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Executives

Keil Decker - VP, Corporate Communications and IR

Richard Schaeffer - Chairman

James Newsome - President and CEO

Kenneth Shifrin - CFO

Analysts

Richard Repetto - Sandler O'Neill & Partners L.P

Howard Chen - Credit Suisse

Edward Ditmire - Fox-Pitt, Kelton

Donald Fandetti - Citigroup

Michael Vinciquerra - BMO Capital Markets

NYMEX Holdings (NMX) Q2 FY08 Earnings Call July 31, 2008 8:00 AM ET

Operator

Good morning ladies and gentlemen and welcome to the NYMEX Holdings Incorporated 2008 Second Quarter Financial Results Conference Call. My name is Lisa 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 floor over to Keil Decker, Vice President of Corporate Communications and Investor Relations.

Keil Decker - Vice President, Corporate Communications and Investor Relations

Thank you, operator. Good morning and welcome to the NYMEX Holdings 2008 second quarter 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 involves 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 statement. 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 forms 10-K and 10-Q, which are also available on our website.

As a note, during this call, we will refer to GAAP and non-GAAP pro forma results. You can find a description of these measures in the reconciliation table in our press release.

With us this morning to discuss the highlights of the second quarter are NYMEX Chairman, Richard Schaeffer; President and CEO, James Newsome and CFO, Ken Shifrin. At the conclusion of their remarks, we'll open the call up for your questions.

I'll now turn the call over to our Chairman, Rich Schaeffer.

Richard Schaeffer - Chairman

Thank you, Keil. Good morning ladies and gentlemen. Thanks for joining us today. The second quarter was another record quarter for NYMEX as we continued to benefit from market participants' need for credit risk mitigation, price discovery and risk management.

With continued volatility in the energy markets, NYMEX is the venue of choice for participants who seek to hedge their price risks.

Our strong performance is a result of continued volume growth, strength in average rate per contract and the discipline we are applying to our management and to manage our expenses as we consistently say since we've gone public.

For the second quarter, total operating revenues were up 29% to a record $210.8 million. GAAP net income for the quarter was $94.3 million or $0.99 per diluted share and non-GAAP income excluding merger-related expenses and one-time items was $78.6 million or $0.83 per share.

Our GAAP pre-tax margin was 91% for the second quarter. Excluding merger-related expenses and one-time items, non-GAAP pre-tax margin was 75% as we continue to push and grow our pre-tax margin.

In addition, the Board of Directors has approved at its quarterly dividend... at our quarterly meeting, a dividend of $0.10 per share to shareholders of record as of August 15, 2008 payable on September 15, 2008.

As you are all aware, on July 18, CME amended the merger agreement between NYMEX and the CME Group. We believe this combination allows us to take our business and growth it to a much higher level and create new value for our customers and shareholders.

Voting for shareholders and owners of class A memberships is ongoing and we will conclude with a special meeting on August 18th. We anticipate closing the transaction in the third quarter. We will not be answering questions today about the CME transaction. While we are working diligently towards closing the deal with CME, we are also making great strides in executing key business initiatives.

Work on our initiative LCH.Clearnet to offers contracts cleared in Europe is rapidly progressing. We are very excited about being able to offer the marketplace significant capital efficiencies and other benefits as well as the benefits of transacting as a global leader in energy training.

In addition, NYMEX's Green Exchange venture, recently adding two new founding numbers, including Spectron and TFS Energy. This week NYMEX announced the first ever contract based on the Regional Greenhouse Gas Initiative. An important step for market participants wishing to trade in a contract on an exchange that complies with government programs for emissions. Jim will give you more details on that in a few minutes.

To conclude, we continue to lead the industry in profitability. We remain committed to improving our gross and net margins. As we say, we are real proud that we brought it up to 75% in the short time that we've been public.

We continue to deliver on the strong fundamentals of our core business while advancing the business into the future through the launch of new ventures and innovative products. Jim, please?

James Newsome - President and Chief Executive Officer

Thank you, Mr. Chairman. During the second quarter, we continued to build on the strong fundamentals of our core business. Our core benchmark and energy and metals contracts continue to grow. We set numerous daily volume records throughout the second quarter for natural gas, crude oil and overall electronic trading.

In addition, over the past three months, we have taken back significant additional market share in our benchmark WTI contract going from 70% to 73%. We believe the safety and liquidity of our physically delivered contracts in this uncertain environment is attractive to market participants.

Regarding the LCH efforts, we are continuing on with the process for regulatory approval and we will be providing the marketplace with updates as we prepare to launch.

The Green Exchange venture at NYMEX has been making progress. The venture is establishing itself as an emerging leader in the environmental market space with first ever contracts such as the exchange traded futures and options on the RGGI, or Regional Greenhouse Gas Initiative as Richard mentioned, which is a government program among 10 states, mainly in the Northeast for trading emissions in the region.

Thus far, NYMEX has launched new environmental futures and options contracts for the following markets. The European Union alliance, certified emission reduction, nitrogen oxides and sulfur dioxides. These contracts, as we've said before, will migrate from NYMEX to The Green Exchange venture when it receives approval from the CFTC to operate as a designated contract market, which we expect early in 2009. The Green Exchange products complement NYMEX's energy complex and give market participants the ability to effectively manage risk and gain direct exposure to the emissions market on the same screen where they manage their energy risk.

In addition to launching new contracts, NYMEX has brought on board a number of new founding members of The Green Exchange venture. Just this past quarter, NYMEX welcomes Spectron and TFS Energy as new founding members. These industry leaders join NYMEX, Evolution Markets, Morgan Stanley, Credit Suisse, JPMorgan, Goldman Sachs, Merrill Lynch, Tudor Investment Corporation, Constellation Energy, RNK Capital, Vitol and ICAP as founding members to help build what we believe is quickly becoming the world's premier environmental products exchange.

In its first year, the Dubai Mercantile Exchange venture has traded approximately 390,000 crude oil futures contracts. The DME Oman crude oil futures contract is increasingly seen and traded as the third global benchmark for crude oil and the first for Middle Eastern sour crude now with over 350 million barrels of oil traded. Over the past quarter, open interest on the Oman contract has remained relatively stable at 11,000 contracts. In May, the DME launched two new financially settled contracts, the Brent crude oil financial contract and Oman crude oil financial contract, replacing the discontinued spread contracts.

The newly launched contracts are responding to industry demand by providing traders with the essential tools for making the commonly traded over-the-counter transaction to spread between sweet and sour crude oil benchmarks.

Finally, NYMEX has always been a supporter of trading innovation and market transparency. With that in mind, we've recently joined as a stakeholder in ConfirmHub, the energy and environmental industry initiative to provide a central, standardized platform from transaction confirmation delivery. We believe that ConfirmHub's standardized electronic confirmation will provide significant advantages to users of NYMEX and has helped exchange brokerage services.

Overall, we continue to focus on our fundamental business and we are achieving our strategic goals.

I would like to turn it over to Ken who will discuss our strong second quarter financial performance. Ken?

Kenneth Shifrin - Chief Financial Officer

Thank you, Jim. We turned another strong performance in the second quarter, driven by solid average daily volumes during this time of continuing volatility in the energy markets. Let me recap our performance.

Total operating revenues for the second quarter rose 29% to a record $210.8 million compared to $163.6 million for the second quarter of 2007. On a GAAP basis, net income for the second quarter of 2008 increased 126% to $94.3 million compared to $41.7 million for the second quarter of 2007.

Diluted earnings per share for the second quarter of 2008 was $0.99 based on 94.9 million shares outstanding compared to $0.44 based on 94.8 million shares outstanding for the second quarter of 2007.

On a non-GAAP basis, net income for the quarter ending June 30, 2008 was $78.6 million or $0.83 per diluted share compared to $56.4 million or $0.60 per diluted share for the second quarter of 2007. These exclude merger-related expenses as well as the one-time net gain on long-term investments in the second quarter in 2008 as well as a loss on impairment in 2007 related to Optionable Inc. We have also included a reconciliation table in the press release.

Included in the second quarter of 2008 is a one-time net gain on long-term investments of $30.6 million, consisting of approximately 33.8 million investment gain on the Montreal Exchange and an impairment loss of $3.2 million on its investment in Optionable Inc., and that is a final impairment loss. Going forward, I'll reference this as the one-time net gain.

As you recall, in May 2008, the Toronto Stock Exchange completed its merger with the Montreal Exchange in which the company received cash and shares of the Toronto Stock Exchange. In the current quarter, the company evaluated its investment in Optionable Inc. and determined that the remaining value has been impaired and thus reported or recorded as a pre-tax charge to earnings.

The second quarter of 2008 results include $1.4 million of merger-related expenses, of which approximately $1 million are considered non-deductible for income tax purposes and consist primarily of professional fees incurred in connection with NYMEX's proposed merger with CME Group Inc. These can be found in the other expense line item in the P&L.

For the second quarter, gross average rate per contract across all venues was $1.56 while the net rate per contract net of transaction costs was $1.32. This compares to last year's second quarter gross average rate of $1.56 per contract and net average rate of $1.29 per contract. We drive our business by volume, but each month, rate per contracts fluctuates based on product mix, incentive programs member/non-member mix.

For the second quarter, clearing and transaction fees rose 31% to $180.4 million. Market data revenues increased 15% to $26.9 million, driven by a 12.3% increase in the number of units and a 10% increase in revenue per unit. 104,319 [ph] and $55 respectively in the second quarter of 2008 compared to 126,764 and $50 during the second quarter of 2007.

Total operating expenses for the second quarter excluding direct transaction costs of $26.9 million and the merger-related cost of $1.7 million were $42.9 million compared to $41.8 million in the second quarter of 2007. Operating expenses for the second quarter of 2008 included $1.8 million of expenses related to our LCH.Clearnet alliance and $800,000 for The Green Exchange venture. The second quarter also includes higher marketing expenses related to special events.

Compensation expenses totaled $19.9 million for the second quarter of 2008 including $4 million of management equity costs compared to $20.5 million for the same period last year, which included $800,000 of severance costs and $2.6 million of management equity costs. Non-compensation expenses excluding direct transaction and merger-related costs were $23 million for the second quarter of 2008.

Additional expenses earmarked for the third quarter. We expect expenses for The Green Exchange to run approximately $1.5 million for the third quarter. As we've said previously, we expect a majority of The Green Exchange expenses will be refunded to NYMEX when the equity structure of the new exchange is finalized. With regard to our LCH.Clearnet venture, start-up costs for this initiative are expected to be approximately $2.5 million for the third quarter.

Now let me move on to non-operating income and expenses. Investment income was $3.2 million for the second quarter of 2008. Our gains of unconsolidated investments was $28.6 million, which relates primarily to our one-time gain from the company's investment in Montreal as I mentioned earlier.

Our continued strong volume combined with consistent strength in rate per contract and operating efficiencies resulted in a strong pre-tax margin. Excluding the merger-related costs and the one-time net gain, our pre-tax margin was 75%.

Let me briefly hit on record results for the first half. For the six months ended June 30, 2008, NYMEX reported record total operating revenues of $419.7 million, a 28% increase from $327.8 million for the first half of 2007. Net income rose 69% to $165.5 million versus $98 million in the first half of 2007. Diluted earnings per share for 2008 first half was $1.74 versus $1.73 per diluted share in the 2007 period based on 95 million and 94.8 million shares outstanding respectively.

Excluding merger-related expenses of $9.6 million and the one-time net gain, net income increase 60% to $157.2 million and diluted earnings per share was $1.66 for 2008 six-month period. For the first half of 2008, pre-tax margin was 81%. Excluding merger-related expenses and one-time net gain, pre-tax margin was 76%.

In closing, I'll touch on a couple of items from our balance sheet as of June 30. We had approximately $635 million in cash and marketable securities, our working capital was $653 million and capital expenditures were $1.4 million in the second quarter.

With that, I'll now turn the call back to Rich.

Richard Schaeffer - Chairman

Thanks Ken. We are extremely proud of our performance in the second quarter as we continue to demonstrate the tremendous strength of our fundamental business and what makes us the leader in providing risk management tools to the energy and metals exchange.

Operator, at this point I will take questions.

Question And Answer

Operator

Thank you. [Operator Instructions]. And our first question comes from Rich Repetto from Sandler O'Neill. Please proceed.

Richard Schaeffer - Chairman

Rich, how are you?

Richard Repetto - Sandler O'Neill & Partners L.P

Good morning guys, congrats, another solid quarter. I guess the first question is for... more for Jim I guess or Rich. But on the regulatory front, it seems like yesterday, the House rejected another bill. I am just trying to see, where do you think we are going with this? It seems like the extremes in the political process have been moderated and you have crude coming down. I'm just trying to see what's your outlook on this regulatory issues and political issues that are going on down in DC.

Richard Schaeffer - Chairman

Rich, surely, that's for Jim to answer, but I do want to mention that Jim has been running down in Washington phenomenally [ph]. But spending quite a bit of time down there being very proactive in what the right thing for the industry has been. And I think Jim and our team down there have been very productive at providing insight to the leaders here. But I'm going to turn that over to Jim.

James Newsome - President and Chief Executive Officer

Thank you Rich. Certainly, there were some extremist views taken and some very emotional views taken early in this debate, Rich. We think the cooler heads are starting to prevail not only from policy as it regards to different market participants. But I think the Congress is also recognizing through discussions with many, many people that they are not going to solve the pricing issues until they address the supply side of the equation as well.

So I think you've got a lot of the moderates, more conservatives insisting that the supply side component has to be a part of the overall energy package that passes through the Congress. Some have not gotten to that point. I think they are quickly getting to that point and my guess is after the August recess, we'll see much more general discussion about how to address some of the concerns regarding certain market participants as well as the supply side of the equation.

Richard Repetto - Sandler O'Neill & Partners L.P

Okay. Okay, that's helpful. I guess moving on to another subject. I was just... well, I should have this, but I don't have it right on my finger tips is just the percentage of volume. You are seeing some really strong volumes in the natural gas area, and just trying to see what percentage of overall volumes, because there is... your volumes are differential or separate themselves a bit from MYCE [ph] volume, but without them having nat gas in their futures volume.

Unidentified Company Representative

Rich, you are saying in the futures, OTC side, together, what are you saying?

Richard Repetto - Sandler O'Neill & Partners L.P

Just how much volume futures comes from nat gas approximately percentage wise?

Richard Schaeffer - Chairman

No, we don't... not a exact number. We don't have that with us, Rich. But if any of you, including you Rich, we would like to call Keil or Ken, please do so. We'll give you the exact numbers.

Richard Repetto - Sandler O'Neill & Partners L.P

Okay. And then the very last question, the fixed expenses, and when you ex out The Green Exchange and LCH, you hover around $40 million ex those investments. And just trying to see... I know you've got the deal in place, but what can that go to and then also on LCH, you got the 2.5 coming in 3Q. Any expectation on revenue offsetting that?

James Newsome - President and Chief Executive Officer

No, not yet on revenue. We don't want to revenue right now. Rich, as you can see, our expense is around 39.5, 40 or so. And the second quarter, due to some marketing initiatives that we have, is usually a heavier... has been a heavier quarter this year. So we are looking for some improvement on that net number.

Richard Schaeffer - Chairman

And Rich, it's not that we don't anticipate income in the LCH joint venture, but we just don't want to give forward projections on it.

Richard Repetto - Sandler O'Neill & Partners L.P

Right, understood. Congrats again on a solid quarter.

Richard Schaeffer - Chairman

Thanks very much Rich.

Operator

Our next question comes from Howard Chen from Credit Suisse. Please proceed.

Howard Chen - Credit Suisse

Good morning everyone.

Richard Schaeffer - Chairman

Hey Howard, how are you?

Howard Chen - Credit Suisse

Well, thanks, how are you?

Richard Schaeffer - Chairman

Good, thanks. Can you speak up a little bit please?

Howard Chen - Credit Suisse

Sure. Is this better?

Richard Schaeffer - Chairman

Yes, much better.

Howard Chen - Credit Suisse

Great. Asking the regulatory environment question a little bit different way, I guess since the regulatory environment has become a bit higher profile over the past few months, have you seen any noticeable changes in your business? Positive or negative market share shifts or maybe different conversations among your customer base?

Richard Schaeffer - Chairman

It's hard to tell because I have not noticed it directly. The market has been very volatile all the way up, came off a pretty decent amount. So we are in a period of high volatility. So it would be difficult to differentiate at this point in time. It's too early to know of any which related to political. But when you see it go up $5 after they make an announcement, obviously, political has some... has an impact on the volatility in the market. But what happens is that's usually short term. Then the Congressional leaders go off to vacation and the normal volatile market still exits. So I would say the moves or volatility related to Washington are events, not daily happenings.

Howard Chen - Credit Suisse

Makes sense. Thanks Rich. And then the FT is reporting this morning that a group of six independent OTC brokers are going to form a new... inter unit [ph] broker that will utilize your clearing house. I am not sure what specifics you can share on this, but to the extent that you can, can you discuss opportunities like this and maybe how they are potentially different than your current ClearPort OTC efforts?

Richard Schaeffer - Chairman

Well, they were all involved. We embrace the inter dealer broker market aggressively, and it's one that we believe not only has helped grow our business, but continues to grow our business. And we reach out to companies like in this case the people who made the announcement and we support them and we work with them. OTC holdings are friends of the exchange. They are friends, they bring business, we work hard with them and we will continue to do things like this. But we are real happy that they are getting together and we're real happy to help them to help us grow our business.

Howard Chen - Credit Suisse

Great, thanks. And then finally, did any products cross the 90% threshold para section 311 during the June quarter?

Richard Schaeffer - Chairman

I'm sorry, can you please repeat that?

Howard Chen - Credit Suisse

Yea, I was just curious if any products crossed the 90% electronic threshold during the quarter.

Richard Schaeffer - Chairman

We are putting that information out shortly. We anticipate within the next day or two.

Howard Chen - Credit Suisse

Great, thank you.

Richard Schaeffer - Chairman

Thanks a lot.

James Newsome - President and Chief Executive Officer

Thanks.

Operator

Our next question comes from Edward Ditmire from Fox-Pitt. Please proceed.

Richard Schaeffer - Chairman

Good morning.

Edward Ditmire - Fox-Pitt, Kelton

Hi, good morning to you all.

James Newsome - President and Chief Executive Officer

Good morning, Ed. How are you?

Edward Ditmire - Fox-Pitt, Kelton

Can you update us on the regulatory approvals necessary for the LCH partnership?

James Newsome - President and Chief Executive Officer

The only thing I can say right now, Edward, is that we're close to the finish line with regard to the regulatory approvals and we expect a sign off roughly anytime.

Edward Ditmire - Fox-Pitt, Kelton

Okay. Thank you.

Richard Schaeffer - Chairman

Thank you.

Operator

Our next question comes from Don Fandetti from Citigroup. Please proceed.

Donald Fandetti - Citigroup

Hi. Jim or Rich, a question about your WTI market share. Obviously, you've picked up share and it's probably accelerated in July. What do you attribute that to and do you sense that that's more of a temporary blip or is something more permanent going on?

Richard Schaeffer - Chairman

Well, I would like to attribute it to brilliant management, but I can't. I think the uncertainty in the marketplace, in our initiatives to keep on obviously building on market share through different efforts we have with our partners. I think more and more people are cognizant that liquidity goes for liquidity, us being the higher liquidity provider, or market is drawing more attention.

Donald Fandetti - Citigroup

Is there anything in terms of sort of cost margining benefits that you think are at play as well?

Richard Schaeffer - Chairman

No comment.

Donald Fandetti - Citigroup

Okay.

Richard Schaeffer - Chairman

We will be able comment on that when we announce the final formation of the LCH.Clearnet deal and there clearly will be substantial margin benefit but until the deal is closed, I'm going to hold off on that one.

Donald Fandetti - Citigroup

Okay. And than just lastly, obviously the regulatory stuff, there is emotions involved short term. But as you step back and look over the next few years, how concerned are you about sort of the general regulatory environment versus what we have been and...

Richard Schaeffer - Chairman

Well, I will just give you a short comment. Jim is obviously the one to answer it, but I have seen during many periods in time, of course, this is the worst ever in terms of price, times when I have been on the Board 19 years now or so and down here trading, previously for 30 years and I have seen periods like this come and go. I think you will continue to. I think, though, this is an issue that's hot, hot in everybody's mind because it affects every single consumer in the world. But I am going to let Jim follow up on that.

James Newsome - President and Chief Executive Officer

Don, I mean you are exactly right. It is driven by a lot of emotion at this point. But I think the education process is improving. I think members are starting to understand that the time period of very cheap oil and gasoline may actually be over. If you look at these price spikes in the past, they've almost always been driven by the supply side because there were shortages or pipelines were cut off, supplies were cut off. People are just now understanding, particularly those in Congress that this price increase is demand driven. And it's much harder to get your arms around because the demand numbers are difficult to achieve from particularly India and China, which is driving a lot of the demand. So I think part of it's education. I think we are coming to the end of the most emotional component of the equation, and now people are going to start really focusing on what they have to do to try and impact price.

Donald Fandetti - Citigroup

Okay, thanks.

Operator

Our next question comes from Mike Vinciquerra from BMO Capital Markets. Please proceed.

Michael Vinciquerra - BMO Capital Markets

Good morning.

Richard Schaeffer - Chairman

Good morning.

Michael Vinciquerra - BMO Capital Markets

One more follow up for Jim on that. I still see some notes out in the press from... in the last couple of days about people or some of the Democrats pushing for the CFTC to limit speculative participation in the market. Jim, is there any update on that? Is that something that sounds like it's actually going to be included in the bill?

James Newsome - President and Chief Executive Officer

Well I think speculative [ph] limits will certainly be included as it relates to foreign boards of trade. Obviously, the regulated markets of the CFTC have position limits in place already. I think more of the discussion has focused upon ascertaining those position limits between like NYMEX, ICE, OTC. That's a much broader and a much more difficult question to solve. I don't think Congress will come up with the solution, my guess is at the end of the day, they will request to the CFTC study aggregate position limits and report back to the Congress.

Michael Vinciquerra - BMO Capital Markets

Very good, Okay, thank you. And then just on the WTI again, just looking at the open interest there, we have seen a pretty persistent decline in open interest over the last several months, I guess setting a new recent low in last week any thought on why that continues to drift lower, difference mix of participants, different trading strategies or something like that?

Richard Schaeffer - Chairman

No, we are at such high levels. We go through cycles any given quarter-to-quarter. So no, I don't think there is any particular reason. I don't think it's cause for any concern and it's just normal cyclical moves.

Michael Vinciquerra - BMO Capital Markets

Okay. Thank you guys.

Richard Schaeffer - Chairman

Thank you. One more question please?

Operator

And our last question comes from Jonathan Castellan from Wachovia Securities. Please proceed.

Unidentified Analyst

Hi, good morning.

Richard Schaeffer - Chairman

Good morning.

Unidentified Analyst

Just curious if you have an idea of where you sit of the percentage of your shareholder base that's held by your members versus institutional holders versus retail?

Richard Schaeffer - Chairman

I don't know those numbers. How much is institutional versus retail, I don't --

Unidentified Analyst

Well, I am just trying to understand --

Richard Schaeffer - Chairman

We don't give out that information. I'm sorry, I don't know it.

Unidentified Analyst

Okay. And just drilling down on the regulatory side, a question for Dr. Newsome. I guess I was trying to understand the percentage of the exchange's activities from pension funds via swap dealers. Is there any kind of indication that you have put out there as to how much activity resides on the exchange from that?

James Newsome - President and Chief Executive Officer

No, we haven't put out any indication. As you know, the current

large trader reports that are delivered to the CFTC everyday show the net positions of the banks or swap dealers and not the customers behind that. We have suggested to the CFTC that they further delineate that information. So you can see the customers behind the swap dealers; more importantly, whether they are commercial or non-commercial customers. Traditionally in our market, the overwhelming majority of those customers have been commercial. We do expect that that is the case today, but we are requesting that they delineate that information.

Unidentified Analyst

Okay, that's helpful. And lastly, just any idea of volume that's come about as a result of a hedge exemption on the exchange? It sounds like a pretty pertinent issue. Just wondering if you can sort of delineate that.

James Newsome - President and Chief Executive Officer

Well, I mean I can give you specific volume numbers. They would be relatively low. I mean we do grant hedge exemptions, but there is very formal process that we go through. And the true hedger has to show us the entire book and portfolio so that we know that there is a need for the underlying creditor to make or take delivery of that underlying product and then their need to hedge the risk on that product. So I mean we do grant exemptions, but it's based on a case-by-case basis handled by our compliance department.

Unidentified Analyst

Okay. So any sort of ballpark as to the absolute amount or the percentage amount?

Richard Schaeffer - Chairman

No, but it's a small percentage relative to our open interest.

Unidentified Analyst

Got it. Okay, thanks for your time. I appreciate it.

Richard Schaeffer - Chairman

Thanks a lot. All right, thanks again everybody. We'll talk soon.

Operator

Thank you for participating in today's conference. This concludes the presentation. You may now disconnect. Thank you. Have a great day.

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Source: NYMEX Holdings, Inc. Q2 2008 Earnings Call
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