Executives
Keil Decker - VP, Corporate Communications and IR
Richard Schaeffer - Chairman
James Newsome - President and CEO
Kenneth D. Shifrin - CFO
Ken Worthington - JP Morgan
Analysts
Richard Repetto - Sandler O'Neill & Partners L.P
Christopher Allen - Banc of America Securities
Michael Vinciquerra - BMO Capital Markets
Howard Chen - Credit Suisse
Robert Rutschow - Deutsche Bank
Jonathan Casteleyn - Wachovia Securities
Edward Ditmire - Fox-Pitt, Kelton
NYMEX Holdings, Inc. (NMX) Q4 FY07 Earnings Call February 1, 2008 8:00 AM ET
Operator
Good morning ladies and gentlemen, and welcome to the NYMEX Holdings, Inc. 2007 Fourth Quarter and Year End Financial Results Conference Call. My name is Lacy, and I will be your operator today. All lines have been placed on mute to prevent any background noise. After the speakers' remarks, there will be a question-and-answer period.
It is now my pleasure to turn the call over to Keil Decker, Vice President of Corporate Communications and Investor Relations. Please proceed.
Keil Decker - Vice President, Corporate Communications and Investor Relations
Thank you, Lacy. Good morning and welcome to the NYMEX Holdings 2007 fourth quarter and year end financial results conference call. To obtain a copy of our earnings release issued this morning, please visit our website at www.nymex.com.
Before we begin formal remarks this morning, you should be aware that statements made on this call that are not historical facts are forward-looking statements. These statements are not guarantees of future performance and involve risks, uncertainties, and assumptions that are difficult to predict. Therefore, actual outcomes and results may differ materially from what is expressed or implied in any forward-looking statements. More detailed information about factors that may affect our performance may be found in our filings with the SEC, including our most recent Annual and Quarterly Reports on Form 10-K and 10-Q, which are available on our website.
With us this morning to discuss the highlights of the fourth quarter are NYMEX Chairman, Richard Schaeffer; President and CEO, James Newsome, and CFO Ken Shifrin. At the conclusion of their formal remarks, we'll open up the call for your questions.
I'll now turn the call over to our Chairman, Rich Schaeffer.
Richard Schaeffer - Chairman
Thank you Keil. Good morning and thanks for joining us today. Before I make my remarks, I am sure everyone on this call is aware that NYMEX and CME have issued a press release on Monday, confirming that we are engaged in preliminary discussions regarding the CME Group's potential acquisition of NYMEX. I am sure you have many questions, but we are not in a position to answer them at this time.
Today we are focusing on our strong fundamentals. We are proud to deliver a record year of operating performance and profitability, as we continue to deliver on our strategic goals. Our business has never been stronger. We continue to focus on fundamentals, such as delivering volume growth, expanding into new geographies and developing innovative new products.
For the fourth quarter, total operating revenues were up 38% to a record $172.6 million, and our net income was up 50% to a record $63.5 million or $0.67 per diluted share. Our pretax margin remains the best in the industry at 71% for the fourth quarter. For 07, we delivered a 35% increase in total operating revenues for a record of $673.6 million and achieved record diluted EPS of $2.52, excluding the one-time charge related to optionable. These results were driven by an average daily volume of approximately 1.5 million contracts a day, 25% increase over 06. The Board of Directors also approved the regularly quarterly dividend of $0.10 per share for the... as of March of this year. Company declared dividends totaling $128.4 million or $1.33 per common per share for 07, which included a one-time special dividend of $1.5.
We are also delivering on our strategy to enter new markets and expand our distribution. As we launched Dubai Mercantile Exchange joint venture, we continue to grow and it now dominates all open entries for Middle East crude oil. Most recently, we entered Europe with a purchase of approximately 15% of the Norwegian Exchange IMAREX, the Global leader in freight revenues. We believe numerous opportunities for cost lifting and expanding product offerings with IMAREX will bring great value to the marketplace and to NYMEX.
We also continue to expand into new areas with our recent announcement of The Green Exchange, which we expect will become a leading exchange for environmental contracts. Our partners in this venture are the most respected global participants, including but not limited to, Evolution, Morgan Stanley, Credit Suisse, J.P. Morgan, Merrill Lynch, Constellation, Tudor Investments, Reto [ph] and many other substantial firms in this area. Work on this progress is proceeding quickly. We actually have our first meeting today, which will be... we believe are productive in setting everything up with all of our partners. We are scheduled to launch contracts by the end of this first quarter.
In terms of our enterprise efficiency plan which we announced in November, we have executed on each of the components to the plan, including implementation of NYMEX and COMEX fee increases on January 2nd and a fourth quarter reduction in our workforce, 55 positions.
We will continue on our reductions. Our expenses will continue to be driven down by the leadership here. We retained leading real estate broker Cushman & Wakefield and Newmark Knight Frank to evaluate the sale of our headquarter buildings. We continue to implement and move forward on this plan. We are extremely well positioned strategically and continue to deliver on our fundamentals.
Let me now turn it over to my partner, Jim Newsome and he will give you an update on our business plans.
James Newsome - President and Chief Executive Officer
Thank you Mr. Chairman. During the fourth quarter, we continued to build on the strong fundamentals of our core business. Our core benchmark energy and metals contracts continue to grow in volume and open interest. We've set numerous daily volume records throughout the year and in the fourth quarter, particularly in electronic trading.
In particular, COMEX Gold and other metals have been setting records recently, as well as volumes in crude oils. We also continue to see overall growth in options, as well as expanding interest in electronic trading of options, as evidenced by days went as much as 20% of natural gas options to trade electronically.
As for our Dubai strategic venture, the physically settled Dubai Mercantile Exchange, Oman sour crude oil contract showed consistent growth in volume and open interest, especially off the curve. So DME now commands virtually 100% of all trading volume and open interest for Middle East-based exchange traded crude oil contracts.
DME Oman crude oil futures contract recorded a monthly volume record in January of over 42,000 contracts traded and an open interest record of over 13,000 contracts traded as of yesterday. Open interest now extends out through February 2010. We continue to see substantial commercial, sovereign and other participants enter this market, primarily because they understand the necessity of participating in the dynamic price discovery process of the DME contracts. This quarter, we will launch additional contracts on the DME, which we believe will enhance the ability of traders to effectively hedge their business.
We remain focused on trading new products which will drive volume to our core benchmark contract. This is the basis for our strong fundamentals. During the fourth quarter, we launched a number of new contracts on CME Globex the trading for an NYMEX ClearPort, including nine new natural gas delivery point pipeline options contracts, 11 new balance of mass petroleum product swap futures contracts, electronic crack options and one-month calendar spread options as well as 24 new crude oil swap futures contracts. We will launch two new innovative contracts next month. The MACI futures and the backward Asia contango index futures contracts which will help market participants to reduce the risk of rolling the crude oil contract forward every month.
We are also finalizing specifications on steel and twp physical delivery plastics contracts. However, a primary focus in terms of new products has been in the important environmental market space as Rich mentioned. The world-class green exchange venture is a longer-term project but has the creditability of the most respected founders and partners; the industry-leading NYMEX clearinghouse and an unrivalled global suite of environmental trading products. These products will fit perfectly within our energy complex, giving market players the ability to effectively mange risk and gain direct exposure to the emissions markets. Over the next few weeks, we will be finalizing contract details as well as finalizing the various trading incentive programs, such as an additional market partner agreement, a market maker program and a trading program. We are thrilled by the reception and overwhelming interest from the marketplace to be involved in the green exchange.
Form a regulatory perspective we are very hopeful about recent events regarding regulation of non-transparent energy markets. Bills pending in both the House and the Senate to reauthorize the Commodity Exchange Act reflect significant progress made toward leveling the playing field with unregulated energy markets that list NYMEX look-alike products. Specifically, the full Senate passed an amendment to the farm bill and the House Agricultural Committee passed the standalone bill to regulate energy contracts traded on electronic trading platforms that serve a significant price discovery function. If adopted as amended, the NYMEX benefits because of the regulatory landscape will no longer facilitate the shifting of large positions and key contracts from NYMEX to an unregulated trading platform. Position limits and/our accountability levels would apply to trading on both venues. Also NYMEX's self regulatory efforts, particularly with respect to market surveillance will be greatly enhanced due to the additional transparency provisions that would apply to these competing and presently unregulated markets.
Given that the senate reauthorization bill which passed as an amendment to the farm bill, legislative action on the farm bill will dictate the timing of passage of the CFTC reauthorization. We will continue work diligently to secure passage of the reauthorization language. Finally, as Rich mentioned, we have been implementing our enterprise efficiency plan with an initial reduction in force of 55 positions. We have also been reviewing our options with regard to the location of our existing staff and requirements for trading forward square footage.
Ken will give you more details on the implementation progress. Ken, I will now turn it over to you to discuss our strong fourth quarter financial performance.
Kenneth D. Shifrin - Chief Financial Officer
Thank you Jim. We had another strong quarter and a record year, driven by solid average daily volumes and ongoing improvements in our operating expenses net of transaction costs. Total operating revenues for the fourth quarter ended December 31, 2007 rose 38% to a record $172.6 million compared to a $124.8 million for the full quarter 2006. Net income for the fourth quarter 2007, increased 50% to a record $63.5 million compared to $42.3 million for the fourth quarter 2006.
Diluted earnings per share for the fourth quarter 2007 were $0.67 based on 94.9 million shares outstanding compared to $0.48 based on 87.6 million shares outstanding for the fourth quarter 2006. For the year, we reported record total operating revenues of $673.6 million, a 35% increase from $497.2 million for 2006. Net income rose 45% to $224 million versus a $154.8 million in 2006, excluding the charge for optionable, net income was $238.8 million for 2007.
Diluted earnings per share for 2007 was $2.36 versus $1.90 per diluted share in 2006, based on 94.8 million and 81.5 million shares outstanding respectively, excluding optionable diluted earnings per share of $2.52. The effective tax rate for 2007 was 43.25% compared to 44.5% for 2006. As we reported two weeks ago for the fourth quarter, gross average rate per contract across all venues was $1.47, or the net rate per contract net of transaction cost was a $1.23. Against last year's fourth quarter RPC is up from the first average rate rose $1.41 per contract and net average rate of a $1.17 per contract.
We drive our business by volumes. That each month made for contract moved around based on product mix, incentive program and member, non-member mix. In December, we saw have the grade move to a higher member mix close to 75% of trading. However, as Rich noted on January 1, our new fee schedule became effective raising rates across NYMEX and COMEX positions. For the fourth quarter, clearing and transactions fees rose 38% to $144.9 million. Market data revenues increased 50% to $24.6 million for the fourth quarter 2007, primarily driven by an increase in number of units and revenue per unit, $138, $886 and $50 respectively, during the fourth quarter of 2007 as compared to $123, $446 and $40 respectively, during the fourth quarter of 2006.
Total operating expenses for the fourth quarter excluding direct transactions costs were $40.6 million as compared to $38.5 million in the fourth quarter of 2006 and $40.5 million last quarter. The 2007's fourth quarter included $1.4 million of severance related to the company's enterprise efficiency plan announced on November 1, 2007.
Expenses for the fourth quarter of 2006 were below the normal run rate by approximately $4 million, due to year-end adjustments of bonuses and other accruals. For 2008, we expect to have approximately between $2 million and $2.5 million of severance-related expenses, due to the enterprise efficiency plan. Compensation expenses were a total of $20.6 million for the fourth quarter of 2007, which included once again $1.4 million in severance and $2.8 million of management equity costs, compared to $16.7 million for the same period last year, which included $700,000 of severance and $1.3 million of management equity and a reduction of bonus accrual of $1.9 million.
As a result of the reduction in force in the fourth quarter 2007, we saw a reduction of approximately 700,000 in compensation expense which equates to savings in 2008 of approximately $4 million. For 2008 based on the remaining 64 group positions, we expect savings to be approximately $1.7 million for the year 2008, and $4.1 million on a run rate basis. We also will have an additional $5 million of management equity costs in 2008 based on January 2008 equity awards. Non-compensation expenses excluding direct transaction costs were down 8% to $20 million for the fourth quarter of 2007.
Let me move on to non-operating income and expenses. Investment income was $5.6 million for the fourth quarter of 2007. Our losses in unconsolidated subsidiaries were $2.8 million, which relates to our Dubai venture. The increase in our volume growth, increase in RPC year-over-year and ongoing cost-cutting initiatives all contributed to the increase in pretax income of 53% to $110.6 million, as compared to $72.5 million in the fourth quarter of 2006.
Pretax margins excluding direct transaction costs were 71% for the fourth quarter 2007, compared to 64% in the fourth quarter of 2006. Let me touch on a couple of our balance sheet items in front of you already. At the end of the quarter, we had approximately $465 million in cash and marketable securities. Our working capital was $477 million and capital expenditures were $9.3 million for the fourth quarter 2007.
For the year, the company deferred dividend of 1.36 per common share, totaling $128.4 million; by the way $9.3 million of capital expenditure was for the year.
Richard Schaeffer - Chairman
Well, Ken, thank you very much. We continue to demonstrate a tremendous strength in our fundamental business plan and that's what makes us the leader in providing risks management tools to the energy and metals industries. At this point, we will take questions.
Question And Answer
Operator
[Operator Instructions].Your first question will come from the line of Richard Repetto with Sandler O'Neill. Please proceed.
Richard Schaeffer - Chairman
Good morning Rich.
Richard Repetto - Sandler O'Neill & Partners L.P
Good morning Rich. First I want a sort of apply... you continue to focus on your fundamentals, so I think that's something that sort of has been obscured by I guess the attractiveness of you guys as an asset, as well.
Richard Schaeffer - Chairman
Thank you, Rich.
Richard Repetto - Sandler O'Neill & Partners L.P
I guess the first question which would be as you go forward, you are delivering almost to the key on the numbers, how and I know you can't say anything about the acquisition, but like, will there be any adjusted delay, any of the cost savings or any of the benefits from the efficiency plan that you laid out, because of the negotiations?
Richard Schaeffer - Chairman
No. If anything we will continue it, and even work to accelerate it. Our plan is working well our fundamentals is where we direct it. Of course, our business plan is good but our fundamental plan that we laid out to you is going to continue on pace or even accelerated.
Richard Repetto - Sandler O'Neill & Partners L.P
Great. And then next question, January of '07 was a very robust month, last year not this year, January of '07 was robust in regards to energy volumes and I know it's tough comp in regards to when you look at year-over-year volume comparison gain. But I guess I am just trying to get your outlook has been much more experienced than I about volumes of LNG, how do you think the volatility of oil and volumes, are you aware where you would expect to be as far as the volume growth outlook at the exchange.
Richard Schaeffer - Chairman
We like to be conservative Rich, but we can't help to be excited. We have done on average of 1.72 million for the month of January which is just way ahead, way ahead of where we would have expected to have been. So we see the volatility continue. We see new products coming in. Our plan for new products is extremely robust and working well and we can't help contain ourselves. We're really excited about the possibilities, starting January up for the 1.72 million is a very, very positive start to what we think will be a great New Year.
Richard Repetto - Sandler O'Neill & Partners L.P
Okay, thanks Rich. And then a very last thing, clearing at least in my mind is becoming more valuable everyday, I know you have the acquisitions away, but as far as you've bought IMAREX or you have got an investment there, could you make any comments on what you think about the importance of clearing and say clearing in Europe and clearing in the U.S. and your capability with ClearPort.
Richard Schaeffer - Chairman
At this point in time, that's an area that's very confidential. We've been working on a plan, Jim Newsome, myself and our team here and we have an extremely robust plan of what we are going to do in Europe and we hope to announce that very shortly.
Richard Repetto - Sandler O'Neill & Partners L.P
Understood. Congrats on a great quarter Rich.
Richard Schaeffer - Chairman
Thanks a lot Rich.
Operator
And our next question will come from the line of Ken Worthington with JP Morgan. Please proceed.
Ken Worthington - JP Morgan
Good morning and thank you for taking my question.
Richard Schaeffer - Chairman
Good morning Ken.
Ken Worthington - JP Morgan
First may be on RPC. RPC has been kind of falling in the months following price increases. Can we talk about the pricing strategy, how you are cheering your customers and maybe are there any different treatments for energy and metal customers in terms who you are trying to go after. And given the most recent price increases effective earlier this year, kind of what is the outlook for RPC?
Richard Schaeffer - Chairman
Ken, I think the outlook is pretty stable for RPC. We have come a lot. I will not discuss pricing strategy. Obviously that's very confidential and one of the reasons where it's so competitive and continue to be competitive and beat our competitor on all fronts. So I can not discuss the strategy. I expect the RPC to stabilize in these numbers. Of course it changes a little. But we are comfortable that we are at a very stable point in the RPC.
Ken Worthington - JP Morgan
Thanks.Can you give us without giving away too much information, any information about how you are cheering customers or maybe who you're trying to really pursue?
Richard Schaeffer - Chairman
No I cannot give that information.
Ken Worthington - JP Morgan
Okay, worth a try. In terms of ClearPort, growth at ClearPort is a little bit below what we are seeing in your other product areas. I know gas volatility is low. What are your thoughts about expanding ClearPort into new products really outside of gas and are there any new initiatives to jumpstart growth within ClearPort?
Richard Schaeffer - Chairman
I'll tell you on the ClearPort side stay tuned. We are working on an extremely robust plan. We are actually looking at ClearPort now as a separate business, although it's tied into what we do and it's absolutely what we think is a goldmine for the future. We've had discussions with a number of different institutions who had interest in participating in certain products and ClearPort with us. It will expand, it will grow in number, we commit that it will involved in are lot more than just energy and metals in this year. And it has been a little slow, our plans have been developing and I think you'll see it rollout and be the credit intermediation product for a number of different commodities.
Ken Worthington - JP Morgan
That sounds great. We are looking forward to that. And then may be lastly for Ken. On the stock loan, the interest income and the interest expense that sell, the net income was kind of in line but the gross numbers fell quite a bit. What are the dynamics that took place during the quarter and is that just normal fourth quarter seasonality?
Richard Schaeffer - Chairman
It's normal fourth quarter seasonality Ken. We talked about that. Pretty much it's like we said, it's normal for the fourth quarter to end up where it did.
Ken Worthington - JP Morgan
Okay. And what do the dynamics in the fourth quarter suggest; lower open interest, can you just refresh our memory?
Kenneth D. Shifrin - Chief Financial Officer
I think in general as happens in the fourth quarter you have a lot of traders closed down somewhat, they have their profit for the year and trading tails a lot in the last couple of weeks.
Richard Schaeffer - Chairman
Yes Ken, I have noticed it for about the last 28 years or so. People come the middle of November, they pull a lot of money, they quit trading, put down a lot of money, they force some stock trading. The big funds that... and that's typical. Especially in year like this where volatility was so high and the amounts of money of made or lost was so high, come the middle of November you won't find a lot of traders around even trading these products.
Ken Worthington - JP Morgan
Yes great, thank you.
Operator
And our next question will come from the line of Chris Allen with Banc of America Securities, please proceed.
Christopher Allen - Banc of America Securities
Hi, guys. How are you doing?
Richard Schaeffer - Chairman
Good Chris, how are you doing?
Christopher Allen - Banc of America Securities
Just wanted to follow-up on your RPC question. Richard you said your outlook is for what was a stable RPC but you guys have price increases coming in January 2nd. Can you just give us a little bit more details on kind of the outlook?
Richard Schaeffer - Chairman
If I were to say anything for the first quarter, you will... yes, we can't I don't like to project forward, we like to be conservative. But stable means stable or higher.
Christopher Allen - Banc of America Securities
Got you. Fair enough, fair enough. And then just Ken, just in terms of looking at the interest income just calculated on a yield basis. It looks like it came up a little bit from what we were expecting in the quarter. Was there any shift in terms of the assets you are investing in the marketable securities?
Kenneth D. Shifrin - Chief Financial Officer
There is no shift. We had to supply with all these cuts, what obviously the interim income is not going to be as substantial but we've had no shift. There has been no shift and that's a stable and maybe the amount of cash we had available Chris, I don't know how did your calculation but it was as expected.
Christopher Allen - Banc of America Securities
Okay. And then just lastly in terms of the points when the ClearPort products went to Globex like what's the strategy in terms of building liquidity in those products?
Richard Schaeffer - Chairman
Can you repeat that question again?
Christopher Allen - Banc of America Securities
Yes, just in terms of listing some of the ClearPort products are certain over the kind of products on Globex. I think what Jim mentioned before what's the strategy in terms of building liquidity on those products?
Richard Schaeffer - Chairman
Because we're in discussions with the CME on a very large front I prefer to stay away from that for now.
Christopher Allen - Banc of America Securities
Okay, thanks a lot guys.
Richard Schaeffer - Chairman
Thanks.
Kenneth D. Shifrin - Chief Financial Officer
Thank you
Operator
And our next question will come from the line of Mike Vinciquerra with BMO Capital Markets. Please proceed.
Michael Vinciquerra - BMO Capital Markets
Good morning guys.
Richard Schaeffer - Chairman
Good morning.
Michael Vinciquerra - BMO Capital Markets
I know you can't answer anything specific to the CMEs. Let me ask a generic question just on mergers in general. The rights of the numbers, I got this question a number of times, not sure what the exact answer is. What kind of members do in terms of blocking a potential deal if they are not happy with say a buy out provision regarding their trading rates.
Richard Schaeffer - Chairman
Well you said you weren't going to get specific and that was a lie. That's a very specific question which we can't answer at this point in time.
Michael Vinciquerra - BMO Capital Markets
Okay, very good. Ken, can you tell us one more question on the RPC, it's the new pricing continue to play safe for the fourth quarter or staying equal, can you give us a sense of what the RPC, the gross RPC might have been?
Kenneth D. Shifrin - Chief Financial Officer
Well it might have been, if it was all equal.
Michael Vinciquerra - BMO Capital Markets
Everything being equal in terms of mix product customer, if you would have the new pricing schedule in place with the fourth quarter, any idea what the gross RPC would have looked like?
Kenneth D. Shifrin - Chief Financial Officer
I actually do, I don't want to give you that number, because it gives some kind of indication going forward. So it's the great game of forward number Mike. Yes, I do but I can't answer.
Michael Vinciquerra - BMO Capital Markets
Okay I am off for two. Well let me try one you can answer.
Kenneth D. Shifrin - Chief Financial Officer
Now again a little more specific.
Michael Vinciquerra - BMO Capital Markets
You guys are having your first meeting I know you said, have you talked at all about the focus. Is this going to be on voluntary carbon in the U.S. or are you looking to compete head-to-head with CCX on sulfur and nitrous. Any thoughts that you can share with us, on the direction of the green exchange, and why you are so excited about it?
Richard Schaeffer - Chairman
Jim do you want to take this
James Newsome - President and Chief Executive Officer
Yes, more than happy to. Mike we plan to compete globally across all contracts with regard to the green exchange. We'll have domestic contracts, European contracts. It's going to be a very broad slate of contracts, cap in trade et cetera. Yes there is no stone unturned when in it comes to the contracts, we are going to be listing and competing on with the green exchange.
Michael Vinciquerra - BMO Capital Markets
So you will start off with one or two may be by the end of this quarter and then build from that?
Richard Schaeffer - Chairman
No we have six to seven by the end of the quarter. Pretty much six to seven by the end of this quarter, and we are not naming them yet. At this point now.
Michael Vinciquerra - BMO Capital Markets
Okay fair enough and then, just one more for Ken, if I could. You mentioned CapEx I think you said $9.3 million, you clarified was for the year and I realized you don't have a trading system necessarily to support and change but. Do you feel like you are under investing at all? It's a very, it's a relatively low number compared to you competitors.
Richard Schaeffer - Chairman
No, we are not sensitive because this is a strategic, this is strategic issue. We continue to robustly support our own trading system which we do have, just a correction, we do have our own trading system, it's called ClearPort Clearing. And matter of fact we use it for our joint venture in Dubai. We continue to put in what we need at different times, we do not hold back, a capital that we need to upgrade our systems. We do not believe by any means we are holding back CapEx for any reasons. We will continue to spend where we need to grow the business.
Michael Vinciquerra - BMO Capital Markets
Very good, thank you guys.
Operator
Our next question will come from the line of Howard Chen with Credit Suisse. Please proceed.
Howard Chen - Credit Suisse
Good morning everyone.
Richard Schaeffer - Chairman
Good morning.
Howard Chen - Credit Suisse
I guess I had a different spin on the ClearPort question. I understand volumes are driven by lot of factors and its pretty lumpy but, do you have any updated thoughts on comparing ClearPort with that of your primary competitor ISO TC [ph] I guess, when you simply look at the revenues of the two franchises that appears, you've been growing a bit slower in the past few months. Is that something that you have even look at, is it you believe it's reflective of growth within the business?
Richard Schaeffer - Chairman
Sure we look at it, we look at it daily. We see what our competitors are doing. So now we have to do -- to continue to have the edge in our business. ClearPort is growing slowly. I wouldn't say that, I'd say it built up to a pretty substantial number averaging over 350,000 to-date. Has that reached a point that has been quiet in growth? It's a tremendous growth from its inception; post Enron to now and now with our new plan that we are going to be implementing, it's going to be in addition to energy and non-energy mills [ph], I would stand to say that you will see some substantial growth in it going forward.
James Newsome - President and Chief Executive Officer
Yes, I would add to that, I mean we always want more growth across all of our product areas, ClearPort included. But certainly, when you look at the growth that we've had in ClearPort, it has been overshadowed by extreme growth in grow backs. And that's certainly not a bad thing from our viewpoint.
But I think we've got a pretty aggressive slate of new products that we have listed on ClearPort that we are going to continue list. And then don't forget about the level playing field that's coming through the Congress with regard to the over-the-counter products. And we believe that that is going to help our ClearPort volume as well.
Howard Chen - Credit Suisse
Okay. Thanks Rich and thanks Jim.
James Newsome - President and Chief Executive Officer
Thank you.
Howard Chen - Credit Suisse
And then on the existing NYMEX and Globex relationship, we can always see the volume growth everyday and it's been substantial. But besides on the volumes, anything else that you can kind of give us a sense of the success for the relationship either what you see in the depth of books or amongst the user base expansion?
Richard Schaeffer - Chairman
Obviously to get to the point of where we are now in our discussions, we have seen a great deal that we can do together. But at this point in time, we are not permit to talk about it, because of the ongoing negotiation. We think in this case, on one-on-one makes three and there are substantial benefits. But keep in mind, CME is a great partner now, we love doing business with them, we are extremely comfortable and should this work out, we'd be extremely comfortable moving forward and growing the business dramatically with them.
Howard Chen - Credit Suisse
Okay, thanks, that's it from me. Great to hear from everyone and you in particular Jim.
James Newsome - President and Chief Executive Officer
Thanks.
Operator
And our next question will come from the line of Robert Rutschow with Deutsche Bank, please proceed.
Robert Rutschow - Deutsche Bank
Hey good morning guys.
Richard Schaeffer - Chairman
Good morning.
Robert Rutschow - Deutsche Bank
First question, they are related to transaction costs. I'm wondering, can you tell us what the rate pay to CME was?
Kenneth D. Shifrin - Chief Financial Officer
Say it again, about what?
Robert Rutschow - Deutsche Bank
About how much per contract you paid to CME for?
Kenneth D. Shifrin - Chief Financial Officer
No. We won't say what that is.
Robert Rutschow - Deutsche Bank
Okay, I mean the reason I ask is that it looks like, I can make an assumption and it looks like the transaction fees away from that were down fairly substantially on a linked-quarter basis. So, I am just wondering, if you had some improved deficiencies there or sort what the moving parts were.
Kenneth D. Shifrin - Chief Financial Officer
Well if, are you looking quarter-to-quarter last year or this year, what your looking at Rob?
Robert Rutschow - Deutsche Bank
Linked quarter.
Kenneth D. Shifrin - Chief Financial Officer
As you know, the more volume you do, there is a break, we become cheaper. So did you to take that into account?
Robert Rutschow - Deutsche Bank
Yes.
Kenneth D. Shifrin - Chief Financial Officer
Okay.
Robert Rutschow - Deutsche Bank
I mean I guess there were no changes to transaction fees.
Kenneth D. Shifrin - Chief Financial Officer
No, there were no changes.
Robert Rutschow - Deutsche Bank
Okay, I'm wondering can you tell us what your mix of member and non-member volume was in the fourth quarter and how that might compare to say fourth quarter of '06 or first quarter of the year?
Richard Schaeffer - Chairman
No we don't share that information.
Robert Rutschow - Deutsche Bank
Okay, and I guess I will try this trade card here, have you talked to... can you give us sense of what you heard from your ownership in regard to the CME deal?
Richard Schaeffer - Chairman
Yes, you are out for everything. Sorry, we can't answer that question.
Robert Rutschow - Deutsche Bank
Okay.
Operator
[Operator Instructions].Our next question will come from the line of Jonathan Casteleyn with Wachovia Securities. Please proceed.
Jonathan Casteleyn - Wachovia Securities
Hi. Good morning.
Richard Schaeffer - Chairman
Good morning Jonathan
Kenneth D. Shifrin - Chief Financial Officer
Good morning Jonathan
Jonathan Casteleyn - Wachovia Securities
Rich, I have a question for you. You've spent a fair amount of time on the floor of the exchange, just... the energy exchanges seem to be a proxy for the direction of crude oil. Just wondering if you think that's valid, misguided, et cetera?
Richard Schaeffer - Chairman
Please say that again, the comment Jonathan.
Jonathan Casteleyn - Wachovia Securities
Yes, I mean you've spent a lot of time on the floor of the exchange and it seems at this level, the energy exchange is seem to be a proxy for the direction of crude oil. Just wondering if you think that's valid or misguided, just using your experience on the floor?
Richard Schaeffer - Chairman
I have to say I don't know what you mean a proxy for the --
Jonathan Casteleyn - Wachovia Securities
I mean if you look at the comment... the stock prices of UNIs [ph] the trends of crude oil, oil sort of broke down from a 100. It seems like the energy exchanges seem to follow the underlying price of crude oil. I mean do you think as a former member...
Richard Schaeffer - Chairman
I don't subscribe to that at all. I don't see the... do you mean the relationship between the price of oil and the price of the stock.
Jonathan Casteleyn - Wachovia Securities
Yes, exactly the underlying crude price.
Richard Schaeffer - Chairman
Absolutely no relationship, the more the volatility, the more the business we get, the better it is for our bottom line, the more likely it is then our price are going to up. So whether oil goes up or down, when you get up to unprecedented numbers like we are right now $90, if we were to drop just the $50, the amount of business that we would do because of the volatility move would be a dramatic plus. So whether the oil price is higher or lower does not necessarily have any affect on the price of the stock.
Jonathan Casteleyn - Wachovia Securities
Right, okay, fair enough and then about forward curve, I mean you were fairly backwardated in crude oil and it seems open interest is fairly flat. Just using your experience, I mean how does that sort play out for future volume trends?
Richard Schaeffer - Chairman
Well my... you keep growing my experience. I thank you for that but it's limited. But I think it's going to be substantial continued volatility in the marketplace. You see and get, you read in the paper today that the price of gas is expected to be more than $4. I mean you've everything economically worldwide, domestically hints that we are going to have an extremely vital year this year.
Jonathan Casteleyn - Wachovia Securities
Okay. And then just curious, losses from the consolidated seem to continue to tick up a bit. Just wondering with the robust numbers you say that you... you are printing the DME and I would assume CAREX is obviously lumpy in that. Can you give us an update on the joint venture with Montreal and if there has been any impact with the merger negotiations up there and not to the border and just when do you think these ventures start to breakeven?
Richard Schaeffer - Chairman
Well we go across what's to be evolving CAREX it's probably almost breakeven just on the permanent basis natural gas that we have so. I don't see that costing us much money. I had a conversation here today with my counterpart in Montreal and we are committed to try to work hard together. They are busy with their Toronto-Montreal merger but we have a strong commitment and move forward with them and energy products in Canada.
Jonathan Casteleyn - Wachovia Securities
Okay and the DME we've sort of never articulated breakeven point. I mean it seems like trends are heading up albeit, they are still at low absolute levels of trading, volume and open interest. But when do we think about breakeven there?
Richard Schaeffer - Chairman
Well I think Jonathan with regard to the DME we went into that project, looking at it as a long-term project. I mean it's creating a brand new contract in a region of the world that has never traded futures contract. So the development of a new contract like this is a longer term process than just copycatting a product that someone else has. I mean it takes a while to establish the customer base, develop liquidity and open interest. We are very pleased with the direction that it's going. And so I mean the amount of money we are spending is minimal in the overall context and we think we are on target from moving to a profitable direction.
Jonathan Casteleyn - Wachovia Securities
Okay. And if you're a betting man, I mean is this in 08.
Richard Schaeffer - Chairman
I'm not a betting man.
Jonathan Casteleyn - Wachovia Securities
Of course the rest of us are, so.
Richard Schaeffer - Chairman
But we are not designating a specific timeframe to when that becomes a profitable venture.
Jonathan Casteleyn - Wachovia Securities
Okay. Fair enough. Thank you.
Operator
And our next question will come from the line of Edward Ditmire with Fox-Pitt, Kelton. Please proceed.
Edward Ditmire - Fox-Pitt, Kelton
Yes. Hi guys I have two questions. First of all do you have any updated thoughts on using ClearPort as more of a prized discovery platform and not merely, just say a kind of party clearing platform in more of the way that that competitive platforms to going forward?
Richard Schaeffer - Chairman
Two issues, I'll take the first and I'll turn it over to Jim. We are very proud of our model of embracing the inter-dealer broker community. And they have been a big part of our success, as I think we have for them. So to our relationship with that community, we will continue to turn that into what looks like a front-end and backend system. What we'll do it through our inter-dealer brokers who are all developing substantial systems now, with that we'll write into us. And so the answer is yes. What we are partnership with those who have helped us grow our business.
James Newsome - President and Chief Executive Officer
And then Edward I mean ClearPort does contribute to our price discovery function. The way we handle the ClearPort trade is the fact that they roll in the futures, those become part of our large trade reports that we submit to the CFTC, becomes completely transparent. So it is the component of overall price discovery function although it's just not designated as ClearPort price discovery.
Edward Ditmire - Fox-Pitt, Kelton
Got you and then one follow-up question, you guys have a thriving options business on the floor and, lots of people are trying to pack their problems getting options under the screen. In recent calls you've said that there were, I think may be three or four years away from screen-based options treating really being prevalent, any updated thoughts on that?
Richard Schaeffer - Chairman
It continues to be a difficult task, to take all the permutations that are traded in the options market and convert them to an electronic-based system. We haven't seen a lot of headway in that business leaving the floor at current time. We probably do 10%, all that in electronic options. So, it still tells us from what we see that we are no closer than when we had this discussion last time, towards eliminating a robust forum and we are happy that we provide 95% plus market share in that options business.
Edward Ditmire - Fox-Pitt, Kelton
Okay, thanks guys.
Richard Schaeffer - Chairman
Alright. At this point we would like to round it up, no more questions. Thank you very much. We appreciate and look forward to talking to you guys throughout this quarter and the quarters to come. Thank you, as always for your support.
Operator
Thank you for you participation in today's conference. This concludes your presentation. You may now disconnect. Good day.
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