New York Mercantile Exchange (Nymex)'s share of the electronic energy futures market on the Globex platform hit the 40% mark last week, less than a month after physically settled versions of the major contracts were listed on-screen.
The effect of the growth in trading on Globex, which the New York exchange has licensed from Chicago Mercantile Exchange, has been seen in the 10% dent made in rival ICE Futures' WTI crude market share. Having averaged just under 40% during the 15 trading days before the introduction of physical contracts its market share fell to under 30% over the following 15 days.
Volume in WTI on Globex hit 100,000 in a single day on 8 September, dropping below that figure only once since then. Side-by-side trading saw early success with screen volume on any given day accounting for 20-35% of the total WTI volume on Nymex.
A senior oil trading source told FO Week that he believed some of the screen volume had come from traders new to the market but that some of it could well be volume which, until the Globex deal, would have been put through the Nymex floor.
Nonetheless, he added that floor volumes in New York have been holding up "reasonably well," and estimated that smaller orders would be put through on screen because of the ease of that method, but said that large orders were still more likely to go through the exchange floor.
"What the floor has to offer is not the near end of the market, for people who want to trade five lots, but the markets made in the forward spreads which constitutes a responsive liquidity pool for people who want to dip in," the source told FO Week.
He also pointed out that the introduction of screen trading has not always resulted in contracts fully migrating off the floor.
While the Euronext Liffe STIR contract switched to the screen in a matter of weeks when the option was made available, he explained, CME still has a thriving Eurodollar pit despite that contract having been available on screen for some time.
Nymex and ICE declined to comment on the shift in volume.