27,590 in 1995, 28,759 in 1996, 30,562 in 1997, 37,944 in
1998 and 46,022 in 1999. Henry Hub Natural Gas contracts were traded at a rate
of 9,008 in 1995, 10,049 in 1996, 14,003 in 1997, 19,094 in 1998 and 23,015 in
1999. Gold contracts were traded at a rate of 9,788 in 1995, 10,982 in 1996,
11,607 in 1997, 10,935 in 1998 and 12,392 in 1999. Heating Oil contracts were
traded at a rate of 8,970 in 1995, 9,451 in 1996, 9,518 in 1997, 9,533 in 1998
and 9,896 in 1999. All Other contracts were traded at a rate of 18,116 in 1995,
16,559 in 1996, 18,162 in 1997, 17,512 in 1998 and 18,214 in 1999.]

The aggregate trading volume on NYMEX has increased from 73.5 million
futures and options contracts in 1995 to 109.5 million futures and options
contracts in 1999. NYMEX believes that this growth has resulted principally from
increased demand for NYMEX's energy contracts.

NYMEX completed preparations in 1999 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.

At March 31, 2000, NYMEX had approximately 605 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. None of NYMEX's employees
are represented by labor unions.

PURPOSE

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<PAGE> 28

Customers of our markets primarily include commercial producers, refiners
or processors, marketers and users of energy products including industrial
consumers. These market users use NYMEX for both hedging and speculative
purposes. Hedging allows users with an interest in physical inventories to
reduce exposure to risks inherent in price fluctuations. Speculators realize
profit or loss based upon price fluctuations of the underlying commodity.

The charts below set forth the percentage of futures contracts and options
contracts that were traded on NYMEX in 1999 for either hedging or speculating
purposes. NYMEX does not expect these percentages to change in the future.

[NYMEX DIVISION HEDGING VS. SPECULATING CONTRACTS 1999]

<TABLE>
<CAPTION>
HEDGING SPECULATING
------- -----------
<S> <C> <C>
Futures 79.00 21.00
Options 70.10 29.90
</TABLE>

[COMEX DIVISION HEDGING VS. SPECULATING CONTRACTS 1999]

<TABLE>
<CAPTION>
HEDGING SPECULATING
------- -----------
<S> <C> <C>
Futures 60.80 39.20
Options 53.40 46.60
</TABLE>

[TOTAL NYMEX HEDGING VS. SPECULATING CONTRACTS 1999]

<TABLE>
<CAPTION>
HEDGING SPECULATING
------- -----------
<S> <C> <C>
Futures 75.70 24.30
Options 66.50 33.50
</TABLE>

24
<PAGE> 29

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 that it is able to respond promptly and
effectively to competitive and technological developments. These changes in the
exchange environment could reduce NYMEX's ability to offer trading volume and
open interest and therefore its ability to offer liquidity to market
participants. NYMEX believes that demutualization will position it to enter into
transactions that could enhance its ability to offer liquidity.

HISTORY

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 August 1994, NYMEX acquired COMEX which is currently a wholly owned
subsidiary of NYMEX.

STRATEGY

The commodities and securities markets are being affected by the emergence
of 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.

ENERGY CONTRACTS

As the largest exchange for trading energy futures and options, NYMEX
actively participates in the development and integration of the energy markets.
NYMEX

25
<PAGE> 30

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. NYMEX has designed energy futures and options contracts on a
product-by-product basis as related sectors of the energy industry have been
deregulated. NYMEX offers "one-stop shopping" for the energy industry by
providing a wide variety of energy related products in one central marketplace.
For example, with price deregulation of the petroleum markets in the late 1970's
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, NYMEX participated 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, added two additional sets of electricity futures and options
contracts in 1998 and one new futures contract in 1999.

METALS CONTRACTS

NYMEX is pursuing a similar strategy with respect to its metals futures and
options business, attempting to build on its status as the largest 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).

INTERNATIONAL STRATEGY

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
terminals for trading NYMEX ACCESS(R), NYMEX's electronic trading system, in the
United Kingdom and in Australia, through a linkage with the Sydney Futures
Exchange. In addition, NYMEX is in the process of negotiating the renewal of its
terminals for trading in Hong Kong, through a linkage with the Hong Kong Futures
Exchange, now known as the Hong Kong Exchanges and Clearing Limited. In
addition, NYMEX concluded an agreement in 1999 with the Singapore International
Monetary Exchange, now known as the Singapore Exchange Derivatives Trading
Limited, 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.

26
<PAGE> 31

TECHNOLOGY

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), which was initiated in 1993, climbed to
record volumes during 1999--approximately 2.4 million contracts accounting for
approximately 2% of NYMEX's total trading volume in 1999. Volume traded on NYMEX
ACCESS(R) has grown at an average annual rate of approximately 31% during the
period since its inception in 1993 through December 31, 1999. 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 and is less costly to operate and easier to maintain than
the previous system. The new system offers brokers and their customers a wider
range of accounting and data tracking functions. Most importantly, NYMEX
ACCESS(R) now allows for daytime trading as well as the potential to trade
financial and other commodity products, pursuant to joint ventures, in the North
American time zone. Toward this end, in March 2000, NYMEX launched its
electricity contracts for trading exclusively on NYMEX ACCESS(R) throughout the
daytime and night sessions. 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, was also rolled out in 1999 and is expected to be implemented for COMEX
in 2000.

The Clearing 21(R) system was designed to replace NYMEX's trade management
systems, data input systems and clearing systems. These applications are
expected to support any anticipated growth in volume or business expansion for
the next five to ten years. The Clearing 21(R) system clears trades originating
from two sources: the trade management system on the trading floor and NYMEX
ACCESS(R) electronic trading. The system consists of the following six modules:

- Banking -- This module has the ability to handle multi-exchange
requirements as well as process bank transactions, including payments and
receipts, and adjustments.

- Settlement -- Settlement processes and calculates the amounts applied to
margin requirements and determines the payment or amount to be received
on a transaction.

- Asset Management -- Asset management processes and calculates the asset
inventories maintained by a member as well as values them based on
settlement value.

- Deliveries -- This module handles delivery instructions as well as tracks
confirmations of trades.

- Position Management -- Position management aggregates trades to the
clearing member level.

- Performance Bond -- This module calculates margin based on both delivery
and open positions.

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.

27
<PAGE> 32

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, known as IPE, 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, the 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
of those competitors have substantially greater capital and resources and offer
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 a variety of factors. These factors include broad trends in legislation and
regulations affecting NYMEX products directly, technological innovations,
national and international financial and business conditions including currency
values, the level and volatility of interest rates, fluctuation in the volume
and price levels in the commodities markets, the perception of stability in the
commodities and financial markets and taxes. 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
some 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

28
<PAGE> 33

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
New York Mercantile Exchange, 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>

Historically, the futures industry has been characterized by significant
specialization. Exchanges generally develop 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 that 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

29
<PAGE> 34

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 complementary risk
management tools. NYMEX products are liquid risk management financial
instruments, the terms of which are standardized and non-negotiable. Because of
the financial guarantees provided by the NYMEX clearing houses for NYMEX
products, counterparty credit risk is diminished. See the heading "-- Clearing
Operations" below for further description of the NYMEX clearing house.

The OTC market is a principal-to-principal unregulated market where
participants negotiate the terms of their private contractual agreements. The
OTC market affords a participant the opportunity to "go outside the physical
marketplace" and "outside contract specifications" to negotiate terms for
obtaining a product. As such, OTC derivative products are customized
instruments, which deviate from the standardized specifications of NYMEX
contracts, and which may not provide the liquidity of a NYMEX product. OTC
derivative products are not cleared like NYMEX products and may not be fully
offset by an opposite OTC transaction, which may expose participants to
potential counterparty risk. However, OTC products may be more desirable for
certain users of a particular commodity where a uniquely tailored agreement is
needed to obtain a product. As an example, a commercial consumer of oil may want
to "go outside" the standardization of a NYMEX product to obtain a different
grade of oil, quantity, delivery period, location and means of delivery.
Therefore, it is the OTC market that offers the flexibility to deviate from
specified terms of NYMEX products. Because of NYMEX's standardized and liquid
features, NYMEX's 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

30
<PAGE> 35

volumes on NYMEX continue to grow. NYMEX believes that at the present time the
most active and fastest growing futures and options products listed on foreign
exchanges, including French, German, Japanese, and Brazilian bonds, Euroyen,
Euromark, U.K. Sterling and French PIBOR deposits and German and Brazilian stock
indices, have not competed with the most active and fastest growing NYMEX
products such as natural gas. This is primarily due to the fact that the fastest
growing foreign futures and options are based on financial instruments and not
on physical commodities. Nevertheless, foreign futures and options exchanges may
have taken and may continue to take some volume away from NYMEX since foreign
exchanges also list futures and options based on physical commodities.

NYMEX believes that its clearing and compliance operations, including
reporting and record keeping requirements, provide greater security to market
participants than foreign exchanges and the OTC market. Accordingly, NYMEX
believes that 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's operations are subject to extensive regulation by the CFTC under
the Commodity Exchange Act. The Commodity Exchange Act generally requires that
futures trading in commodities be conducted on a commodity exchange designated
as a "contract market" by the CFTC. That act establishes 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 is seeking
either approval to transfer its contract market designations to NYMEX Exchange
or approval for NYMEX Exchange to obtain new designations with respect to
NYMEX's futures and options contracts. This approval is a condition to the
demutualization.

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 and COMEX, each of NYMEX and COMEX has instituted detailed risk
management policies and procedures. To manage the risk of financial
non-performance, each of NYMEX and COMEX:

- has established minimum capital requirements for clearing members;

- limits the number of net open contracts that can be held by any clearing
member, based upon that clearing member's capital;

- 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 initial margin from their customers;

- pays and collects variation margin on a marked-to-market basis at least
twice daily;

- requires clearing members to collect variation margin from their
customers;

- 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

- has broad assessment authority to recoup financial losses.

31
<PAGE> 36

Each of NYMEX and COMEX 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 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. Furthermore, through its clearing and
compliance functions, NYMEX has the mechanisms in place to ensure financial
performance of and, if necessary, physical delivery of all contracts traded on
the exchange.

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 consolidating its
clearing operations by assigning all of the assets and liabilities of CCA to
NYMEX. NYMEX and the CCA provide 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, in the form of cash, U.S. treasury securities or letters of
credit. These deposits are often referred to as original margin. Upon purchase
or sale of a futures or option contract traded on NYMEX, the 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. 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 the customer's account over the initial margin requirements for the
positions currently carried for such account may be used for payment. These
payments provide 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 customer maintains its position, the
applicable clearing member and the customer is required to maintain minimum
margin funds for that position, as well as to deposit additional funds, known as
variation margin, to cover the market moves against the 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 the 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
$84.0 million in cash and U.S. treasury securities as of December 31, 1999. The
CCA guaranty fund contained approximately $76.9 million in cash and U.S.
treasury securities as of December 31, 1999. Although the

32
<PAGE> 37

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.

On March 17, 1985, due to the non-receipt of customer margin payments due,
a clearing member defaulted on its financial obligation to COMEX. At no time
were funds from the CCA guaranty fund used to repay the shortfall caused by the
default. The CCA guaranty fund was merely used as collateral for the CCA to
secure a loan for satisfaction of CCA's margin obligation with respect to this
default. Neither NYMEX guaranty funds nor CCA guaranty funds have ever been
utilized to cover the financial defaults of a clearing member.

SOURCES OF REVENUE

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

The chart below indicates the percentage of total 1999 revenues represented
by each principal source of revenue.

1999 PERCENTAGE OF TOTAL REVENUE* BY SOURCE

[Graphic: Pie chart entitled "1999 Percentage of Total Revenue* by Source" and
representing the sources of revenue as a percentage of total revenue. The chart
is divided as follows: Clearing and Transaction Fees, Net of Rebates -- 70.90%,
Market Data Revenue -- 23.38%, Investment Income, Net -- 2.66% and Other, Net of
Rebates -- 3.06%.]

- -------------------------
* Total consolidated revenue of $148.4 million is derived from combining total
operating revenues and net investment income.

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

33
<PAGE> 38

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, which are 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, under which clearing fees of eligible
members who are owners of seats and member firms are reduced by $.24 per round
turn to $.06 for day trades and $.56 for trades held overnight, and clearing
fees of eligible 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 July 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 Futures Commission Merchants
Rebate Program, the Floor Brokers Cost Reduction Program and the Local Owners
Fee Waiver Program on the NYMEX and COMEX Divisions and the Electricity Floor
Brokers Incentive Program on the NYMEX Division which in the year 2000 were
combined to form the Consolidated Cost Reduction Program. All of these 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 facility fees and payments if minimum 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, 1999, 1998, 1997,
1996 and 1995 for each of NYMEX and COMEX.

VOLUME AND EXCHANGE FEES

<TABLE>
<CAPTION>
CLEARING AND
CONTRACT VOLUME TRANSACTION FEES(1)
------------------------------------- ----------------------------
YEAR NYMEX COMEX TOTAL NYMEX COMEX TOTAL
- ---- ---------- ---------- ----------- ------- ------- --------
(IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C>
1999..................... 89,189,928 20,348,903 109,538,831 $79,867 $25,339 $105,206
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
</TABLE>

- -------------------------
(1) Commencing in 1996, these numbers are net of rebates of (in thousands)
$13,065, $11,272, $10,012 and $8,510 for the years ended December 31, 1999,
1998, 1997 and 1996, respectively.

The magnitude of operating revenues earned by NYMEX during any period
depends heavily on the volume of trading on NYMEX and the mix of non-member and
member

34
<PAGE> 39

business. Clearing and transaction fees represented approximately 73% of NYMEX's
consolidated operating revenues, of which approximately 76% were attributable to
the NYMEX Division's contracts, for the year ended December 31, 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 to customers through information
vendors. In addition, fees from customers are collected by these vendors and
remitted to NYMEX. These information vendors include Reuters, Bridge and Dow
Jones, who distribute the data to subscribers that 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. Although no
single customer accounts for more than 5% of total market data revenue,
distribution of data and collection and remittance of fees is concentrated in
the top nine vendors who represent approximately 80% of market data revenues.
Market data revenue represented approximately 24%, 27% and 28% of NYMEX's
consolidated operating revenues for each of the years ended December 31, 1999,
1998 and 1997, respectively.

INVESTMENT INCOME

NYMEX invests primarily in various fixed income securities including U.S.
government and municipal securities. Investment income, net of investment
advisory fees, totaled approximately $3.9 million and $6.7 million for the years
ended December 31, 1999 and 1998, respectively.

OTHER

Other revenue totaled $4.5 and $5.0 million for the years ended December
31, 1999 and 1998, respectively. Other revenue consists of rental income,
membership application and transfer fees, fines levied by NYMEX from time to
time, booth licensing fees and clerk fees and other miscellaneous items. 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.

The largest component of other revenue is rental income. Rental income
totaled $3.2 million or 70% of total other revenue for the year ended December
31, 1999. There can be no assurance that NYMEX Exchange will be able to continue
to lease available space on favorable terms.

TRADING VOLUME AND OPEN INTEREST

The following tables set forth information regarding the annual trading
volume of contracts on NYMEX and COMEX for each of the five years in the period
ended December 31, 1999 and open interest on NYMEX and COMEX at December 31 of
each of those years. Open interest denotes the number of contracts that have not
been liquidated as of the dates shown.

NYMEX

Contracts traded on NYMEX include futures and/or options contracts for
light sweet crude oil, heating oil, New York Harbor unleaded gasoline, Henry Hub
natural gas,

35
<PAGE> 40

propane, electricity and platinum group metals. Trading volume in NYMEX's two
most active contracts--light sweet crude oil futures and Henry Hub natural gas
futures--increased by 21% and 28%, respectively in 1999 and 1998 compared to the
prior year. Over the period from January 1, 1995 to December 31, 1999, the
trading of light sweet crude oil futures and options contracts accounted for
approximately 50% of NYMEX's 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. Set forth below is information regarding the annual
volume of contracts traded on NYMEX.

36
<PAGE> 41

NYMEX CONTRACTS TRADED
<TABLE>
<CAPTION>
1995 1996 1997
----------------------- ----------------------- -----------------------
FUTURES OPTIONS FUTURES OPTIONS FUTURES OPTIONS
---------- ---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
Light Sweet Crude Oil....................... 23,613,994 3,975,611 23,487,821 5,271,456 24,771,375 5,790,333
Henry Hub Natural Gas....................... 8,086,718 921,520 8,813,867 1,234,691 11,923,628 2,079,607
Heating Oil................................. 8,266,783 703,388 8,341,877 1,108,935 8,370,964 1,147,034
New York Harbor Unleaded Gasoline........... 7,071,787 766,557 6,312,339 655,965 7,475,145 1,033,778
Platinum.................................... 846,693 43,601 802,468 36,175 698,597 31,139
Palladium................................... 166,713 N/A 205,610 N/A 238,716 N/A
California-Oregon Border Electricity........ N/A N/A 52,340 7,650 120,896 13,495
Palo Verde Electricity...................... N/A N/A 17,548 3,964 155,977 19,328
Heating Oil-Crude Oil Spread Options........ N/A 72,969 N/A 45,920 N/A 18,657
Gasoline-Crude Oil Spread Options........... N/A 64,285 N/A 31,743 N/A 41,867
Propane..................................... 49,532 N/A 53,903 N/A 40,255 N/A
Cinergy Electricity......................... N/A N/A N/A N/A N/A N/A
Entergy Electricity......................... N/A N/A N/A N/A N/A N/A
PJM Electricity............................. 0 N/A N/A N/A N/A N/A
Permian Basin Natural Gas................... N/A N/A 8,811 0 15 0
Alberta Natural Gas......................... 0 N/A 2,876 15 110 0
Sour Crude Oil.............................. 0 N/A 0 N/A 0 N/A
Gulf Coast Unleaded Gasoline................ 252 N/A 0 N/A 0 N/A
---------- ---------- ---------- ---------- ---------- ----------
Total............................... 48,102,472 6,547,931 48,099,460 8,396,514 53,795,678 10,175,238
========== ========== ========== ========== ========== ==========

<CAPTION>
1998 1999
----------------------- -----------------------
FUTURES OPTIONS FUTURES OPTIONS
---------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
Light Sweet Crude Oil....................... 30,495,647 7,448,095 37,860,064 8,161,976
Henry Hub Natural Gas....................... 15,978,286 3,115,765 19,165,096 3,849,454
Heating Oil................................. 8,863,764 669,725 9,200,703 695,558
New York Harbor Unleaded Gasoline........... 7,992,269 730,421 8,701,216 600,009
Platinum.................................... 528,269 14,183 567,268 11,146
Palladium................................... 131,250 N/A 75,394 N/A
California-Oregon Border Electricity........ 128,423 19,989 52,032 3,761
Palo Verde Electricity...................... 139,738 28,597 51,852 4,419
Heating Oil-Crude Oil Spread Options........ N/A 36,615 N/A 46,482
Gasoline-Crude Oil Spread Options........... N/A 22,575 N/A 46,281
Propane..................................... 43,868 N/A 37,544 N/A
Cinergy Electricity......................... 48,483 2,597 34,367 1,419
Entergy Electricity......................... 42,580 1,855 20,528 105
PJM Electricity............................. N/A N/A 3,254 N/A
Permian Basin Natural Gas................... 0 0 0 N/A
Alberta Natural Gas......................... 0 0 0 N/A
Sour Crude Oil.............................. 1 N/A 0 N/A
Gulf Coast Unleaded Gasoline................ 0 N/A 0 N/A
---------- ---------- ---------- ----------
Total............................... 64,392,578 12,090,417 75,769,318 13,420,610
========== ========== ========== ==========
</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.

37
<PAGE> 42

Set forth below is information with respect to open interest on contracts
traded on NYMEX.

NYMEX OPEN INTEREST
<TABLE>
<CAPTION>
DECEMBER 31, 1995 DECEMBER 31, 1996 DECEMBER 31, 1997 DECEMBER 31, 1998
------------------- ------------------- ----------------- -------------------
FUTURES OPTIONS FUTURES OPTIONS FUTURES OPTIONS FUTURES OPTIONS
------- --------- --------- ------- ------- ------- --------- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Light Sweet Crude Oil.............. 353,354 297,642 364,170 439,536 413,045 363,639 483,327 420,962
Henry Hub Natural Gas.............. 162,783 134,748 143,846 120,431 186,815 221,849 222,576 242,379
Heating Oil........................ 128,834 72,578 95,408 104,877 152,476 86,415 176,361 66,632
New York Harbor Unleaded
Gasoline......................... 61,632 23,116 59,806 32,886 100,742 25,965 100,465 26,859
Platinum........................... 23,690 2,345 25,990 3,276 10,983 1,141 11,543 413
Palladium.......................... 6,196 0 7,995 N/A 3,565 N/A 2,861 N/A
California-Oregon Border
Electricity...................... N/A N/A 3,196 1,743 5,336 2,904 2,401 268
Palo Verde Electricity............. N/A N/A 1,218 899 4,515 2,191 1,537 10
Heating Oil-Crude Oil Spread
Options.......................... N/A 9,271 N/A 2,655 N/A 1,998 N/A 4,845
Gasoline-Crude Oil Spread
Options.......................... N/A 640 N/A 1,645 N/A 2,521 N/A 977
Propane............................ 2,447 0 3,222 N/A 2,019 N/A 4,068 N/A
Cinergy Electricity................ N/A N/A N/A N/A N/A N/A 2,087 1,490
Entergy Electricity................ N/A N/A N/A N/A N/A N/A 2,653 50
PJM Electricity.................... N/A N/A N/A N/A N/A N/A N/A N/A
Permian Basin Natural Gas.......... N/A N/A 50 0 0 0 0 0
Alberta Natural Gas................ N/A N/A 162 0 0 0 0 0
Sour Crude Oil..................... 0 N/A 0 N/A 0 N/A 0 N/A
Gulf Coast Unleaded Gasoline....... 0 N/A 0 N/A 0 N/A 0 N/A
------- --------- --------- ------- ------- ------- --------- -------
Total...................... 738,936 540,340 705,063 707,948 879,496 708,623 1,009,879 764,885
======= ========= ========= ======= ======= ======= ========= =======

<CAPTION>
DECEMBER 31, 1999
-------------------
FUTURES OPTIONS
------- ---------
<S> <C> <C>
Light Sweet Crude Oil.............. 501,819 557,221
Henry Hub Natural Gas.............. 246,629 369,520
Heating Oil........................ 135,259 58,593
New York Harbor Unleaded
Gasoline......................... 89,804 45,854
Platinum........................... 11,953 326
Palladium.......................... 2,869 N/A
California-Oregon Border
Electricity...................... 1,974 1
Palo Verde Electricity............. 1,769 0
Heating Oil-Crude Oil Spread
Options.......................... N/A 5,235
Gasoline-Crude Oil Spread
Options.......................... N/A 1,411
Propane............................ 2,408 N/A
Cinergy Electricity................ 193 0
Entergy Electricity................ 25 0
PJM Electricity.................... 372 N/A
Permian Basin Natural Gas.......... 0 N/A
Alberta Natural Gas................ 0 N/A
Sour Crude Oil..................... 0 N/A
Gulf Coast Unleaded Gasoline....... 0 N/A
------- ---------
Total...................... 995,074 1,038,161
======= =========
</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.

38
<PAGE> 43

COMEX

Contracts traded on COMEX include futures and options contracts for
aluminum, gold, silver, high grade copper the FTSE Eurotop 100(R) Index and
futures contracts for the FTSE Eurotop 300(R) Index. Set forth below is
information regarding the annual volume of contracts traded on COMEX.

COMEX CONTRACTS TRADED
<TABLE>
<CAPTION>
1995 1996 1997 1998
---------------------- ---------------------- ---------------------- ----------
FUTURES OPTIONS FUTURES OPTIONS FUTURES OPTIONS FUTURES
---------- --------- ---------- --------- ---------- --------- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
Gold............................... 7,781,596 2,006,695 8,902,179 2,079,663 9,541,904 2,064,883 8,990,094
Silver............................. 5,183,236 1,146,513 4,870,808 949,239 4,893,520 842,923 4,094,616
High Grade Copper.................. 2,519,414 134,212 2,311,919 150,339 2,356,170 133,603 2,483,610
Aluminum........................... N/A N/A N/A N/A N/A N/A N/A
FTSE Eurotop 100(R) Index.......... 49,328 0 38,925 0 47,427 0 50,619
FTSE Eurotop 300(R) Index.......... N/A N/A N/A N/A N/A N/A N/A
5 Day Gold Option.................. N/A 688 N/A 150 N/A N/A N/A
5 Day Silver Option................ N/A 221 N/A 96 N/A N/A N/A
5 Day High Grade Copper Option..... N/A 34 N/A 0 N/A N/A N/A
---------- --------- ---------- --------- ---------- --------- ----------
Total...................... 15,533,574 3,288,363 16,123,831 3,179,487 16,839,021 3,041,409 15,618,939
========== ========= ========== ========= ========== ========= ==========

<CAPTION>
1998 1999
--------- ----------------------
OPTIONS FUTURES OPTIONS
--------- ---------- ---------
<S> <C> <C> <C>
Gold............................... 1,945,366 9,575,788 2,815,831
Silver............................. 818,053 4,157,500 725,885
High Grade Copper.................. 153,332 2,852,962 160,857
Aluminum........................... N/A 27,978 642
FTSE Eurotop 100(R) Index.......... 0 25,181 0
FTSE Eurotop 300(R) Index.......... N/A 6,279 N/A
5 Day Gold Option.................. N/A N/A N/A
5 Day Silver Option................ N/A N/A N/A
5 Day High Grade Copper Option..... N/A N/A N/A
--------- ---------- ---------
Total...................... 2,916,751 16,645,688 3,703,215
========= ========== =========
</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.

39
<PAGE> 44

Set forth below is information with respect to open interest on contracts
traded on COMEX.

COMEX OPEN INTEREST

<TABLE>
<CAPTION>
DECEMBER 31, 1995 DECEMBER 31, 1996 DECEMBER 31, 1997 DECEMBER 31, 1998 DECEMBER 31, 1999
----------------- ----------------- ----------------- ----------------- -----------------
FUTURES OPTIONS FUTURES OPTIONS FUTURES OPTIONS FUTURES OPTIONS FUTURES OPTIONS
------- ------- ------- ------- ------- ------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Gold.......................... 142,179 276,737 189,805 328,367 177,770 404,403 162,912 432,256 155,914 629,296
Silver........................ 98,555 67,924 84,693 59,319 98,906 106,258 75,353 60,858 76,387 64,209
High Grade Copper............. 35,393 5,503 49,176 12,637 70,078 15,214 71,975 19,960 71,753 12,142
Aluminum...................... N/A N/A N/A N/A N/A N/A N/A N/A 571 0
FTSE Eurotop 100(R) Index..... 3,910 0 2,461 0 2,200 0 1,811 0 387 0
FTSE Eurotop 300(R) Index..... N/A N/A N/A N/A N/A N/A N/A N/A 552 N/A
5 Day Gold Option............. N/A 0 N/A 0 N/A N/A N/A N/A N/A N/A
5 Day Silver Option........... N/A 0 N/A 0 N/A N/A N/A N/A N/A N/A
5 Day High Grade Copper
Option...................... N/A 0 N/A 0 N/A N/A N/A N/A N/A N/A
------- ------- ------- ------- ------- ------- ------- ------- ------- -------
Total................. 280,037 350,164 326,135 400,323 348,954 525,875 312,051 513,074 305,564 705,647
======= ======= ======= ======= ======= ======= ======= ======= ======= =======
</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.

40
<PAGE> 45

TECHNOLOGY

GENERAL

In recent years, NYMEX has implemented several initiatives intended to
increase the range and quality of services provided to members, which is one 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,
also known as LIFFE. While this trend has been most prevalent in the equities
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 March 2000, NYMEX listed its electricity contracts in a
wholly electronic trading environment 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,
also known as SFE, closed its trading floor in November 1999 and migrated all of
its markets to its SYCOM(R) electronic trading system and the Hong Kong
Exchanges and Clearing Limited has announced it will become wholly electronic by
the end of the second quarter of 2000.

The relative size of these three exchanges according to data reported by
the Futures Industry Association is as follows. In 1999, LIFFE was the fifth
largest futures exchange in the world with a volume of 120,040,031 contracts
traded. By comparison, NYMEX was the sixth largest with a volume of 109,538,831
contracts traded in 1999. In 1999, the SFE recorded volume of 29,793,333
contracts traded and the Hong Kong Exchanges and Clearing Limited recorded
volume of 6,331,400 contracts traded.

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<PAGE> 46

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.

NYMEX ACCESS(R)

NYMEX ACCESS(R) is an electronic trading system, initially developed for
after-hours trading only, 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, NYMEX trades its electricity contracts exclusively on NYMEX
ACCESS(R) throughout the daytime and night sessions. As of March 1, 2000,
approximately 700 users were authorized to trade over the system and
approximately 300 trader workstations were in place primarily in the United
States as well as London, Sydney and Hong Kong. NYMEX ACCESS(R) volume currently
accounts for approximately 2% of NYMEX's average daily volume. In 1999,
approximately 2.4 million contracts were traded over NYMEX ACCESS(R) which
accounted for approximately 2% of NYMEX's total 1999 trading volume.

The chart below indicates the gross amount of clearing and transaction fees
generated by NYMEX ACCESS(R).

NYMEX ACCESS(R) CLEARING AND TRANSACTION FEES

[Graphic: Bar graph entitled "NYMEX Access(R) Clearing and Transaction Fees."
Below the horizontal axis each year for which clearing and transaction fees were
measured is written in chronological order from left to right. The vertical axis
indicates the amount of fees, in thousands, beginning with zero and increasing,
in intervals of two thousand, up to ten thousand. There are three bars for each
year showing from left to right the amount of fees received by COMEX, NYMEX and
Combined. Inset in a square to the right of the chart is a legend containing a
dark shaded box to the left of the word "COMEX," a dotted box to the left of the
word "NYMEX" and a white box to the left of the word "Combined." The amount of
fees collected by COMEX was approximately $121,000 in 1995, $327,000 in 1996,
$494,000 in 1997, $837,000 in 1998 and $1,026,000 in 1999. The amount of fees
collected by NYMEX was approximately $3,812,000 in 1995, $3,815,000 in 1996,
$4,023,000 in 1997, $5,669,000 in 1998 and $7,420,000 in 1999. The amount of
fees collected by the combined company was approximately $3,933,000 in 1995,
$4,142,000 in 1996, $4,517,000 in 1997, $6,506,000 in 1998 and $8,446,000 in
1999.]

NYMEX ACCESS(R) was originally developed pursuant to a joint development
agreement among 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

42
<PAGE> 47

all orders entered into the system, a unique and proactive risk management
system and a trade allocation system. The joint development agreement expired in
December 1999.

In February 1998, NYMEX entered into a joint development agreement with the
IPE to develop an updated system which would retain the benefits of the current
system while providing expansion of capacity and functionality. Pursuant to this
agreement, neither NYMEX nor the IPE retain any royalty rights or other
proprietary rights over the other's system. 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 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 Exchanges and Clearing Limited. Currently, this linkage agreement
has expired; NYMEX and the Hong Kong Exchanges and Clearing Limited are in the
process of negotiating an extension of the terms of the linkage. In 1999, NYMEX
finalized a new agreement with the Singapore Exchange Derivatives Trading
Limited that will allow it to place terminals in that oil market center. This
linkage is currently pending approval of the CFTC. Similar opportunities are
being explored in Japan, Korea, and India.

PROPERTIES

NYMEX's state-of-the-art trading facilities and corporate headquarters are
located at One North End Avenue in New York, New York. NYMEX leases the land on
which this building is located from the Battery Park City Authority. The lease
expires on June 17, 2069. Construction of the 502,000 square foot building was
completed in 1997. Each of the NYMEX and COMEX Divisions has its own 25,000
square foot trading floor in the facility. The facility also contains all of
NYMEX's back office support functions. NYMEX leases approximately 73,000 square
feet at this facility to 30 tenants who are member firms and five non-member
retail tenants.

NYMEX also leases 17,000 square feet of space at 22 Cortland Street in New
York, New York. This space is used as the NYMEX ACCESS(R) primary data center,
the NYMEX ACCESS(R) control center, known as NACC and the backup data center for
the One North End facility.

NYMEX also leases office space in Washington, D.C., at which it conducts
government relations activities, as well as office space in Houston, Texas and
London, England, at which it conducts marketing activities. These offices are
used to promote awareness of NYMEX's contracts.

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<PAGE> 48

NYMEX management believes its properties are adequate and suitable for its
business as presently conducted and are adequately maintained. For further
information concerning leases, see Note 14 of the Consolidated Financial
Statements.

MEMBERSHIP VALUE

The charts below indicate information regarding NYMEX Division memberships
for each year from 1995 to 1999.

[Graphic: Bar graph entitled "Sale Price Per NYMEX Membership". Below the
horizontal axis each year for which sale price is measured is written in
chronological order from left to right. The vertical axis indicates the sales
price beginning with zero and increasing, in intervals of two hundred thousand,
up to eight hundred thousand. There are two bars for each year. The left bar
represents the high and the right bar represents the low sales price for each
year. To the right of the chart is a square in which a legend is inset
consisting of a white square box to the left of the word "High" and a black
square box to the left of the word "Low". The high sales price per membership
was approximately $575,000 in 1995, $585,000 in 1996, $675,000 in 1997, $705,000
in 1998 and $630,000 1999. The low sales price per membership was approximately
$340,000 in 1995, $410,000 in 1996, $525,000 in 1997, $430,000 in 1998 and
$551,000 1999.]

[Graphic: Bar graph entitled "Earnings Per NYMEX Membership." Below the
horizontal axis each year for which earnings was measured is written in
chronological order from left to right. The vertical axis indicates earnings
beginning with zero and increasing, in intervals of five thousand dollars, up to
twenty thousand dollars. Earnings per NYMEX membership were approximately
$16,708 in 1995, $9,504 in 1996, $1,408 in 1997, $7,449 in 1998 and $13,906
1999.]

[Graphic: Bar graph entitled "Book Value Per NYMEX Membership." Below the
horizontal axis each year for which book value is measured is written in
chronological order from left to right. The vertical axis indicates book value
beginning at one hundred thousand dollars and increasing, in intervals of five
thousand dollars, up to one hundred fifteen thousand dollars. Book value per
NYMEX Membership was $109,393 in 1995, $112,484 in 1996, $106,085 in 1997,
$105,678 in 1998 and $114,218 1999.]

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<PAGE> 49

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. In
order to be vested, participants must complete 15 years of continuous service in
NYMEX under the terms of the plan. Payments commence for vested participants
after attaining age 59 1/2 and continue for 10 years. Payments are equal to
$25,000 per year increased by 3% each year commencing July 1, 1996. The amount
of the payments for each participant is determined at the time the participant
first becomes eligible to receive payments and remains fixed at that amount.
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,
or $2,000 for option seatholders, per year for vested participants. 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 the lesser of $500,000 or
60% of the purchase price of a membership. The program is presently limited to
an aggregate of $11 million in loan guarantees at any one time. Currently, NYMEX
is guarantor for 30 such loans in an aggregate amount of approximately $8.0
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
the 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

45
<PAGE> 50

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, New York Mercantile Exchange, Cantor Fitzgerald, L.P. and the
Chicago Mercantile Exchange. 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. Cantor Fitzgerald, L.P. has
settled this lawsuit and is no longer a party to this action. This case
is in discovery.

- Phillip Petruzzi and Joann Petruzzi v. 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. NYMEX's motion to dismiss punitive damages
was served on March 17, 2000.

- 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.

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<PAGE> 51

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.

- Western Capital Design, LLC, On Its Own Behalf and on Behalf of All Those
Similarly Situated 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 compensatory damages and
$75,000,000 in punitive 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 by notice of removal filed March 8, 1999.
Venue was transferred to the Southern District of New York by an order
dated May 11, 1999. NYMEX's motion to dismiss was filed on November 12,
1999 and granted on March 31, 2000. NYMEX was served with an amended
complaint on or about April 26, 2000.

- John Donnellan v. New York Mercantile Exchange, Turner Construction
Company, LaStrada General Construction Corp. and the Faraday Company,
Ltd. This action is pending in New York State Supreme Court (New York
County). The complaint was filed on February 25, 1999. This is a personal
injury case that relates to the construction of the One North End Avenue
facility. Plaintiff alleges that he was injured on February 28, 1996
while working at the One North End construction site. LaStrada General
Construction Corp. is a subcontractor of Turner. Although the complaint
alleges that the Faraday Company, Ltd. is a subcontractor of LaStrada,
NYMEX has no record of Faraday's relationship to LaStrada. Plaintiff
seeks $25,000,000 in compensatory damages. NYMEX is reviewing the
complaint to determine its response.

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<PAGE> 52

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 years in the five year period ended December 31, 1999 have been derived
from the audited consolidated financial statements and notes thereto. The
information set forth below should be read in conjunction with "Management's
Discussion and Analysis of Financial Condition and Results of Operations" on
page 49, the consolidated financial statements and the notes thereto, and other
financial information, including the pro forma consolidated financial
information, included in this proxy statement and prospectus.

<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
---------------------------------------------------------------------------------------
1999 1998 1997 1996 1995
---- ---- ---- ---- ----
(IN THOUSANDS, EXCEPT PER NYMEX MEMBERSHIP DATA)
<S> <C> <C> <C> <C> <C>
OPERATING DATA
Revenues
Clearing and transaction fees(1).... $ 105,206 $ 90,764 $ 80,773 $ 76,826 $ 80,877
Market data fees.................... 34,689 34,858 33,457 33,232 33,839
Other(2)............................ 4,540 4,961 3,557 2,532 3,198
--------------- --------------- --------------- --------------- ---------------
Operating revenues.................. 144,435 130,583 117,787 112,590 117,914
--------------- --------------- --------------- --------------- ---------------
Expenses
General and administrative.......... 89,732 86,992 83,933 73,170 74,467
Rent and facility................... 12,877 12,760 17,116 14,415 12,153
Depreciation and amortization(3).... 10,966 9,901 5,215 7,642 6,169
Marketing........................... 2,537 2,403 4,813 2,534 3,722
Amortization of goodwill............ 2,153 2,153 2,153 2,153 2,153
Loss on disposition of property and
equipment......................... 1,298 2,814 1,234 -- --
--------------- --------------- --------------- --------------- ---------------
Operating expenses.................. 119,563 117,023 114,464 99,914 98,664
--------------- --------------- --------------- --------------- ---------------
Operating income.................... 24,872 13,560 3,323 12,676 19,250

Other income and expenses
Investment income, net.............. 3,942 6,739 8,288 4,860 7,429
Interest expense.................... (7,721) (7,958) (6,967) (1,781) (1,299)
--------------- --------------- --------------- --------------- ---------------
Income before income taxes.......... 21,093 12,341 4,644 15,755 25,380
Income tax expense.................. 8,903 6,263 3,495 8,000 11,746
--------------- --------------- --------------- --------------- ---------------
Net income.......................... $ 12,190 $ 6,078 $ 1,149 $ 7,755 $ 13,634
=============== =============== =============== =============== ===============
BALANCE SHEET DATA
Total assets.......................... $ 392,494 $ 375,282 $ 372,327 $ 329,515 $ 154,986
Total liabilities..................... 299,292 289,049 285,762 237,728 65,721
Short term borrowings................. -- -- 5,043 5,043 5,043
Long term borrowings.................. 100,000 100,000 100,000 90,043 10,086
Total equity.......................... 93,202 86,233 86,565 91,787 89,265
UNAUDITED PRO FORMA DATA(4)
Pro forma net income.................. $ 11,494
Pro forma stockholders' equity........ $ 92,506
Pro forma earnings per share.......... $ 14,086
Pro forma book value per share........ $ 113,365
Pro forma times interest earned....... 3.6
OTHER DATA
Earnings per NYMEX membership(5)...... $ 14,939 $ 7,449 $ 1,408 $ 9,504 $ 16,708
Book value per NYMEX membership(5).... $ 114,218 $ 105,678 $ 106,085 $ 112,484 $ 109,393
Current ratio(6)...................... 6.8 8.1 5.1 4.9 3.7
Working capital....................... $ 120,669 $ 112,839 $ 102,002 $ 122,438 $ 58,616
Capital expenditures.................. $ 20,022 $ 18,175 $ 82,795 $ 109,375 $ 26,374
Times interest earned(7).............. 3.7 2.6 1.7 9.8 20.5
Number of employees at end of
period.............................. 609 594 587 528 521
Sales price per NYMEX membership
High................................ $ 630,000 $ 705,000 $ 675,000 $ 585,000 $ 575,000
Low................................. $ 551,000 $ 430,000 $ 525,000 $ 410,000 $ 340,000
</TABLE>

- -------------------------
(1) Clearing and transaction fees are presented net of member fee rebates which
were $13,065, $11,272, $10,012 and $8,510 for the years ended December 31,
1999, 1998, 1997 and 1996, respectively. There were no member fee rebates
for the year ended December 31, 1995.

(2) Beginning in 1998, NYMEX introduced various other rebate programs. These
costs reduced other revenue for the years ended December 31, 1999 and 1998
by $2,399 and $1,364, respectively.

(3) Depreciation and amortization expense is net of amortization of deferred
credit for building construction of $2,145, $1,930 and $1,287 for the years
ended December 31, 1999, 1998 and 1997, respectively. There was no
amortization of deferred credit for building construction for the years
ended 1996 and 1995.

(4) Unaudited pro forma data reflects such adjustments as necessary, in the
opinion of management, for a fair presentation of the results of operations
and stockholders' equity of NYMEX Holdings on a pro forma basis. See "Pro
Forma Consolidated Financial Information" on page F-23 for more detailed
information concerning these adjustments.

(5) NYMEX has 900 authorized NYMEX memberships. The per NYMEX membership amounts
in the table are based on the 816 NYMEX memberships issued and outstanding
at the end of each of the periods shown.

(6) Equals current assets divided by current liabilities.

(7) Equals income before income taxes and interest expense divided by interest
expense.
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<PAGE> 53

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 benefits of its 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 prices 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 market data is also a significant business activity, but
is 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 the effect of these factors on 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 218,600 during the year ended December 31, 1995 to
approximately 356,800 during the year ended December 31, 1999. NYMEX's light
sweet crude oil contract is the primary contributor to NYMEX's growth. This
contract's annual volume has increased by 67% from 1995 to 1999--see the chart
on page 23. 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 75,300 contracts traded versus
approximately 81,400 contracts traded daily during the year ended December 31,
1999.

RESULTS OF OPERATIONS

YEAR ENDED DECEMBER 31, 1999 COMPARED TO YEAR ENDED DECEMBER 31, 1998

For the year ended December 31, 1999, NYMEX's net income increased 100% to
$12.2 million, compared to $6.1 million in 1998. Operating revenue increased 11%
to $144.4 million in 1999, compared to $130.6 million in 1998. Clearing and
transaction fees, net of the member fee rebate which was $13.1 million for 1999
versus $11.3 million for 1998, increased by 16% in 1999 to $105.2 million from
$90.8 million last year. Overall, NYMEX's volume of contracts traded increased
by 15%. The average daily trading volume on NYMEX, excluding COMEX, for 1999 was
356,800 contracts, compared to 305,000 contracts in 1998; the average daily
trading volume on COMEX was 81,400 contracts during 1999, compared to 73,800
contracts during 1998. A slight contraction of the market data subscriber
network resulted in a $0.2 million decrease in revenue during 1999 from 1998;
NYMEX data subscriber revenue increased 1% or $0.1 million, whereas COMEX data
subscriber revenue declined $0.3 million or 2%.

Other revenue in 1999, consisting principally of rental income, decreased
$0.4 million or 8% compared to 1998. Specifically, with regard to rental income,
NYMEX subleased additional space at the One North End property resulting in a
$1.3 million increase over 1998. During 1999, NYMEX continued and expanded its
member incentive programs. These incentive programs resulted in a decrease in
other revenue of $2.4 million in 1999

49
<PAGE> 54

which was $1 million greater than the effect of these programs on other revenue
in 1998. Telephone equipment fees were also waived under this program, resulting
in lower 1999 fees of $1.2 as compared to $1.5 million in 1998.

Operating expenses totaled $119.6 million in 1999 as compared to $117.0
million in 1998. The substantial portion of expenses incurred in both 1999 and
1998 were for salary and employee benefit costs; $45.8 million of these expenses
were incurred in 1999, an increase of $1.2 million or 3% over 1998. This
increase primarily resulted from greater personnel compensation costs due to
additional hires during 1999 as well as increased year-end bonus awards.
Telecommunications, equipment rentals and maintenance costs were $15.9 million
in 1999, an increase of approximately 9% or $1.3 million over 1998. This
increase was due to the $7.1 million expensed in 1999 for NYMEX ACCESS(R)
terminal data communication line fees, as compared with $5.9 million in 1998, an
increase of 20%. The increased expenditures during 1999 for data communication
line fees were largely due to additional NYMEX ACCESS(R) terminals placed in
service in the United States and the United Kingdom, as well as costs for
parallel operations of both the original NYMEX ACCESS(R) system and the updated
version of the system during the last quarter of 1999. NYMEX adopted Statement
of Position (SOP) 98-1, Accounting for the Costs of Computer Software Developed
or Obtained for Internal Use, in 1999 which required capitalization of
approximately $10.2 million for costs incurred in the development of internal
use software. These capitalized costs consisted primarily of outside consulting
service costs, staff salaries, related fringe benefits and payroll expenses.
Amortization of these costs, which is over the expected life of the software,
not to exceed five years, totaled $0.3 million. Similar software development
costs of $5.2 million incurred during 1998 were expensed as incurred. The
adoption of SOP 98-1 in 1999 had a material effect on NYMEX's results of
operations and financial position. The net effect was an increase in pre-tax net
income of approximately $9.9 million and an increase in property and equipment
balances at December 31, 1999 by the same amount. Applying the 42.2% effective
tax rate for 1999, this adoption has increased net income and members' equity by
$5.7 million and earnings per NYMEX membership by $6,985.

General and administrative expenses in 1999, which included travel and
related expenses of $2.5 million, software licensing fees of $2.4 million, board
stipends of $2.9 million, and other general office expenses of $6.2 million,
decreased by $1.0 million or 6% from 1998. This reduction was primarily due to
the impact of legal settlement costs, of $0.6 million in 1998, as well as lower
trading floor and office supply expenses incurred during 1999, a decrease of
$0.6 million from 1998. Rent and facility costs increased by $0.1 million over
1998. This increase was due in part to 1999 PILOT (Payment In Lieu Of Taxes)
payments to the Battery Park City Authority of $0.8 million. This expense was
not incurred in 1998 as PILOT obligations prior to 1999 were abated. In
addition, costs for repair and maintenance of the building increased in 1999 by
$0.6 million over the prior year due to the lapse of repair and maintenance
warranties with respect to building assets. These increases over the prior year
were partially offset by a reduction in expenses as a result of the payment of
$1.1 million in 1998 to the Commodity Exchange Center, Inc., known as CEC, for
residual overhead costs. Depreciation and amortization of property and
equipment, net of deferred credit amortization, increased by $1.1 million or
approximately 11% over 1998. This increase was attributable to 1999 capital
expenditures of $20.0 million of which approximately one-half was for computer
equipment related largely to the Clearing 21(R) and NYMEX ACCESS(R) upgrade
efforts. These expenditures are being depreciated over seven years. Professional
services rendered during 1999 were $9.0 million, representing an increase of
$1.5 million or 20% over the prior year. This increase was primarily the direct
result of investment banking and legal representation fees incurred

50
<PAGE> 55

during the fourth quarter of 1999 in connection with the demutualization. Loss
on the disposition of property and assets decreased by $1.5 million or 54% from
1998. During the fourth quarter of 1999, management reviewed NYMEX's property
and equipment records and determined that several computer assets should be
written off as they either had no value, because they were no longer in service.
In addition, previously existing leasehold improvements at the 22 Cortlandt
Street location were deemed to have no value and were written off at the end of
1999. Other expenses decreased by $0.4 million, or 7%, from the prior year
largely due to lower costs for members' life insurance and long term disability
benefits. These decreases were attributable to lower insurance premiums
resulting from positive experience rate factors.

Net investment income, which is not a component of operating income,
decreased in 1999 by approximately 42% to $3.9 million, as compared to $6.7
million in 1998, primarily as a result of unrealized losses on NYMEX's fixed
income marketable securities portfolio 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 $6.1 million,
compared to $1.1 million for 1997, an increase of approximately 429%. Operating
revenue for 1998 was $130.6 million versus $117.8 million for 1997, an increase
of approximately 11%. Revenue from clearing and transaction fees, the largest
component of NYMEX's revenue, increased to $90.8 million for 1998, an increase
of more than 12% from 1997. 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
$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; NYMEX data subscriber revenue
increased 6.0% or $1.1 million, and COMEX data subscriber revenue increased $0.3
million or 2.0%.

Other revenue in 1998, consisting principally of rental income, increased
$1.4 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 $1.4 million in 1998.

Operating expenses totaled $117.0 million in 1998 as compared to $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

51
<PAGE> 56

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 $14.6 million in 1998, an increase of
approximately 11% or $1.5 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
$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 in 1998, which include travel and
related costs of $2.9 million, software licensing fees of $2.2 million, and
other general office expenses of $9.9 million, decreased by $1.9 million from
1997. This decrease resulted primarily from the cost accrued during late 1997
for the "Global Settlement and Surrender Agreement" reached with the CEC in late
April, 1998. NYMEX paid the CEC $3.1 million in satisfaction of liabilities owed
to the CEC and relinquished its rights to use a portion of the trading floor at
the 4 World Trade Center facility. This reduction in expenses was partially
offset in 1998 by increased staff travel resulting from foreign exchange
strategic alliance initiatives, an increase of $0.4 million, as well as by legal
settlement costs with an outside vendor, $0.6 million. Rent and facility
expenses amounted to $12.8 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 $5.4 million. This decrease was partially offset by
the $1.1 million increase during 1998 in facility repair and 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 $1.6 million in 1998 primarily due to leasehold
improvement write-offs as a result of the relocation to One North End. The $2.8
million written off in 1998 represents trading floor leasehold improvements
abandoned pursuant to the lease termination agreement entered into between NYMEX
and the CEC on April 22, 1998.

Investment income, which is not a component of operating income, decreased
in 1998 by $1.5 million from 1997 due primarily to a reduction in the size of
the building reserve portfolio during 1998. Interest expense increased by $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.

LIQUIDITY AND CAPITAL RESOURCES

Historically, NYMEX's cash flows from operations have been adequate to fund
working capital needs. NYMEX's principal sources of cash flows have been from
operating activities which primarily include clearing and transaction fees and
market data fees from third parties. Clearing and transaction fees represented
73% of NYMEX's consolidated operating revenues, of which approximately 76% were
attributable to NYMEX's energy contracts, for the fiscal year ended December 31,
1999. NYMEX's principal uses of cash are to fund operating expenses and to
upgrade equipment and facilities.

52
<PAGE> 57

The chart below indicates the percentage of total assets represented by
each principal category of asset as of December 31, 1999.

TOTAL ASSETS AS OF DECEMBER 31, 1999

[Graphic: Pie chart entitled "Total Assets as of December 31, 1999" and
representing assets of NYMEX divided into principal categories of assets as a
percentage of the total assets as of December 31, 1999. Total assets are divided
as follows: Property and Equipment, Net -- 58%, Marketable Securities -- 20%,
Cash -- 9%, Other -- 8%, Goodwill, Net -- 5%.]

For the year ended December 31, 1999, cash and cash equivalents increased
by $22.2 million. This increase consisted primarily of net income of $12.2
million net cash generated by operating activities of $31 million less capital
expenditures primarily for technology related infrastructure of $20.0 million,
and distributions from the members' retention program of $1 million.

NYMEX's investment portfolio, with a market value of $77.0 million as of
December 31, 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 $29.5 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, 1999, 1998 and 1997, $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 COMEX member retention fund was $7.3 million
as of December 31, 1999.

53
<PAGE> 58

The table below provides information about the market values of NYMEX's
marketable securities at December 31, 1999 (in thousands).

<TABLE>
<CAPTION>
MATURITY
------------------------------------------- TOTAL TOTAL
WITHIN 10 YEARS MARKET BOOK
DESCRIPTION 1 YEAR 1-5 YEARS 5-10 YEARS AND MORE NO MATURITY VALUE VALUE
----------- ------- --------- ---------- -------- ----------- ------- -------
<S> <C> <C> <C> <C> <C> <C> <C>
Government Bonds, Federal
Agency Issues............... $ 2,188 $ 3,330 $ -- $ -- $ -- $ 5,518 $ 5,500
US Treasury Issues............ 10,202 3,922 968 -- -- 15,092 15,121
Municipal Bonds............... 2,946 12,254 26,411 12,708 -- 54,319 58,262
Equities...................... -- -- -- -- 2,063 2,063 2,022
------- ------- ------- ------- ------ ------- -------
Total Marketable Securities... $15,336 $19,506 $27,379 $12,708 $2,063 $76,992 $80,905
======= ======= ======= ======= ====== ======= =======
</TABLE>

The charts below indicate the maturities and composition of the marketable
securities portfolio as of December 31, 1999.

MATURITIES OF MARKETABLE SECURITIES* AS OF DECEMBER 31, 1999

[Graphic: Pie chart entitled "Maturities of Marketable Securities as of December
31, 1999" and representing marketable securities owned by NYMEX divided into
terms of maturity. The chart is subtitled "Percentages are based on year end
market values." Maturities are divided as follows: 5-10 years -- 35%, 10 or more
years -- 17%, No Maturity -- 3%, Within 1 year -- 20%, 1-5 years -- 25%.

54
<PAGE> 59

MARKETABLE SECURITIES* PORTFOLIO ALLOCATION AS OF DECEMBER 31, 1999

* Percentages are based on year end market values
[Graphic: Pie chart entitled "Marketable Securities Portfolio Allocation as of
December 31, 1999" and representing types of marketable securities as
percentages of total marketable securities owned by NYMEX. The chart is
subtitled "Percentages are based on year end market values." The chart is
divided as follows: Municipal Bonds -- 70%, Equities -- 3%, Government Bonds,
Federal Agency Issues -- 7%, U.S. Treasury Issues -- 20%.]

As of December 31, 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 $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 $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 $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
$3.0 million beginning October 2022 with a final repayment of remaining
principal in October 2026. As of December 31, 1999, NYMEX has established a
$20.9 million fund to be used to repay principal on this debt.

It is expected that during 2000, NYMEX capital expenditures will amount to
$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

55
<PAGE> 60

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.

The table below provides information about NYMEX's marketable securities,
excluding equity securities, including expected principal cash flows for the
years 2000 through 2004 and thereafter (in thousands).

PRINCIPAL AMOUNTS BY EXPECTED MATURITY

<TABLE>
<CAPTION>
FAIR MARKET
VALUE AS OF
TOTAL PRINCIPAL DECEMBER 31,
2000 2001 2002 2003 2004 THEREAFTER CASH FLOWS 1999
------- ----- ------ ---- ------- ---------- --------------- ------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Government Bonds, Federal
Agency Issues................ $ 2,157 -- $2,351 -- $ 992 -- $ 5,500 $ 5,518
Weighted average interest
rate....................... 2.50% -- 5.50% -- 6.50% --
U.S. Treasury Issues........... 10,199 -- -- -- 3,948 974 15,121 15,092
Weighted average interest
rate....................... 4.45% -- -- -- 5.88% 6.00%
Municipal Bonds................ 2,959 95 3,946 898 7,352 43,012 58,262 54,319
Weighted average interest
rate....................... 4.37% 3.57% 5.53% 4.50% 5.88% 4.80%
------- ----- ------ ---- ------- ------- ------- -------
Total Portfolio, excluding
equity securities........ $15,315 $ 95 $6,297 $898 $12,292 $43,986 $78,883 $74,929
======= ===== ====== ==== ======= ======= ======= =======
</TABLE>

INTEREST RATE RISK

Current Assets. In the normal course of business, NYMEX's outside
investment advisors invest primarily in fixed income securities. Marketable
securities bought by NYMEX are typically held 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, 1999 and
1998, NYMEX had net investment income of $3.9 million and $6.7 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, 1999
and 1998 was $77 million and $92 million, respectively. The change in fair
value, using a hypothetical 10% decline in prices, is estimated to be a $7.7
million loss and a $9.2 million loss for December 31, 1999 and 1998,
respectively. NYMEX also invests in U.S. government securities and repurchase
agreements and maintains interest bearing balances in its trading accounts with
its investment managers. Financial instruments with maturities of three months
or less when purchased are classified as cash equivalents in the consolidated
financial statements.

Debt. The interest rate on our long-term indebtedness is a weighted
average fixed rate of 7.68%. NYMEX's fixed rate debt is exposed to the risk that
the fair market value of its debt will increase in a declining interest rate
environment. This would result in NYMEX paying a redemption premium if NYMEX
should choose to refinance this debt. Management has 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

56
<PAGE> 61

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 December 31,
1999, NYMEX had $36.6 million of cash and cash equivalents bearing an average
annual interest rate of approximately 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.

57
<PAGE> 62

CAPITALIZATION

The following table sets forth the capitalization of NYMEX as of December
31, 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" beginning on page 49 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 DECEMBER 31, 1999
---------------------------------------
PRO FORMA
ACTUAL ADJUSTMENT(2) PRO FORMA
-------- -------------- ---------
(IN THOUSANDS)
<S> <C> <C> <C>
Long term debt -- notes payable.......... $100,000 $ -- $100,000
-------- -------- --------
Members' Equity:
Members' equity........................ 93,202 (93,202) --
Common stock, $.01 par value, 816
shares authorized and
outstanding(1)...................... -- -- --
Additional paid-in capital............. -- 92,506 92,506
-------- -------- --------
Total members'
equity/stockholders' equity.... 93,202 (696) 92,506
-------- -------- --------
Total capitalization.............. $193,202 $ (696) $192,506
======== ======== ========
</TABLE>

- -------------------------
(1) Total pro forma common stock amount at December 31, 1999 is $8. Due to
rounding to '000's, this number does not appear on this table.

(2) Pro forma data reflects such adjustments as necessary, in the opinion of
management, for a fair presentation of the results of operations and
stockholders' equity of NYMEX Holdings on a pro forma basis. See "Pro Forma
Consolidated Financial Information" on page F-23 for more detailed
information concerning these adjustments.

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<PAGE> 63

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 and will be considered members of 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. The board of NYMEX currently has one vacancy which is a
public director vacancy. We expect that this vacancy will be filled by the board
of directors within the next three months.

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
---- --- -------- -------
<S> <C> <C> <C>
Daniel Rappaport................. 46 Chairman of the Board 2001
Mitchell Steinhause.............. 52 Vice Chairman 2002
Richard Schaeffer................ 47 Director, Treasurer 2002
Neil Citrone..................... 36 Director, Secretary 2003
Stephen Ardizzone................ 38 Director 2001
Madeline Boyd.................... 47 Director 2001
Robert Coakley................... 37 Director 2002
John Conheeney................... 71 Director 2002
Thomas Costantino................ 49 Director 2001
Anthony George Gero.............. 63 Director 2002
David Greenberg.................. 35 Director 2003
E. Bulkeley Griswold............. 61 Director 2002
Jesse B. Harte................... 42 Director 2003
Robert Halper(1)................. 41 Director 2001
Scott Hess....................... 43 Director 2003
Steven Karvellas................. 40 Director 2002
Harley Lippman................... 45 Director 2001
Kevin McDonnell.................. 40 Director 2002
Gary Rizzi....................... 45 Director 2001
Richard Saitta................... 50 Director 2003
Robert Steele.................... 61 Director 2001
R. Patrick Thompson, Esq......... 51 President
Neal L. Wolkoff, Esq............. 44 Executive Vice President
Christopher K. Bowen, Esq........ 39 Senior Vice President & General
Counsel
Patrick F. Conroy................ 43 Senior Vice President --
Finance & Administration
</TABLE>

59
<PAGE> 64

<TABLE>
<CAPTION>
TERM
NAME AGE POSITION EXPIRES
---- --- -------- -------
<S> <C> <C> <C>
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) Mr. Halper was appointed to the board of directors at its meeting held on
April 5, 2000. His term will expire on March 20, 2001, the date of the next
scheduled annual meeting of members.

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. 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 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.

Mitchell Steinhause has been Vice Chairman of the board of directors of
NYMEX since March 2000 and has been a director of NYMEX since 1992. Mr.
Steinhause also previously served as Corporate Secretary of NYMEX. 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.

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.

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<PAGE> 65

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 is chairman of the NYMEX
Charitable Foundation Committee and a director of the Commodity Floor Brokers
and Traders Association.

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 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.

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 FINEX and was previously a director
of the Commodity Clearing Corporation. He is also Chairman of the NYMEX PAC and
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, the New York
Futures Exchange, FINEX, the Coffee, Sugar & Cocoa Exchange and the New York
Cotton Exchange and authored the textbook Precious Metals.

David D. Greenberg has been a director of NYMEX since March 2000 and has
been a member of NYMEX since 1990 and of the COMEX Division since 1988. Mr.
Greenberg is also a member of the New York Board of Trade and a director of the
Commodity Floor Brokers and Traders Association. He is president of Sterling
Commodities Corp. He is a graduate of Syracuse University.

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 Scan-Optics, Inc., Trust Company of Connecticut and
Fleet Bank.

Robert Halper has been a director of NYMEX since April 2000 and has been a
member of NYMEX since 1983. Mr. Halper has a BA degree in economics from SUNY

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Binghamton. Pursuant to a settlement agreement dated February 22, 1995 entered
into with Mr. Halper, the CFTC conditioned Mr. Halper's registration as a floor
trader on his activities being subject to a Supplemental Sponsor Certification
statement and restricted his service on self-regulatory governing boards or
other oversight committees for such period of conditional registration. This
conditional registration expired on February 22, 1996.

Jesse B. Harte has been a director of NYMEX since March 2000 and has been a
member of NYMEX since 1983. He is a former owner of Bay Area Petroleum a large,
independent floor brokerage operation and a Senior Vice President of Daiwa
Securities, a Futures Commission Merchant. Currently, Mr. Harte is employed by
Duke Energy Trading and Marketing, LLC. Mr. Harte is a graduate of The
University of Maine with a Bachelor of Science in Resource Economics.

Scott Hess has been a member of NYMEX since 1982 and a director since 1997.
He is presently a partner in G&H Commodities. He is also a director of the
Commodity Floor Brokers and Traders Association. 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 and has been a
member of NYMEX since 1990. He was elected to the board of directors of COMEX in
1987.

Harley Lippman has been a public director of NYMEX since 1999. Mr. Lippman
is the founder and chief executive officer of Genesis 10 Corp., 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 member of NYMEX since 1984. He is a 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 the boards of Scan Optics, Inc.,
SmartServ Online, Inc., Accent Color Sciences and NLC Insurance Co. and is
chairman of the board of directors of Moore Medical Corp. He also served as a
U.S. Congressman from the second district in Connecticut from 1970 - 1974.

R. Patrick Thompson has been President of NYMEX since October 1989. Mr.
Thompson also serves as President of COMEX and the COMEX Clearing Association,
Inc. 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

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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 and the COMEX Clearing Association, Inc. 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.

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 and the COMEX Clearing Association, Inc.

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 and the COMEX Clearing Association, Inc. 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. 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 and the COMEX Clearing
Association, Inc. (of which he is also Treasurer) 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. 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

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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: Ms. Boyd and Messrs. Citrone, Karvellas, Rappaport,
Rizzi, Schaeffer and Steinhause.

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: Messrs. 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.
The board of NYMEX Holdings does not intend to establish any compensation for
members of 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. Effective April 1, 2000, the Vice Chairman receives
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 receive a monthly stipend of $2,500, or
$30,000 a year. Effective April 1, 2000, directors receive an additional fee of
$1,000 for each board meeting attended. In addition, effective April 1, 2000,
directors serving on the executive committee 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.

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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(3)......................... 1999 -- 300,000 50,000
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) Mr. Helmig's term as Vice Chairman ended on March 21, 2000. The $50,000
shown under "All Other Compensation" 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 that they have completed 1,000 hours of employment within one
year. 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
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 on their contributions. 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 employees. NYMEX may provide a matching and
year end contribution to the plan. Matching

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contribution percentages and vesting follow the same guidelines as NYMEX's
defined 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. No person will be the beneficial owner of 5% or more of the
shares of common stock.

<TABLE>
<CAPTION>
SHARES OF
COMMON PERCENT OF
STOCK COMMON STOCK
BENEFICIALLY BENEFICIALLY
NAME OF BENEFICIAL OWNER OWNED OWNED
- ------------------------ ------------ ------------------
<S> <C> <C>
Daniel Rappaport.......................... 3 *
Mitchell Steinhause....................... 1 *
Richard Schaeffer......................... 3 *
Neil Citrone(1)........................... 1 *
Stephen Ardizzone......................... 1 *
Madeline Boyd............................. 1 *
Robert Coakley(2)......................... 1 *
John Conheeney............................ 0 *
Thomas Costantino(3)...................... 1 *
Anthony George Gero....................... 2 *
David Greenberg........................... 1 *
E. Bulkeley Griswold...................... 0 *
Robert Halper............................. 2 *
Jesse B. Harte(4)......................... 1 *
Scott Hess................................ 1 *
Steven Karvellas.......................... 1 *
Harley Lippman............................ 0 *
Kevin McDonnell........................... 1 *
Gary Rizzi(5)............................. 1 *
Richard Saitta............................ 1 *
Robert Steele............................. 0 *
R. Patrick Thompson, Esq. ................ 0 *
</TABLE>

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<PAGE> 71

- -------------------------
* Less than one percent.

(1) Pursuant to an 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, the agreement also provides
that Mr. Citrone may not sell, transfer or otherwise encumber the membership
without the consent of Pioneer. This type of agreement, in which a member
designates an individual to exercise voting rights and other membership
privileges but does not give the individual the power to dispose of a
membership, is known as an "ABC Agreement." The provisions of this ABC
Agreement will also apply to the common stock of NYMEX Holdings shown to be
beneficially owned by Mr. Citrone.

(2) Mr. Coakley has entered into an ABC Agreement with FIMAT USA Inc. The
provisions of this ABC Agreement will also apply to the common stock of
NYMEX Holdings shown to be beneficially owned by Mr. Coakley.

(3) Mr. Costantino has entered into an ABC Agreement with Union Oil Company of
California. The provisions of this ABC Agreement will also apply to the
common stock of NYMEX Holdings shown to be beneficially owned by Mr.
Costantino.

(4) Mr. Harte has entered into an ABC Agreement with Duke Energy Trading and
Marketing, LLC. The provisions of this ABC Agreement will also apply to the
common stock of NYMEX Holdings shown to be beneficially owned by Mr. Harte.

(5) Mr. Rizzi has entered into an ABC Agreement with AGE Commodity Clearing
Corp. The provisions of this ABC Agreement will also apply to the common
stock of NYMEX Holdings shown to be beneficially owned by Mr. Rizzi.

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CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

The following are descriptions of material transactions involving NYMEX and
its directors:

- Pioneer Futures, Inc., of which Mr. Citrone is Vice President, currently
leases from NYMEX approximately 32,093 square feet of space at the One
North End facility. Pioneer has three leases, one for 2,840 square feet
expiring on December 4, 2002, one for 10,360 square feet expiring on
December 14, 2002 and one for 18,893 square feet expiring April 1, 2005.
The current aggregate annual rent for these spaces is $1,213,320.

- FIMAT USA Inc., of which Mr. Coakley is a Senior Vice President,
currently leases from NYMEX approximately 1,350 square feet of space at
the One North End facility. The lease expires on July 27, 2001. The
current annual rent for this space is $56,574.

- Sterling Commodities Corp., of which Mr. Greenberg is President,
currently leases from NYMEX approximately 6,253 square feet of space at
the One North End facility. The lease expires on November 23, 2002. The
current annual rent for this space is $225,108. Mr. Greenberg's father,
Martin Greenberg, is the Chief Executive Officer and 100% owner of
Sterling Commodities.

- 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 interest
of Genesis 10. Genesis 10 is one of the companies which NYMEX has
consulted with regarding its search for a new Chief Information Officer.
In the event that NYMEX hires a candidate recommended by Genesis 10,
Genesis 10 will earn a fee of 30% of the annual compensation of the
candidate who is hired. Management believes this is a typical fee for
this type of consulting and recommendation service. In addition, NYMEX
has entered into a written contractual relationship with Genesis 10 under
which Genesis 10 provides the services of one temporary Senior Developer
/Architect to NYMEX. NYMEX pays Genesis 10 $115 per hour for the Senior
Developer/Architect. Approximately $104,440 has been paid by NYMEX to
Genesis 10 for services rendered from October 1999 to the present.
Furthermore, if the Senior Developer/Architect is hired on a permanent
basis, NYMEX will be obligated to pay Genesis 10 a fee of 30% of annual
compensation in accordance with the arrangement described above in this
paragraph.

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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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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

At present, each NYMEX member is entitled to one vote on all matters on
which members are entitled to vote, even if multiple memberships are owned by
the same person. Unlike NYMEX, Class A members of NYMEX Exchange will not be
limited to one vote per member; rather each Class A member will be entitled to
one vote per each membership owned. NYMEX Holdings, as the sole Class B member,
is entitled to one vote on all matters including fundamental changes such as an
amendment to the certificate of incorporation or a merger of NYMEX Exchange. The
Class A memberships are 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. Any other matters that require the vote of members will be voted on
solely by NYMEX Holdings as the sole Class B member. The board of directors of
NYMEX Holdings would exercise this vote on behalf of NYMEX Holdings.

Unless and until the common stock of NYMEX Holdings and the Class A
memberships of NYMEX Exchange are unstapled, the board of NYMEX Holdings will be
the same as the board of NYMEX Exchange. Those directors will be elected by the

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stockholders of NYMEX Holdings and are subject to the same criteria for election
as the existing board members of NYMEX. Until the Class A memberships and common
stock are unstapled, the Class A members of NYMEX Exchange will be the same as
the stockholders of NYMEX Holdings.

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

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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 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 agreement,
acceptable to the board of NYMEX Exchange, by which the member submits to the
continuing jurisdiction of NYMEX Exchange. This rule does not apply to lessees.

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;

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<PAGE> 77

- 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,
provided that, if properly registered as a clerk, that person may
transmit customer orders for execution.

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 the 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

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<PAGE> 78

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.

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. "Floor member" means a member who has been granted floor
trading privileges. Each applicant as a floor member must be qualified to trade
on the floor by a clearing member who must execute the 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.

The membership committee is comprised of a number of members as the
Chairman of NYMEX Exchange may determine. The membership committee is divided
into two panels -- a NYMEX Division panel and a COMEX Division panel. The NYMEX
Division panel currently has 18 members.

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 an amount as 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 non-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 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 admission as a member. An applicant who has

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<PAGE> 79

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 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. These 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 comply with the 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 amounts as it
determines, on contracts traded on NYMEX Exchange. From time to time the board
may levy 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, 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

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<PAGE> 80

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 the 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 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 the 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 the 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 the expulsion.

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<PAGE> 81

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 and the replacement
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.

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<PAGE> 82

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 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 indemnified 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 that capacity, regardless of whether the bylaws would permit
indemnification.

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<PAGE> 83

COMPARISON OF RIGHTS OF NYMEX MEMBERS
BEFORE AND AFTER THE DEMUTUALIZATION

The rights of members are currently governed by New York law as well as 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 or, in
the case of NYMEX
Exchange, the Class B
member. The Class A
members of NYMEX Exchange
have no right to receive
dividends or distributions
under the certificate of
incorporation of NYMEX
Exchange.
</TABLE>

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<PAGE> 84

<TABLE>
<CAPTION>
NYMEX EXCHANGE CLASS A
MEMBERSHIPS AND
NYMEX HOLDINGS COMMON
STOCK NYMEX MEMBERSHIPS
---------------------------- ----------------------------
<S> <C> <C>
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 additional
but the board may create class of membership may
additional classes of have voting or other
memberships with rights rights equal to or greater
and limitations as it than the class of regular
determines. No additional members.
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.
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 of NYMEX Exchange.
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.
</TABLE>

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<PAGE> 85

<TABLE>
<CAPTION>
NYMEX EXCHANGE CLASS A
MEMBERSHIPS AND
NYMEX HOLDINGS COMMON
STOCK NYMEX MEMBERSHIPS
---------------------------- ----------------------------
<S> <C> <C>
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 NYMEX memberships.
is not the subject of any Memberships may be
disciplinary proceeding or transferred only to
investigation, unless transferees that meet
certain conditions are certain fiscal and other
met. requirements.
- There is no public market
for the memberships of NYMEX
Exchange or the common
stock of NYMEX Holdings.
Memberships may be
transferred only to
transferees that meet
certain fiscal and other
requirements.
VOTING RIGHTS - The sole Class B - Each member of NYMEX has
membership held by NYMEX one vote regardless of the
Holdings has the sole number of memberships
voting right on matters owned.
relating to NYMEX
Exchange, except that - Lessees of NYMEX
Class A memberships have memberships may have
the right to vote with the voting rights as provided
Class B membership on for in the rules of NYMEX
proposed amendments to the from time to time.
bylaws of NYMEX Exchange.
As to any matters upon
which Class A members are
entitled to vote, each
member has one vote per
membership owned.
- 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.
</TABLE>

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<PAGE> 86

<TABLE>
<CAPTION>
NYMEX EXCHANGE CLASS A
MEMBERSHIPS AND
NYMEX HOLDINGS COMMON
STOCK NYMEX MEMBERSHIPS
---------------------------- ----------------------------
<S> <C> <C>
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.
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.
</TABLE>

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<PAGE> 87

<TABLE>
<CAPTION>
NYMEX EXCHANGE CLASS A
MEMBERSHIPS AND
NYMEX HOLDINGS COMMON
STOCK NYMEX MEMBERSHIPS
---------------------------- ----------------------------
<S> <C> <C>
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.
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 distributions.
- Stockholders of NYMEX
Holdings are entitled to
share ratably in any
liquidating distributions.
</TABLE>

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<PAGE> 88

<TABLE>
<CAPTION>
NYMEX EXCHANGE CLASS A
MEMBERSHIPS AND
NYMEX HOLDINGS COMMON
STOCK NYMEX MEMBERSHIPS
---------------------------- ----------------------------
<S> <C> <C>
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.
- 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.
</TABLE>

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<PAGE> 89

<TABLE>
<CAPTION>
NYMEX EXCHANGE CLASS A
MEMBERSHIPS AND
NYMEX HOLDINGS COMMON
STOCK NYMEX MEMBERSHIPS
---------------------------- ----------------------------
<S> <C> <C>
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
substantially identical to
NYMEX's current charter,
bylaws and rules except
for changes made to
reflect the
demutualization and to
comply with Delaware law.
</TABLE>

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<PAGE> 90

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 IRS 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.

It is a condition to the consummation of the demutualization that we
receive a ruling from the IRS generally to the effect that the demutualization
will have the foregoing effects. An opinion of counsel does not satisfy this
condition.

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

86
<PAGE> 91

aware of any facts or circumstances that would cause the IRS to revoke or modify
the IRS ruling.

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.

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 up to the
value of the NYMEX Holdings stock received by the member.

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

87
<PAGE> 92

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.

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, 1999 and 1998 and for each of the three
years in the period ended December 31, 1999 included in this proxy statement and
prospectus, have been audited by Deloitte & Touche LLP, independent auditors, as
stated in their report appearing herein and are included in reliance upon the
report of such firm given upon their authority as experts in accounting and
auditing.

88
<PAGE> 93

INDEX TO FINANCIAL STATEMENTS AND PRO FORMA
FINANCIAL INFORMATION

<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Independent Auditors' Report................................ F-2
Consolidated Balance Sheets at December 31, 1999 and 1998... F-3
Consolidated Statements of Income and Members' Equity for
the Years Ended December 31, 1999, 1998 and 1997.......... F-4
Consolidated Statements of Cash Flows for the Years Ended
December 31, 1999, 1998 and 1997.......................... F-5
Notes to Consolidated Financial Statements for the Years
Ended December 31, 1999, 1998 and 1997.................... F-6
Pro Forma Consolidated Financial Information................ F-23
</TABLE>

F-1
<PAGE> 94

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, 1999
and 1998, 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,
1999. 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 auditing standards generally accepted
in the United States of America. 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, 1999 and 1998, and the results of their
operations and their cash flows for each of the three years in the period ended
December 31, 1999 in conformity with accounting principles generally accepted in
the United States of America.

DELOITTE & TOUCHE LLP

New York, New York

March 31, 2000 (April 26, 2000 as to Notes 14 and 15)

F-2
<PAGE> 95

NEW YORK MERCANTILE EXCHANGE AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
DECEMBER 31, 1999 AND 1998
(IN THOUSANDS)

<TABLE>
<CAPTION>
1999 1998
-------- --------
<S> <C> <C>
ASSETS
Cash and cash equivalents................................ $ 36,592 $ 14,353
Marketable securities, at market (cost of $80,905 and
$89,900)............................................... 76,992 92,259
Clearing and transaction fees receivable................. 14,421 6,075
Market data fees receivable.............................. 4,647 3,640
Prepaid taxes and expenses............................... 4,209 9,233
Deferred income taxes.................................... 476 346
Other current assets..................................... 4,172 2,794
-------- --------
Total current assets........................... 141,509 128,700
Property and equipment, net.............................. 228,613 223,000
Goodwill, net............................................ 20,635 22,788
Other assets............................................. 1,737 794
-------- --------
TOTAL ASSETS............................................. $392,494 $375,282
======== ========
LIABILITIES AND MEMBERS' EQUITY
LIABILITIES:
Accounts payable and accrued liabilities............... $ 12,053 $ 7,829
Accrued salaries and related liabilities............... 2,848 2,924
Deferred credit -- grant for building construction..... 2,145 2,145
Accrued interest payable............................... 1,920 1,920
Other current liabilities.............................. 1,874 1,043
-------- --------
Total current liabilities...................... 20,840 15,861
Deferred income taxes.................................... 12,568 9,459
Postemployment and postretirement benefits............... 6,770 6,585
Notes payable............................................ 100,000 100,000
Deferred credit -- grant for building construction....... 121,179 123,324
Subordinated commitment -- members' retention program.... 37,935 33,820
-------- --------
Total liabilities.............................. 299,292 289,049
COMMITMENTS AND CONTINGENCIES (See Note 14)
MEMBERS' EQUITY.......................................... 93,202 86,233
-------- --------
TOTAL LIABILITIES AND MEMBERS' EQUITY.................... $392,494 $375,282
======== ========
</TABLE>

The accompanying notes are an integral part of these statements.
F-3
<PAGE> 96

NEW YORK MERCANTILE EXCHANGE AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF INCOME AND MEMBERS' EQUITY
YEARS ENDED DECEMBER 31, 1999, 1998 AND 1997
(IN THOUSANDS)

<TABLE>
<CAPTION>
1999 1998 1997
--------------- --------------- ---------------
<S> <C> <C> <C>
OPERATING REVENUES:
Clearing and transaction fees, net of member
fee rebates of $13,065, $11,272 and
$10,012 in 1999, 1998 and 1997. .......... $ 105,206 $ 90,764 $ 80,773
Market data fees............................. 34,689 34,858 33,457
Other, net of rebates of $2,399, $1,364, and
$0 in 1999, 1998 and 1997................. 4,540 4,961 3,557
--------------- --------------- ---------------
Total operating revenues............. 144,435 130,583 117,787
--------------- --------------- ---------------
OPERATING EXPENSES:
Salaries and employee benefits............... 45,802 44,552 43,676
Telecommunications, equipment rentals and
maintenance............................... 15,917 14,627 13,164
General and administrative................... 14,012 14,983 16,869
Rent and facility............................ 12,877 12,760 17,116
Depreciation and amortization of property and
equipment, net of deferred credit
amortization.............................. 10,966 9,901 5,215
Professional services........................ 9,017 7,486 5,198
Marketing.................................... 2,537 2,403 4,813
Amortization of goodwill..................... 2,153 2,153 2,153
Loss on disposition of property and
equipment................................. 1,298 2,814 1,234
Other........................................ 4,984 5,344 5,026
--------------- --------------- ---------------
Total operating expenses............. 119,563 117,023 114,464
--------------- --------------- ---------------
INCOME FROM OPERATIONS......................... 24,872 13,560 3,323
OTHER INCOME (EXPENSES):
Investment income, net....................... 3,942 6,739 8,288
Interest expense............................. (7,721) (7,958) (6,967)
--------------- --------------- ---------------
INCOME BEFORE PROVISION FOR INCOME TAXES....... 21,093 12,341 4,644
PROVISION FOR INCOME TAXES..................... 8,903 6,263 3,495
--------------- --------------- ---------------
NET INCOME..................................... 12,190 6,078 1,149
MEMBERS' EQUITY, BEGINNING OF YEAR............. 86,233 86,565 91,787
LESS NET TRANSFER TO MEMBERS' RETENTION
PROGRAM:
NYMEX Division............................... (4,017) (5,255) (5,006)
COMEX Division............................... (1,204) (1,155) (1,365)
--------------- --------------- ---------------
MEMBERS' EQUITY, END OF YEAR................... $ 93,202 $ 86,233 $ 86,565
=============== =============== ===============
</TABLE>

The accompanying notes are an integral part of these statements.
F-4
<PAGE> 97

NEW YORK MERCANTILE EXCHANGE AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS
YEARS ENDED DECEMBER 31, 1999, 1998 AND 1997
(IN THOUSANDS)

<TABLE>
<CAPTION>
1999 1998 1997
--------------- --------------- ---------------
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income................................................ $ 12,190 $ 6,078 $ 1,149
Adjustments to reconcile net income to net cash provided
by operating activities:
Depreciation and amortization of property and equipment,
net of deferred credit amortization................... 10,966 9,901 5,215
Amortization of goodwill................................ 2,153 2,153 2,153
Deferred income taxes................................... 2,979 8,262 4,378
Loss on disposition of property and equipment........... 1,298 2,814 1,234
Net changes in operating assets and liabilities:
Decrease (increase) in marketable securities:
Corporate funds.................................... 9,029 2,167 45,455
Members' retention funds........................... 6,238 (5,398) (5,223)
(Increase) decrease in clearing and transaction fees
receivable......................................... (8,346) 2,042 (1,477)
Increase in market data fees receivable............... (1,007) (154) (3,486)
Decrease (increase) in prepaid taxes and expenses..... 5,024 2,398 (9,353)
Increase in other current assets...................... (1,378) (366) (1,095)
Decrease in due from affiliate........................ -- -- 4,810
Decrease in prepaid pension cost...................... -- -- 2,003
Increase (decrease) in accounts payable and accrued
liabilities........................................ 4,224 (4,954) (8,590)
(Decrease) increase in accrued salaries and related
liabilities........................................ (76) 1,078 (34)
(Decrease) increase in accrued interest payable....... -- (1,196) 545
Increase in other current liabilities................. 831 906 766
Increase in postemployment and postretirement
benefits........................................... 185 420 1,905
--------------- --------------- ---------------
Net cash provided by operating activities.......... 44,310 26,151 40,355
--------------- --------------- ---------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures...................................... (20,022) (18,175) (82,795)
(Increase) decrease in other assets....................... (943) 50 (110)
--------------- --------------- ---------------
Net cash used in investing activities.............. (20,965) (18,125) (82,905)
--------------- --------------- ---------------
CASH FLOWS FROM FINANCING ACTIVITIES:
COMEX acquisition note repayments......................... -- (5,043) (5,043)
Proceeds from notes payable............................... -- -- 15,000
Grant receipts from EDC and ESDC for building
construction............................................ -- -- 38,698
Distributions under NYMEX Division members' retention
program................................................. (1,106) (1,012) (1,148)
--------------- --------------- ---------------
Net cash (used in) provided by financing
activities....................................... (1,106) (6,055) 47,507
--------------- --------------- ---------------
NET INCREASE IN CASH AND CASH EQUIVALENTS................... 22,239 1,971 4,957
CASH AND CASH EQUIVALENTS, BEGINNING OF YEAR................ 14,353 12,382 7,425
--------------- --------------- ---------------
CASH AND CASH EQUIVALENTS, END OF YEAR...................... $ 36,592 $ 14,353 $ 12,382
=============== =============== ===============
SUPPLEMENTAL INFORMATION
Cash paid for:
Interest (net of $1.6 million capitalized in 1997)...... $ 7,680 $ 9,130 $ 6,914
=============== =============== ===============
Income taxes............................................ $ 704 $ -- $ 4,877
=============== =============== ===============
Cash received from:
Income tax refunds...................................... $ -- $ 3,461 $ --
=============== =============== ===============
Noncash members' equity transaction -- transfer to
subordinated commitment -- members' retention program:
NYMEX Division.......................................... $ 4,017 $ 5,255 $ 5,006
=============== =============== ===============
COMEX Division.......................................... $ 1,204 $ 1,155 $ 1,365
=============== =============== ===============
</TABLE>

The accompanying notes are an integral part of these statements.
F-5
<PAGE> 98

NEW YORK MERCANTILE EXCHANGE AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 1999, 1998 AND 1997

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.

BASIS OF PRESENTATION -- The accompanying consolidated financial statements
are presented on an accrual basis in conformity with accounting principles
generally accepted in the United States of America.

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.

NEW ACCOUNTING STANDARD -- The American Institute of Certified Public
Accountants issued Statement of Position (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 of this 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. The total amount of
internally developed software costs capitalized for the year ended December 31,
1999 was $10.2 million and is included in property and equipment, net in the
consolidated balance sheets. All capitalized internally developed software costs
are amortized using the straight-line method over the estimated

F-6
<PAGE> 99
NEW YORK MERCANTILE EXCHANGE AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

useful lives of the software, not exceeding five years. Prior to 1999, all costs
associated with internally developed software were expensed as incurred.

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, 1999 and 1998, 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 -- The Exchange invests primarily in high-grade
tax-exempt municipal bonds and direct obligations of the U.S. government and its
agencies. The Exchange has classified all of its investments in debt and
equities as trading. Management determines the appropriate classification of
debt and equity securities at the time of purchase and re-evaluates such
classification at each balance sheet date.

Trading securities are bought and held principally for the purpose of
selling them in the near future and are carried at fair value based on quoted
market prices. The resulting unrealized gains or losses are recognized currently
in the consolidated statement of income and members' equity. Realized gains or
losses from the sales of marketable securities are determined on the specific
identification basis and are included in Investment Income, Net in the
consolidated statement of income and members' equity.

REVENUE RECOGNITION -- The largest source 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, 1999 and 1998, no clearing and
transaction fees 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.

Clearing and transaction fees receivable are carried at amounts that
approximate fair value, net of allowances for member credits which are based
upon expected billing adjustments. An allowance for member credits of $1,500,000
has been established based on historical recording of these subsequent credits
and has been applied as a reduction of clearing and transaction fees receivable
at December 31, 1999 and 1998, respectively. The Exchange believes the
allowances are adequate to cover member credits. The Exchange believes the
likelihood of incurring material losses due to collectibility is remote and
therefore no allowance for doubtful accounts is necessary.

Effective January 1, 1996, the Exchange adopted a fee reduction program,
pursuant to which certain clearing fees of NYMEX members are substantially
reduced. The Exchange adopted a fee reduction program for Futures Commission
Merchants ("FCMs") effective

F-7
<PAGE> 100
NEW YORK MERCANTILE EXCHANGE AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

January 1, 1998 and similar fee reduction programs for Local Owners and Floor
Brokerage Operations effective January 1, 1999. These programs have been
established to reduce various operating costs to these participants such as
telephone, rent and marketing expenses.

The Exchange provides 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, 1999, nine vendors each represented receivable
balances greater than 5% of the total balance. An allowance for uncollectible
receivables of $500,000 has been applied as a reduction to the December 31, 1999
market data fees receivable balance.

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.

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.
There were no impairments recognized for the years ended December 31, 1999 and
1998. The loss on disposition of assets included in the consolidated statements
of income and members' equity for these years represents the net book value of
property retired from service. For the year ended December 31, 1997, the loss on
disposition included in the consolidated statement of income and members' equity
represents the write down of impaired assets.

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.

F-8
<PAGE> 101
NEW YORK MERCANTILE EXCHANGE AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

GOODWILL -- Goodwill, representing the excess of the purchase price over
the fair value of the net assets of COMEX (acquired in August 1994), 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.

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.)

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, but revises disclosures about pensions and other
postretirement benefit plans. The Exchange adopted SFAS No. 132 during 1998
retroactive to January 1, 1997.

SEGMENT REPORTING -- The Exchange adopted SFAS No. 131, Disclosures About
Segments of an Enterprise and Related Information during 1998 retroactive to
January 1, 1997. Management reports 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 1999 and 1998 amortization of the deferred
credit is recorded as a reduction to depreciation and amortization expense.

RECLASSIFICATIONS -- Certain reclassifications have been made to the 1997
and 1998 consolidated financial statements to conform to the 1999 presentation.

F-9
<PAGE> 102
NEW YORK MERCANTILE EXCHANGE AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

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, the Coffee, Sugar, Cocoa Exchange, and the New York Cotton
Exchange). 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, under which 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.

3. PROPERTY AND EQUIPMENT, NET

Property and equipment are stated at cost, less related accumulated
depreciation and amortization of $31,323,000 at December 31, 1999 and
$21,552,000 at December 31, 1998.

PROPERTY AND EQUIPMENT (IN THOUSANDS)

<TABLE>
<CAPTION>
DECEMBER 31, DECEMBER 31,
1999 1998
------------------- -------------------
NET GROSS NET GROSS
-------- -------- -------- --------
<S> <C> <C> <C> <C>
Building and improvements.................... $170,420 $178,780 $173,810 $178,700
Information system equipment................. 32,742 50,188 34,762 48,072
Furniture, fixtures, office machinery and
other...................................... 24,937 29,760 13,017 15,300
Leasehold improvements....................... 514 1,208 1,411 2,480
-------- -------- -------- --------
$228,613 $259,936 $223,000 $244,552
======== ======== ======== ========
</TABLE>

Depreciation and amortization expense of property and equipment is
presented net of amortization of the deferred credit. This amortization of
deferred credit was $2.1 million, $1.9 million and $1.3 million in 1999, 1998
and 1997, respectively.

In 1999, the Exchange retired from service leasehold improvements and
computer equipment and their related accumulated amortization and depreciation
totaling $4.6 million and $3.3 million, respectively. The resulting loss
(remaining net book value) of $1.3 million was recognized in current earnings.
In 1998, a similar loss of $2.8 million was recognized and included in the
consolidated statement of income and members' equity. For the year ended
December 31, 1997, a write down of $1.2 million for impaired assets was
recognized in the consolidated statement of income and member's equity.

F-10
<PAGE> 103
NEW YORK MERCANTILE EXCHANGE AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

4. NOTES PAYABLE

Notes payable consisted of the following at December 31:

<TABLE>
<CAPTION>
(IN THOUSANDS)
1999 1998
-------- --------
<S> <C> <C>
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>

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:

<TABLE>
<CAPTION>
(IN THOUSANDS)
<S> <C>
2000................................................ $ -0-
2001................................................ 2,815
2002................................................ 2,815
2003................................................ 2,815
2004................................................ 2,815
</TABLE>

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, 1999,
1998 and 1997, $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

F-11
<PAGE> 104
NEW YORK MERCANTILE EXCHANGE AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

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, 1999 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.

At December 31, 1999 and 1998, based on the membership data on those dates,
a discount rate on benefit commitments of 8.25 percent and 7.5 percent,
respectively, and membership mortality and turnover assumptions, contingent
benefits based on service to date approximated $28 million and $26 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
annual 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 40 percent after two full years of service, and then 20 percent per
year until fully vested at 100 percent after five years of service. The
Exchange's total contributions to the Plan were $1.6 million, $1.6 million, and
$1.2 million for each of the years ended December 31, 1999, 1998 and 1997,
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

F-12
<PAGE> 105
NEW YORK MERCANTILE EXCHANGE AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

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 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.

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. The settlement loss was included as part of the
salaries and employee benefits expense in 1997.

Net pension benefit of the defined benefit plan includes the following
components for the year ended December 31, 1997 (in thousands):

<TABLE>
<S> <C>
Interest cost on projected benefit obligation............... $(421)
Actual return on plan assets................................ 854
Net amortization and deferral............................... --
-----
Net pension benefit......................................... $ 433
=====
</TABLE>

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

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

F-13
<PAGE> 106
NEW YORK MERCANTILE EXCHANGE AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

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>
1999 1998
------- -------
<S> <C> <C>
Change in accumulated postretirement benefit obligation:
Accumulated postretirement benefit obligation, beginning
of year................................................ $ 4,168 $ 4,658
Service cost.............................................. 446 461
Interest cost............................................. 248 239
Amendments................................................ -- --
Actuarial gain............................................ (942) (1,022)
Benefits paid............................................. (159) (168)
------- -------
Accumulated postretirement benefit obligation, end of
year................................................... $ 3,761 $ 4,168
- -------------------------------------------------------------------------------
Funded status............................................... $(3,761) $(4,168)
Unrecognized transition obligation........................ 1,452 1,549
Unrecognized prior service cost........................... (1,613) (1,732)
Unrecognized net (gain) loss.............................. (1,733) (847)
------- -------
Accrued postretirement benefit cost, end of year.......... $(5,655) $(5,198)
======= =======
</TABLE>

<TABLE>
<CAPTION>
1999 1998 1997
----- ----- ------
<S> <C> <C> <C>
Net periodic postretirement benefit cost for the years
ended December 31 (in thousands) consists of the
following components:
Service cost......................................... $ 446 $ 461 $1,328
Interest cost........................................ 248 239 584
Amortization of:
Transition obligation............................. 96 96 219
Prior service cost................................ (118) (118) --
Net (gain) loss................................... (57) (43) 25
----- ----- ------
Net periodic postretirement benefit cost............. $ 615 $ 635 $2,156
===== ===== ======
</TABLE>

The weighted average discount rates used in determining the accumulated
postretirement benefit obligation were 7.75 and 6.75 percent at December 31,
1999 and 1998, 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 9.0 percent for
1999 and is assumed to decrease gradually to 5% by 2005 and remain level
thereafter.

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..... $ 55,544 $ (51,938)
Effect on postretirement benefit obligation...... $274,142 $(254,211)
</TABLE>

F-14
<PAGE> 107
NEW YORK MERCANTILE EXCHANGE AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

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, 1999, 1998 and 1997,
respectively, consisted of the following (in thousands):

<TABLE>
<CAPTION>
1999 1998 1997
-------- ------- ------
<S> <C> <C> <C>
Current:
Federal.................................. $ 4,391 $(2,024) $ (542)
State and local.......................... 1,533 25 (341)
-------- ------- ------
5,924 (1,999) (883)
-------- ------- ------
Deferred:
Federal.................................. 2,844 5,717 2,601
State and local.......................... 135 2,545 1,777
-------- ------- ------
2,979 8,262 4,378
-------- ------- ------
Total...................................... $ 8,903 $ 6,263 $3,495
======== ======= ======
</TABLE>

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

<TABLE>
<CAPTION>
1999 1998 1997
---- ---- ----
<S> <C> <C> <C>
Statutory U.S. federal tax rate................ 34.0% 35.0% 35.0%
State and local taxes, net of federal
benefit...................................... 13.6% 0.1% 1.1%
Member benefits................................ -- 12.2% 31.6%
Amortization of goodwill....................... 4.7% 6.1% 16.2%
Deferred credit amortization -- grant for
building construction........................ (4.7%) (5.5%) (15.9%)
Tax-exempt income.............................. (5.1%) (6.4%) (13.1%)
Reversion of pension assets.................... -- -- 13.0%
Nondeductible expenses......................... 1.5% 2.1% 5.6%
Other, net..................................... (1.8%) 7.1% 1.8%
---- ---- -----
Effective tax rate........................ 42.2% 50.7% 75.3%
==== ==== =====
</TABLE>

F-15
<PAGE> 108
NEW YORK MERCANTILE EXCHANGE AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

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

<TABLE>
<CAPTION>
1999 1998
-------- --------
<S> <C> <C>
Current
Assets:
Unrealized losses on marketable securities.......... $ 304 $ --
Accrued expenses.................................... 89 53
Federal net operating loss.......................... 41 41
Other............................................... 103 497
-------- --------
537 591
-------- --------
Liabilities:
Unrealized gains on marketable securities........... -- (226)
Other............................................... (61) (19)
-------- --------
(61) (245)
-------- --------
Total current net deferred tax assets.................... $ 476 $ 346
======== ========
Noncurrent Long Term
Assets:
Post retirement benefits............................ $ 3,177 $ 2,963
Deferred compensation............................... 237 120
Suspended capital loss.............................. 134 --
Suspended charitable contributions.................. 607 819
Federal net operating loss.......................... 440 482
State and city net operating losses................. -- 490
AMT credit.......................................... 943 353
Other............................................... 98 --
-------- --------
5,636 5,227
-------- --------
Liabilities:
Depreciation & amortization......................... (18,204) (14,686)
-------- --------
(18,204) (14,686)
-------- --------
Total noncurrent long term net deferred tax
liabilities............................................ $(12,568) $ (9,459)
======== ========
</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, 1999 and 1998, $1,872,134 and $17,606 of cash,
$2,832,567,000 and $2,558,480,915 of U.S. Treasury obligations, and $24,200,000
and $7,860,000 of U.S. Treasury bills purchased under agreements to resell,
respectively, were segregated pursuant to such regulations by the NYMEX
Division. In addition, at December 31, 1999 and 1998, the NYMEX Division held
irrevocable letters of credit amounting to $248,089,600 and $102,350,000,
respectively, which are used by members to meet their obligations to the
Exchange for margin requirements on both open futures and options positions, as
well as delivery
F-16
<PAGE> 109
NEW YORK MERCANTILE EXCHANGE AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

obligations in lieu of depositing cash and/or securities. The Exchange invests
cash deposits and earns interest thereon. All income earned on deposits of U.S.
government securities accrue to the member firms depositing such securities.

At December 31, 1999 and 1998, the COMEX Division's segregated funds
consisted of $2,984,384 and $574,802 in cash, $763,650,000 and $474,584,750 in
U.S. Treasury bills, and $4,150,000 and $0 of U.S. Treasury bills purchased
under agreements to resell, respectively. The COMEX Division also holds
irrevocable letters of credit aggregating $89,650,000 and $39,100,000 as of
December 31, 1999 and 1998, 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, 1999 and 1998, the total deposits maintained in the NYMEX
Division Guaranty Fund were $83,966,000 and $78,518,950, respectively. At
December 31, 1999 and 1998, the total deposits for the COMEX Division Guaranty
Fund were $76,944,141 and $75,193,900, 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 (in thousands):

<TABLE>
<CAPTION>
NYMEX COMEX TOTAL
-------- ------- --------
<S> <C> <C> <C>
Year Ended December 31, 1999
OPERATING REVENUES:
Clearing and transaction fees
Regular trading hours(1).................... $ 85,512 $24,313 $109,825
NYMEX ACCESS(R)(2).......................... 7,420 1,026 8,446
Market data fees............................... 18,997 15,692 34,689
Other.......................................... 4,327 213 4,540
Member fee rebates............................. (13,065) -- (13,065)
-------- ------- --------
Total operating revenues............... $103,191 $41,244 $144,435
======== ======= ========
</TABLE>

F-17
<PAGE> 110
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.......................................... 4,196 765 4,961
Member fee rebates............................. (11,272) -- (11,272)
-------- ------- --------
Total operating revenues............... $ 90,655 $39,928 $130,583
======== ======= ========
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 rebates............................. (10,012) -- (10,012)
-------- ------- --------
Total operating revenues............... $ 76,204 $41,583 $117,787
======== ======= ========
</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

From time to time, the Exchange 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
December 31, 1999 that could have a material adverse effect on our business,
operating results or financial condition. While the ultimate result of the
proceedings against the Exchange cannot be predicted with certainty, the
management of the Exchange 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.

The Exchange 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). The
Exchange 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.

F-18
<PAGE> 111
NEW YORK MERCANTILE EXCHANGE AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

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, New York Mercantile Exchange, Cantor Fitzgerald, L.P. and the
Chicago Mercantile Exchange. This action is pending in United States
District Court for the Northern District of Texas (Dallas Division). The
Exchange 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. The Exchange is
providing its own defense to this action. The Exchange has filed motion
to sever and transfer venue to the Southern District of New York. Cantor
Fitzgerald, L.P. has settled this lawsuit and is no longer a party to
this action. This case is in discovery.

- Phillip Petruzzi and Joann Petruzzi v. New York Mercantile Exchange. This
action is pending in New York State Supreme Court (New York County). The
Exchange 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 the Exchange was located at 4 World Trade Center.
Plaintiff, an Exchange 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. The Exchange
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. The Exchange's motion to
dismiss punitive damages was served on March 17, 2000.

- 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). The Exchange
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 the Exchange he was subjected to a hostile work
environment and discrimination regarding his ethnic origin. Plaintiff
seeks an unspecified amount of compensatory and punitive damages. The
Exchange 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 the
Exchange'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.
The Exchange is represented by insurance counsel. The case is in
discovery.

F-19
<PAGE> 112
NEW YORK MERCANTILE EXCHANGE AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

- Robert Teofrio and Susan Teofrio v. New York Mercantile Exchange, Turner
Construction and AJ Construction of New York. This action is pending in
New York State Supreme Court (New York County). The Exchange 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. The Exchange is represented by insurance
counsel. This case is in discovery.

- Western Capital Design, LLC On Its Own Behalf and on Behalf of those
similarly situated 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. The Exchange was served with the summons and
complaint on or about February 17, 1999. This action relates to alleged
wrongful conduct by the Exchange and Exchange 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 compensatory
damages and $75,000,000 in punitive damages. The Exchange has retained
counsel to represent it in this matter. This action was commenced in
State Court in Florida. It was removed to Federal Court by notice of
removal filed March 8, 1999. Venue was transferred to the Southern
District of New York by an order dated May 11, 1999. The Exchange's
motion to dismiss was filed on November 12, 1999 and granted on March 31,
2000. The Exchange was served with an amended complaint on or about April
26, 2000.

- John Donnellan v. New York Mercantile Exchange, Turner Construction
Company, LaStrada General Construction Corp. and the Faraday Company,
Ltd. This action is pending in New York State Supreme Court (New York
County). The complaint was filed on February 25, 1999. This is a personal
injury case that relates to the construction of the One North End Avenue
facility. Plaintiff alleges that he was injured on February 28, 1996
while working at the One North End construction site. LaStrada General
Construction Corp. is a subcontractor of Turner. Although the complaint
alleges that the Faraday Company, Ltd. is a subcontractor of LaStrada,
the Exchange has no record of Faraday's relationship to LaStrada.
Plaintiff seeks $25,000,000 in compensatory damages. The Exchange is
reviewing the complaint to determine its response.

F-20
<PAGE> 113
NEW YORK MERCANTILE EXCHANGE AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

The Exchange occupies premises under leases with various lessors which
expire in 2000 through 2069. For the years ended December 31, 1999, 1998 and
1997, rental expense for the premises amounted to $1,998,996, $2,242,665 and
$4,253,616, respectively. At December 31, 1999, the Exchange was obligated for
future minimum rental payments required under the noncancelable terms of various
leases as follows:

<TABLE>
<CAPTION>
(in thousands)
<S> <C>
2000............................................ $ 1,672
2001............................................ 1,581
2002............................................ 1,506
2003............................................ 1,506
2004............................................ 1,756
2005 and thereafter............................. 15,834
-------
Total................................. $23,855
=======
</TABLE>

The Exchange began sub-leasing space in its headquarters during 1997. Rents
earned from these rentals were $3,159,875, $1,879,656, and $91,076 during 1999,
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. Sub-let space is not eligible for
abatements.

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 the lesser of $500,000 or 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 $11 million.

F-21
<PAGE> 114
NEW YORK MERCANTILE EXCHANGE AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

15. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

The following are descriptions of material transactions involving the
Exchange and its directors:

- Pioneer Futures, Inc., of which an officer and a board member is Vice
President, currently leases from the Exchange approximately 32,093 square
feet of space at the One North End facility. Pioneer has three leases,
one for 2,840 square feet expiring on December 4, 2002, one for 10,360
square feet expiring on December 14, 2002 and one for 18,893 square feet
expiring April 1, 2005. The current aggregate annual rent for these
spaces is $1,213,320.

- FIMAT USA Inc., of which a board member is a Senior Vice President,
currently leases from the Exchange approximately 1,350 square feet of
space at the One North End facility. The lease expires on July 27, 2001.
The current annual rent for this space is $56,574.

- Sterling Commodities Corp., of which a board member is President,
currently leases from the Exchange approximately 6,253 square feet of
space at the One North End facility. The lease expires on November 23,
2002. The current annual rent for this space is $225,108. Mr. Greenberg's
father, Martin Greenberg, is the Chief Executive Officer and 100% owner
of Sterling Commodities.

- A board member is the founder and Chief Executive Officer of Genesis 10
Corp., a company which, among other things, places executives in the
information technology field. This board member owns 95% of the equity
interest of Genesis 10. Genesis 10 is one of the companies which the
Exchange has consulted with regarding its search for a new Chief
Information Officer. In the event that the Exchange hires a candidate
recommended by Genesis 10, Genesis 10 will earn a fee of 30% of the
annual compensation of the candidate who is hired. Management believes
this is a typical fee for this type of consulting and recommendation
service. In addition, the Exchange has entered into a written contractual
relationship with Genesis 10 under which Genesis 10 provides the services
of one temporary Senior Developer/Architect to the Exchange. The Exchange
pays Genesis 10 $115 per hour for the Senior Developer/Architect.
Approximately $104,440 has been paid by the Exchange to Genesis 10 for
services rendered from October 1999 to the present. Furthermore, if the
Senior Developer/Architect is hired on a permanent basis, the Exchange
will be obligated to pay Genesis 10 a fee of 30% of annual compensation
in accordance with the arrangement described above in this paragraph.

16. 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-22
<PAGE> 115

PRO FORMA CONSOLIDATED FINANCIAL INFORMATION
(UNAUDITED)

Since the demutualization will be effective as 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 costs relating to the
demutualization. These costs are estimated to be approximately $1.2 million
broken down as follows:

<TABLE>
<CAPTION>
(IN THOUSANDS, EXCEPT
PER SHARE DATA)
<S> <C>
Legal fees................................................. $ 600
Investment advisory fees................................... 75
Registration, filing and other............................. 175
Printing................................................... 150
Accounting................................................. 200
--------
Total costs associated with demutualization...... 1,200
Less: Income tax effect assuming 42% effective tax rate.... (504)
--------
Net income reduction due to expense of
demutualization..................................... $ 696
========
Pro forma book value at December 31, 1999, after
demutualization is as follows:
Stockholders' equity at December 31, 1999............. $ 93,202
Reduction due to expense of demutualization, net of
taxes............................................... (696)
--------
Pro forma stockholders' equity at December 31, 1999... $ 92,506
========
Pro forma net income at December 31, 1999:
Net income for the year ended December 31, 1999....... $ 12,190
Less: net income reduction due to expense of
demutualization..................................... (696)
--------
Pro forma net income at December 31, 1999........ $ 11,494
========
Pro forma earnings per share(1).................. $ 14,086
========
Pro forma book value per share................... $113,365
========
</TABLE>

- -------------------------
(1) Based on 816 shares issued and outstanding immediately following the
demutualization. Membership seats will be exchanged for common stock on a 1
for 1 basis. The 84 treasury NYMEX memberships will not be exchanged for
common stock and will be cancelled upon consummation of the demutualization.

The pro forma adjustments are based upon available information and certain
assumptions that management believes are reasonable. The pro forma consolidated
financial information should be read in conjunction with the consolidated
financial statements and their notes.

F-23
<PAGE> 116

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> 117

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> 118

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> 119

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

A-3
<PAGE> 120

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 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> 121

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> 122

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").

B-1
<PAGE> 123

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.

B-2
<PAGE> 124

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.

B-3
<PAGE> 125

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

B-4
<PAGE> 126

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 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> 127

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> 128

EXHIBIT A

FORM OF CERTIFICATE OF INCORPORATION FOR THE SURVIVING CORPORATION

[See ANNEX E to this proxy statement and prospectus]

i
<PAGE> 129

EXHIBIT B

FORM OF BYLAWS FOR THE SURVIVING CORPORATION

[See Exhibit F to this proxy statement and prospectus]

ii
<PAGE> 130

EXHIBIT C

FORM OF AMENDED AND RESTATED CERTIFICATE OF
INCORPORATION OF NYMEX HOLDINGS

[See ANNEX C to this proxy statement and prospectus]

iii
<PAGE> 131

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 be
designated in accordance with the procedures determined by the Board of
Directors. The initial designations of the Chairman and Vice Chairman are set
forth in paragraph (a) of this 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;

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(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 be nominated in accordance with
procedures determined by the Board of Directors whereupon that candidate will be
eligible for election at the applicable meeting of stockholders only as a member
of the category determined in accordance with the procedures implemented by the
Board of Directors. 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 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

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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, (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.

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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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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 Chairman of the Board of Directors or by the
Secretary upon the written request of the majority of the Board of Directors or
upon the written request of the stockholders 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, by or at the
direction of the person or persons calling the special meeting, of the proposed
meeting and the special meeting so called shall be limited to 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 one-third 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 or Bylaws, 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 Bylaws. The Board of Directors shall consist of twenty-two (22)
persons. Directors of the Exchange shall include: (1) a Chairman of the Board
and a Vice Chairman of the Board, each of whom shall qualify and serve in
accordance with the provisions of the Bylaws; (2) fifteen (15) persons ("Member
Directors") who shall qualify and serve in accordance with the Certificate of
Incorporation; and (3) five (5) persons ("Public Directors") who shall qualify
and serve in accordance with the Certificate of Incorporation. The Board of
Directors 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, rescind or interpret the Rules of the
Exchange and impose such

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fees, charges, dues and assessments, all as it deems necessary and appropriate.
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 Commodity Futures
Trading Commission taken under authority of the Commodity Exchange Act and
necessary to comply in all respects with any requirements applicable to the
Corporation under the Act; and (4) the Board shall have the power to adopt
arbitration rules for the settlement of claims, grievances, disputes and
controversies. 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.

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
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 8 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 or 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.

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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 as set forth in Article VI.

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, or in his absence, the Vice Chairman on at least one
hour's 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 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. One or more Directors
may participate in a meeting of the Board by means of conference telephone or
similar communication device. 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.

SECTION 7. 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.

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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.

SECTION 2. Any notice to a director may be given personally, by telephone
or by mail, facsimile transmission, telex, telegraph, cable 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

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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. 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 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. In the event of the death, resignation or vacancy of the
Chairman, the Vice Chairman shall be the Chairman. 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.

SECTION 2. Each officer 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 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.

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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, 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

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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 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

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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 director, officer,
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, 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 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

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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, employee or agent and shall inure to the
benefit of the heirs, executors and administrators of such person.

SECTION 11. Actions Against the Exchange. Except as specifically permitted
by applicable law, no person who is or was a director, officer, employee, agent,
or 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
directors, officers, employees, agents, or any committee of the Exchange.

SECTION 12. Retroactive Effect. The provisions of this Article will be
deemed retroactive and will include all acts of the directors, officers,
employee or agent of the Corporation since the date of incorporation.

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. Amendment of Bylaws. Any Bylaw may be amended or deleted by the
Board with the approval of the stockholders. 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 Bylaw shall be voted
upon by the stockholders at any meeting of the stockholders. The proposed Bylaw,
amendment or deletion shall be adopted by the affirmative vote of a majority of
the stockholders. Notice of the proposed Bylaw, amendment or deletion must be
given in accordance with Article VI and shall specifically set forth the entire
Bylaw, amendment, or deletion proposed.

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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 and who qualify and serve in accordance with the Certificate
of Incorporation of NYMEX Holdings, Inc.

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

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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.

(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

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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.

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

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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.

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.

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(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.

(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.

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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.

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

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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.

(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.

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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 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.

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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.

(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.

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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.

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

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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 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.

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(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 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.

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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 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.
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(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.

(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;

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(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.

(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.

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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.

(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;

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(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.

(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

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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.

(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

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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

(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.

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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.

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 "Class B Member" as defined in the
Certificate of Incorporation of the Exchange.

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.

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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.

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.

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<PAGE> 175

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.

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.

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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.

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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 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).
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 -- NYMEX Amended and Restated Member's Retention and Retirement
Plan effective December 31, 1997.*
10.2 -- Trust under the NYMEX Retention and Retirement Plan dated
December 31, 1997.*
10.3 -- Ground Lease between Battery Park City Authority and NYMEX
dated May 18, 1995.*
10.4 -- Funding Agreement among New York State Urban Development
Corporation, New York City Economic Development Corporation,
Battery Park City Authority and NYMEX dated May 18, 1995.*
10.5 -- Note Purchase Agreement among NYMEX and each of the
purchasers listed in Schedule A attached thereto dated
October 15, 1996.*
10.6 -- Network License Order Form between Oracle Corporation and
NYMEX and accompanying Payment Plan Agreement and Payment
Schedule between Oracle Credit Corporation and NYMEX.*
10.7 -- Network License Order Form between Oracle Corporation and
NYMEX, accompanying Payment Schedule between Oracle Credit
Corporation and NYMEX and Amendment 1 to the Network License
Order Form.*
10.8 -- Network License Order Form between Oracle Corporation and
NYMEX and accompanying Payment Schedule between Oracle
Credit Corporation and NYMEX.*
</TABLE>

II-2
<PAGE> 178

<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION OF EXHIBIT
------- ----------------------
<C> <S>
10.8.1 -- Software License and Services Agreement between Oracle
Corporation and NYMEX effective January 6, 1995.
10.9 -- Smartnet Agreement between Cisco Systems, Inc. and NYMEX
dated May 21, 1996.*
10.10 -- Network Supported Account Agreement between Cisco Systems,
Inc. and NYMEX dated May 21, 1996.*
21.1 -- Subsidiaries of the Registrant.*
23.1 -- Consent of Deloitte & Touche LLP.
23.2 -- Consent of Clifford Chance Rogers & Wells LLP (included in
Exhibits 5.1
and 8.1).
24.1 -- Power of Attorney.*
24.2 -- Power of Attorney.*
27.1 -- Financial Data Schedule.*
99.1 -- Form of Proxy and Ballot.*
</TABLE>

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

* Previously filed

II-3
<PAGE> 179

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 offered therein, and the offering of such
securities at that time shall be deemed to be the initial bone fide
offering thereof.

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<PAGE> 180

(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.

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<PAGE> 181

SIGNATURES

Pursuant to the requirements of the Securities Act of 1933, as amended, the
Registrant has duly caused this Amendment No. 2 to be signed on its behalf by
the undersigned, thereunto duly authorized, in the City of New York, State of
New York on the 28th day of April 2000.

By: /s/ DANIEL RAPPAPORT

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

Name: Daniel Rappaport
Title: Chairman

Pursuant to the requirements of the Securities Act of 1933, as amended,
this Amendment No. 2 has been signed by the following persons in the capacities
and on the dates indicated.

<TABLE>
<CAPTION>
SIGNATURES TITLE DATE
---------- ----- ----
<C> <S> <C>

/s/ DANIEL RAPPAPORT Chairman of the Board April 28, 2000
- ------------------------------------ (Principal Executive Officer)
Daniel Rappaport

* Vice Chairman April 28, 2000
- ------------------------------------
Mitchell Steinhause

* Senior Vice President -- Finance April 28, 2000
- ------------------------------------ (Principal Financial and Accounting
Patrick F. Conroy Officer)

* Director April 28, 2000
- ------------------------------------
Stephen Ardizzone

* Director April 28, 2000
- ------------------------------------
Madeline Boyd

* Director, Secretary April 28, 2000
- ------------------------------------
Neil Citrone

* Director April 28, 2000
- ------------------------------------
Robert Coakley

* Director April 28, 2000
- ------------------------------------
Charles Napier Collyns

* Director April 28, 2000
- ------------------------------------
John Conheeney

* Director April 28, 2000
- ------------------------------------
Thomas Costantino

* Director April 28, 2000
- ------------------------------------
Anthony George Gero

* Director April 28, 2000
- ------------------------------------
David Greenberg

* Director April 28, 2000
- ------------------------------------
E. Bulkeley Griswold
</TABLE>

II-6
<PAGE> 182

<TABLE>
<CAPTION>
SIGNATURES TITLE DATE
---------- ----- ----
<C> <S> <C>

* Director April 28, 2000
- ------------------------------------
Jesse B. Harte

* Director April 28, 2000
- ------------------------------------
Scott Hess

* Director April 28, 2000
- ------------------------------------
Steven Karvellas

* Director April 28, 2000
- ------------------------------------
Harley Lippman

* Director April 28, 2000
- ------------------------------------
Kevin McDonnell

* Director April 28, 2000
- ------------------------------------
Gary Rizzi

* Director April 28, 2000
- ------------------------------------
Richard Saitta

* Director, Treasurer April 28, 2000
- ------------------------------------
Richard Schaeffer

* Director April 28, 2000
- ------------------------------------
Robert Steele

* Director April 28, 2000
- ------------------------------------
Robert Halper

*By: /s/ DANIEL RAPPAPORT
- -------------------------------------
Daniel Rappaport
Attorney-in-Fact
</TABLE>

II-7
<PAGE> 183

EXHIBIT INDEX

<PAGE> 184

<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION OF EXHIBIT
------- ----------------------
<C> <S>
10.9 -- Smartnet Agreement between Cisco Systems, Inc. and NYMEX
dated May 21, 1996.*
10.10 -- Network Supported Account Agreement between Cisco Systems,
Inc. and NYMEX dated May 21, 1996.*
21.1 -- Subsidiaries of the Registrant.*
23.1 -- Consent of Deloitte & Touche LLP.
23.2 -- Consent of Clifford Chance Rogers & Wells LLP (included in
Exhibits 5.1
and 8.1).
24.1 -- Power of Attorney.*
24.2 -- Power of Attorney.*
27.1 -- Financial Data Schedule.*
99.1 -- Form of Proxy and Ballot.*
</TABLE>

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

* Previously filed.

<PAGE> 1
Exhibit 8.1

April 28, 2000

New York Mercantile Exchange
One North End Avenue
World Financial Center
New York, New York 10282

Ladies and Gentlemen:

We have acted as counsel to you in connection with the transactions
described in the proxy statement and prospectus ("Proxy Statement and
Prospectus") which forms a part of the registration statement (the "Registration
Statement") filed by NYMEX Holdings, Inc. ("Holdings") with the Securities and
Exchange Commission on May 1, 2000. Subject to a favorable vote of your
membership, the New York Mercantile Exchange ("NYMEX") will merge with and into
New York Mercantile Exchange, Inc. ("NYMEX Exchange"), thereby effecting a
change in form from a New York not-for-profit corporation to a Delaware
for-profit corporation. NYMEX Merger Sub, Inc. then will merge with and into
NYMEX Exchange causing NYMEX Exchange to become a subsidiary of NYMEX Holdings.
In the first merger (the "Conversion"), current NYMEX members will exchange
their memberships and trading privileges for NYMEX Exchange Class A and Class B
membership interests. In the second merger (the "Holdings Reorganization"),
NYMEX Exchange members will exchange their Class B memberships for NYMEX
Holdings stock but retain their Class A membership interests, which represent
privileges to trade on NYMEX Exchange. This opinion is issued with respect to
certain federal income tax consequences of the two mergers. Reference to this
opinion is made in the Proxy Statement and Prospectus of Holdings dated the date
hereof which forms a part of the Registration Statement to which this opinion is
filed as an exhibit. All capitalized terms not otherwise defined herein have the
respective meanings assigned them in the Registration Statement. We filed a
ruling request (the "Ruling Request") on behalf of NYMEX with the Internal
Revenue Service on January 31, 2000.

We have examined and relied upon the accuracy and completeness of the
facts, information, covenants, statements and representations contained in
originals or copies, certified or otherwise identified to our satisfaction, of
the Ruling Request, the agreements pursuant to the Conversion and the Holdings
Reorganization (respectively, the "First Merger Agreement" and the "Second
Merger Agreement"), the Registration Statement, the Form of Certificate of
Incorporation and Bylaws of NYMEX Exchange and NYMEX Holdings filed as
appendices to the Proxy Statement and Prospectus and such other documents and
information as we have deemed necessary or appropriate as a basis for the
opinions set forth below. Our opinions are expressly conditioned on, among other
things, the accuracy as of the date hereof, and the continuing accuracy of all
of such facts, information, covenants, statements and representations up to and
including the Effective Time.

<PAGE> 2
In our examination, we have assumed the genuineness of all signatures,
the legal capacity of natural persons, the authenticity of all documents
submitted to us as certified or photostatic copies and the authenticity of the
originals of such documents. We have also assumed that the contemplated
transactions will be consummated at the Effective Time in accordance with the
description in the Registration Statement.

In rendering our opinions, we have considered applicable provisions of
the Internal Revenue Code of 1986, as amended (the "Code"), Treasury Regulations
promulgated thereunder (the "Regulations"), judicial decisions, rulings of the
Internal Revenue Service and such other authorities as we have considered
relevant. It should be noted that such Code, Regulations, judicial decisions and
administrative interpretations are subject to change at any time and, in some
circumstances, with retroactive effect. A material change in the authorities or
the facts, information, covenants, statements, representations or assumptions
upon which our opinion is based could affect our conclusions herein.

Our opinions are based in part on the representations made by NYMEX to
us in a letter dated April 28, 2000 (the "Representation Letter"). Our opinions
(i) and (ii) below also assume, based in part on obtaining the following rulings
requested from the IRS in the Ruling Request:

1. For purposes of subchapter C of the Code, the current NYMEX
memberships are stock;

2. For purposes of subchapter C of the Code, the Class B NYMEX
Exchange memberships will be stock and the Class A NYMEX Exchange memberships
will not be treated as stock;

3. The continuity of interest requirement of Section 368(a) will
be satisfied in respect of both the Conversion and the Holdings Reorganization;
and

4. The Conversion will be treated as a separate transaction from the
Holdings Reorganization and the Holdings Reorganization will not disqualify the
Conversion from satisfying the requirements of a reorganization under Section
368(a)(1)(F) or the Holdings Reorganization from satisfying the requirements for
an exchange under Section 351(a).

Based upon and subject to the foregoing, we are of the opinion, and
hereby confirm our opinion set forth in the Proxy Statement and Prospectus under
the caption "Federal Income Tax Consequences of the Demutualization" that: (i)
for federal income tax purposes, the Conversion should qualify as a
reorganization within the meaning of Section 368(a)(1)(F) of the Code; (ii) for
federal income tax purposes, the Holdings Reorganization should qualify as a
tax-free exchange within the meaning of Section 351 of the Code; and (iii) the
discussion in the Proxy Statement and Prospectus under the captions "Questions
and Answers About the Demutualization" (Question 17), "Risk Factors," "The
Demutualization-Tax Treatment," and "Federal Income Tax Consequences of the
Demutualization," to the extent it relates to NYMEX or NYMEX members, is a fair
and accurate summary of the material federal income tax consequences of the
demutualization transactions, subject to the qualifications set forth therein.
<PAGE> 3
This opinion represents and is based upon our best judgment regarding
the application of federal income tax laws arising under the Code, existing
judicial decisions, administrative regulations and published rulings and
procedures. Our opinion is not binding upon the Internal Revenue Service or the
courts. Furthermore, we cannot provide assurance that future legislative,
judicial or administrative changes would not, on either a prospective or
retroactive basis, adversely affect the accuracy of the conclusions stated
herein. Moreover, we undertake no responsibility to advise you of any new
developments in the application or interpretation of the federal income tax laws
as they might relate to this opinion.

No opinion is expressed as to any transaction other than the Conversion
and the Holdings Reorganization, as described in the Merger Agreements.
Moreover, we have assumed that all the transactions described in the Merger
Agreements have been or will be consummated in accordance with the terms of the
Registration Statement and without waiver or breach of any material provision
thereof and that all of the representations, warranties, statements and
assumptions upon which we have relied remain true and accurate at all relevant
times. Any change after the date hereof in the facts and circumstances
surrounding the Conversion or the Holdings Reorganization, or any inaccuracy in
the representations, warranties, statements and assumptions upon which we have
relied may affect the continuing validity of the opinion set forth herein. We
assume no responsibility to inform you of any such change or inaccuracy that may
occur or come to our attention.

Except as set forth above, we express no opinion to any party as to any
consequences of the Conversion and the Holdings Reorganization, any transactions
related thereto or any issue relating to NYMEX or any investment therein. This
opinion is expressed as of the date hereof, and we disclaim any undertaking to
advise you of any subsequent changes of the matters stated, represented, or
assumed herein or any subsequent changes in applicable law. We hereby consent to
your filing this opinion as an exhibit to the Registration Statement of which
the Proxy Statement and Prospectus forms a part and to the reference therein to
our firm under the captions "Federal Income Tax Consequences of the
Demutualization" and "Legal Matters." This opinion may not be made available to
any other person or entity, without our prior written consent.

Very truly yours,

Clifford Chance Rogers & Wells LLP

<PAGE> 1
Exhibit 10.8.1

ORACLE
SOFTWARE LICENSE AND SERVICES AGREEMENT

This Software License and services agreement (the "Agreement" is between Oracle
Corporation with the principal place of business at 500 Oracle parkway, Redwood
City, California 94065 ("Oracle") and NEW YORK MERCANTILE EXCHANGE with the
principal place of business at 22 COURTLAND STREET 33RD FLR, CHURCH STREET, NY
10007 ("Customer").

The forms of this agreement shall apply to each Program license granted and to
all services provided by Oracle under this Agreement. When completed and
executed by both parties, an Order Form shall evidence the Program licenses
granted and the services to be provided.

I.DEFINITIONS

1.1 "Program" shall mean the computer software in object code form owned or
distributed by Oracle for which Customer is granted a license pursuant to
this Agreement the media the user guides and manuals for Use of the
software ("Documentation") and Updates.

1.2 "Order Form" shall mean the document by which Customer orders Program
license and services, and which is agreed to buy the parties. The Order
Form shall reference the Effective Date of this Agreement.

1.3 "Price List" shall mean Oracle's applicable standard commercial fee schedule
that is in effect when a Program license or any other product or service is
ordered by Customer.

1.4 "Designation System" shall mean the computer hardware and operating system
designated on the relevant Order Form.

1.5 "Supported Program License" shall mean a Program license for which Customer
has ordered Technical Support for the relevant time period. "Technical
Support" shall mean Program support provided under Oracle's policies in
effect on the date Technical Support is ordered.

1.6 "Commencement Date" shall mean the date on which the Programs are delivered
by Oracle to Customer, or if no delivery is necessary, the Effective Date
set forth on the relevant Order Form.

1.7 "Update" shall mean a subsequent release of the Program which is generally
made available for Supported Program Licenses at no additional charge
other than media and handling charges. Updates shall not include any
release, option or future product which Oracle license separately.

1.8 "User" unless otherwise specified on the Order Form shall mean an individual
authorized by Customer to were specified Programs, regardless of whether
the individual is actively using the Programs at any given time.

1.9 "Application Program" shall be program designated as application software
by Oracle.

1.10 "Limited Production Program" shall be a Program which does not appear on
the Price list on which is designated as Limited Production by Oracle.

II. PROGRAM LICENSE

2.1 Rights Granted

A. Oracle grant to Customer a nonexclusive license to uses the Programs
Customer obtains under this Agreement, as follows:

I. to use the Programs solely for Customer's own internal data operations on the
Designated System or on a backup system if the Designated System is inoperative,
up to any applicable maximum number of designated Users or other such limitation
(if any), Customer may not relicense the Programs or use the Programs for
third-party training, commercial time-sharing, rental or service bureau use;

II. to use the Documentation provided with the Programs in support or
Customer's authorized use of the Programs;

III. to copy the Programs for archival or backup purposes; no other copies
shall be made without Oracle's prior written consent. All titles, trademarks,
and copyright and restricted rights notices shall be reproduced in such copies.
All archival and backup copies of the Programs are subject to the terms of this
Agreement and

IV. to modify the Programs and combine them with other software products.

Customer shall not copy or use the Programs (including the Documentation) except
or otherwise specified in this Agreement or an Order Form, Customer shall have
the right to allow Customer's third party agents ("Agents") to use the Programs
for Customer's internal use purposes so long as Customer ensures that Agents use
the Programs in accordance with the terms of this Agreement.

B. Customer agrees not to cause or permit the reverse engineering,
disassembly or decompiletion of the Programs.

C. Oracle shall retain all title, copyright and other proprietary rights in
the Programs. Customer does not acquire any rights, express or implied, in
the Programs, other than those specified in this Agreement.
<PAGE> 2

D. To use a Program specified on a Order Form ("ordered Program"). Customer
may need to use an ancillary Program embedded in or delivered with the
ordered Program. The ancillary Program may be used only as described in the
Order Form or Documentation for implementation of the ordered Programs and
for no other purposes. Customer shall have no right to use any other
software program that may be delivered with ordered Programs.

E. As an accommodation to Customer, Oracle may supply Customer with
pre-production release or Programs (which may be labeled "Alpha or Beta").
These products are not suitable for production use.

2.2 Acceptance of Program
For each Program license for which delivery is required under this Agreement,
Customer shall have a 15 day "Acceptance Period" beginning on the Commencement
Date. During the Acceptance Period, Customer may cancel the license by giving
written notice to Oracle and returning the Program in accordance with Section
4.5. Unless such cancellation notice is given, the license will be deemed
accepted by Customer at the end of the Acceptance Period. If Customer is granted
a right-to-copy license, subsequent copies shall be deemed accepted upon
acceptance of the master copy.

2.3 Transfer and Assignment

A. Customer may transfer a Program license within the organization upon notice
to Oracle, transfers are subject to the terms and fees specified in
Oracle's transfer policy in effect at the time of the transfer.

B. Customer may not assign this Agreement to a third party (i.e., a legal
entity separate from Customer) without the price written consent of Oracle,
Oracle shall not unreasonably withhold such consent.

2.4 Verification
At Oracle's written request, not more frequently than annually, Customer shall
furnish Oracle with a signed certification (a) verify that the Programs are
being used pursuant to the provisions of this Agreement, including any User and
other limitation and (b) listing the locations, types and serial number of the
Designated Systems on which the Programs are run.

Oracle may, at no expense, audit Customer's use of the Program. Any such audit
shall be conducted during regular business hours at Customer's facilities and
shall not unreasonably interfere with Customer's business activities. If an
audit reveals that Customer has underpaid fees to Oracle, Customer shall be
invoiced for such underpaid fees based on the Price List in effect at the time
the audit is completed; if the underpaid fees exceed 5% of the license fees
paid. Then Customer shall also pay Oracle's reasonable costs of conducting the
audit, Audits shall be conducted no more than once annually.

III. TECHNICAL SERVICES

3.1 Technical Support Services
Technical Support services ordered by Customer will be provided under Oracle's
Technical Support policies in effect on the date Technical Support is ordered,
subject to the payment by Customer of the applicable fees. Reinstatement of
licensed Technical Support service is subject to Oracle's Technical Support
reinstatement fees in effect on the date Technical Support is re-ordered.
Customer may obtain Technical Support services for Limited Production Programs
and pre-production release of Programs on a time and materials basis.

3.2 Consulting and Training Services
Oracle will provide consulting and training services agreed to by the parties
under the terms of this Agreement. All consulting services shall be billed on a
time and materials basis unless the parties expressly agree otherwise in
writing. Any consulting services acquired from Oracle shall be bid separately
from the Program licenses, and Customer may acquire either Program licenses or
consulting services without acquiring the other.

3.3 Incidental Expenses
For any on-site services requested by Customer, Customer shall reimburse Oracle
for actual, reasonable travel and out-of-pocket expenses incurred.

IV. TERM AND TERMINATION

4.1 Term
If not otherwise specified on the Order Form, each Program license granted under
this agreement shall remain in affects perpetually unless the license or this
Agreement is terminated as provided in Section 4.2 or 4.3.

4.2 Termination by Customer
Customer may terminate any Program license at any time; however, termination
shall not relieve Customer's obligations specified in Section 4.4.

4.3 Termination of Oracle
Oracle may terminate this Agreement or any license upon written notice if
Customer breaches this Agreement and fails to correct the breach within 30 days
following written notice specifying the breach.

4.4 Effect of Termination
Termination of this Agreement or any license shall not limit wither party from
pursuing other remedies available to it, including injunction relief, nor shall
such termination relieve Customer's obligation to pay all fees that have accrued
or are otherwise owed by Customer under any Order Form or other similar ordering
document under this Agreement. The parties rights and obligations under Section
2.1.B, 2.1.C, 2.1.D, and 2.3.B and Articles IV,V,VI and VII shall survive
termination of this Agreement.
<PAGE> 3
VII. GENERAL TERMS

7.1 Nondisclosure

By virtue of this Agreement, the parties may have access to information that
is confidential to one another ("Confidential Information"). Confidential
Information shall be limited to the Programs, the terms and pricing under this
Agreement, and all information clearly identified as confidential.

A party's Confidential Information shall not include information that: (a) is or
become a part of the public domain through no act or omission of the other
party; (b) was in the other party's lawful possession prior to the disclosure
and had not been obtained by the other party either directly or indirectly from
the disclosing party; (c) is lawfully disclosed to the other party by a third
party without restriction on disclosure; or (d) is independently developed by
the other party. Customer shall not disclose the results of any benchmark tests
of the Programs to any third party without Oracle's prior written approval.

The parties agree to hold each other's Confidential Information in confidence
during the terms of this Agreement and for a period of two years after
termination of this Agreement. The parties agree, that unless required by law,
not to make each others Confidential Information available in any form to any
third party or to use each other's Confidential Information for any purpose
other than the implementation of this Agreement. Each party agrees to take all
reasonable steps to ensure that Confidential Information is not disclosed or
distributed by the employee or agents in violation of the terms of this
Agreement.

7.2 Governing Law

This Agreement, and all matters arising out of or relating to this Agreement
shall be governed by the law of the State of California, and shall be deemed to
be executed in Redwood City, California.

7.3 Jurisdiction

Any legal action or proceeding relating to this Agreement shall be instituted in
a state or federal court in San Francisco or San Metao County, California.
Oracle and Customer agree to submit to the jurisdiction of, and agree that venue
is proper in, these courts in any such legal action or proceeding.

7.4 Notice

All notices, including notices of address change, required to be sent hereunder
shall be in writing and shall be deemed to have been giver when mailed by first
class mail to the first address listed in the relevant Order Form (if to
Customer) or to the Oracle address on the Order Form (if to Oracle).

To expedite order processing, Customer agrees that Oracle may treat documents
faxed by Customer to Oracle as original documents; nevertheless, either party
may require the other to exchange original signed documents.

7.5 Limitations of Liability

In no event shall either party be liable for any indirect, incidental, special
or consequential damages, or damages for lose of profits, revenue, data or use,
incurred by either party or any third party, whether in an action in contract or
tort, even if the other party has been advised of the possibility of such
damages. Oracle's liability for damages hereunder shall in no event exceed the
amount of fees paid by Customer under this Agreement, and if such damages result
from Customer's use of the Program or services, such liability shall be limited
to fees paid for the relevant Program or services, giving rise to the liability,
presented over a five-year term from the Commencement Date of the applicable
license or the date of performances of the applicable services.

The provisions of this Agreement allocate the risks between Oracle and Customer.
Oracle's pricing reflects this allocation of risk and the limitation of
liability specified herein.

7.6 Severability
In the event any provision of this Agreement is held to be invalid or
unforeseeable, the remaining provisions of this Agreement will remain in full
force.

7.7 Waiver

The waiver by either party of any default or breach of this Agreement shall not
constitute a waiver of any other or subsequent default or breach. Except for
actions for nonpayment or breach of Oracle's proprietary rights in the Programs,
no action, regardless of form, arising out of this Agreement may be brought by
either party more than one year after the cause of action has accrued.

7.8 Export Administration

Customer agrees to comply fully with all relevant export laws and regulations of
the United States ("Export Laws") to assure that neither the Programs nor any
direct product thereof are (1) exported, directly or indirectly, in violation of
Export Laws or (2) are intended to be used for any purposes prohibited by the
Export Laws, including, without limitation, nuclear, chemical, or biological
weapons production.

7.9 Relationship Between the Parties

Oracle is an independent contractor nothing in this Agreement shall be construed
to create a partnership, joint venture or agency relationship between the
parties.

<PAGE> 4

7.10 Entire Agreement
This Agreement constitutes the complete agreement between the parties and
supercedes all prior or contemporaneous agreements or representations, written
or oral, concerning the subject matter of this Agreement. This Agreement may not
be modified or amended except in a writing signed by a duly authorized
representative of each party, the other act document usage or custom shall be
deemed to amend or modify this Agreement.

It is expressly agreed that the terms of this Agreement and any Order Form
shall supercede the terms in any Customer purchase order or other ordering
document. This Agreement shall also supercede the terms of any relationship or
break-the-seal license Agreement included in any package for Oracle-furnished
software except terms consulting in such license agreement that grant specific
use rights for the Programs

The Effective Date of this Agreement shall be 1-6-95

Executed by NEW YORK MERCANTILE EXCHANGE D P Executed by ORACLE CORPORATION

Signature /S/ Neal Wolkoff Signature: /S/ Neil Stallings

Name: Neal Wolkoff Name: Neil Stallings

Title: Exec. V.P. Title: Manager, Sales Support

Oracle
Oracle Corporation
500 Oracle Parkway
Redwood shores, CA 94085
(415) 506-7000

Oracle is a registered trademark of Oracle Corporation

<PAGE> 5

AMENDMENT ONE
to the
SOFTWARE LICENSE AND SERVICES AGREEMENT
between
NEW YORK MERCANTILE EXCHANGE
and
ORACLE CORPORATION

This document is an Amendment to the Software License and Services Agreement
between New York Mercantile Exchange ("Client") and Oracle Corporation
("Oracle") dated January 6 1995 ("SLSA") which shall be amended, as of the
Effective Date below, as follows:

1. The following shall be inserted at the end of section 3.3: "Customer may
request receipts or documentation for such our of pocket expenses."

2. Section 7.2 of the Agreement shall be deleted in its entirety.

3. Section 7.3 of the Agreement shall be deleted in its entirety.

4. In the first sentence of the first paragraph of Section 7.4 of the
Agreement, delete "first class mail" and replace with "certified or
registered mail or express courier".

Other than the changes specified above, the terms and conditions of the Software
License and Services Agreement shall remain in full force and effect.

The Effective Date of this Amendment One is Jan. 6 1995.

NEW YORK MERCANTILE EXCHANGE ORACLE CORPORATION

By: /s/ Neal Wolkoff By: /s/ Neil Stollings
----------------------------- -----------------------------

Name: Neal Wolkoff Name: Neil Stollings
--------------------------- ---------------------------

Title: Exec V.P. Title: Manager, Sales Support
-------------------------- --------------------------

<PAGE> 1
EXHIBIT 23.1

INDEPENDENT AUDITORS' CONSENT

We consent to the use in this Amendment No. 2 to Registration Statement No.
333-30332 of NYMEX Holdings, Inc. on Form S-4 of our report dated March 31, 2000
(April 26, 2000 as to Notes 14 and 15), appearing in the Prospectus, which is a
part of such Registration Statement.

We also consent to the reference to us under the heading "Experts" in such
Prospectus.

DELOITTE & TOUCHE LLP

New York, New York
April 28, 2000