Principal Benefits of Exchange-based Trading

• Reduced Counterparty Risk
  • Using OTC clearing, the credit counterparty is no longer a single bank or merchant energy    company (with unknown future credit issues)
  • NYMEX, through margining, systematically upgrades all credit to STANDARD & POOR’s AA+    rating

• Improved Credit Management
  • All swaps may be cleared through a single party, rationalizing the need for several swap    agreements
  • Margining requirements are updated daily
  • Each position is continually guaranteed by cash in an account and is not nearly as reliant     upon the individual creditworthiness of the counterparty

• Transparency and Accounting Advantages
  • A daily settlement price allows for complete contract transparency
  • Under the new accounting rules of FASB 133, a mark-to-market of these instruments is    crucial
  • NYMEX is the impartial valuation agent

• Improved Market Access and Price Efficiency
  • Communication directly with the NYMEX floor where ultimate price discovery takes place
  • Eliminates potential for middlemen
  • A direct relationship with dealer improves market clarity

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