NY futures markets join forces to cut costs

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NEW YORK's Commodity Exchange, the world's largest precious-metals futures market, has agreed to merge with the New York Mercantile Exchange, bringing to an end a long and difficult courtship.

Under the terms of the agreement, Comex will become a division of Nymex, which is the leading futures market for oil, although it will continue to function as a distinct exchange.

The markets will share computer systems and other back- office costs, saving an estimated dollars 6m a year, or 8 per cent of their combined budgets.

The merger, first agreed in 1991, was cancelled after disagreements about the price Nymex will pay to members of the metals exchange, which has shrunk considerably as speculators have moved away from gold to derivative financial products as hedging instruments.

The price of a seat on Comex has slipped to less than a third of its value at the peak of the precious-metals booms witnessed in the 1970s.

However, daily trading volume on Comex picked up recently after having fallen to less than dollars 1m a day in 1992.

The two exchanges have agreed that Nymex would pay dollars 42m on closing, with an additional dollars 20m to be distributed to former Comex members over the next four years.