Notice # 01-366
October 31, 2001

TO:
All NYMEX Division members
All NYMEX Division cleating members

FROM:
J. Robert Collins, Jr., President

RE:
Introduction of EFS Trading in Natural Gas



The New York Mercantile Exchange, Inc., will begin offering tomorrow
exchange of futures for swap (EFS) transactions in the first step of its
plans to offer over clearing services to the over-the-counter (OTC) natural
gas market.

This plan will also include the introduction of large order execution in the
natural gas futures market and electronic trading of cleared natural gas
swaps and basis contracts.

We are delighted that we were able to expedite the introduction of this
instrument as the current climate in the natural gas market has served to
reinforce the necessity of credit intermediation.  The liquidity of our
market, combined with a clearinghouse that has half billion dollars
available to participants on each of the Exchange divisions through each
guarantee fund and the respective clearing members, put us in a unique
position to offer these services.

In addition, natural gas futures and options volume in 2000 reached the
equivalent of approximately 230 trillion cubic feet of natural gas and the
notional value of last year's transactions Exchange-wide totaled $3
trillion, or $14 billion per day.

EFS transactions will work similarly to exchange of futures for physical
(EFP) transactions.  Two parties will be allowed to privately negotiate the
execution of an integrated over-the-counter swaps and related futures
transaction on pricing terms agreed upon by the involved parties.  The
transaction must involve approximately equal but opposite side-of-market
quantities of futures and swap exposures in the same or related commodities
and will be permitted until two hours after trading terminates in the
underlying futures contract.  EFS transactions will be permitted to
liquidate, initiate, and transfer futures market positions between the two
parties involved in the transaction.  The Exchange will charge $10 per side
for each EFS transaction.  The clearing member representing each party will
be responsible to notify the Exchange of the amount and type of futures
contracts involved, the price at which the futures transaction should be
cleared, and the identity of the parties involved.

Forward Looking and Cautionary Statements
The New York Mercantile Exchange, Inc., has attempted, wherever possible, to
make statements in good faith , as of the date of this release, by using
words such as anticipate, believes, expects, and words and terms of similar
substance in connection with any discussion of its present and future
operations within the industry. Any forward-looking statements made by, or
on behalf of the Exchange, involve a number of risks, trends, uncertainties,
and other factors which may cause actual results to differ materially,
including; the Exchange=s receipt of the necessary Commodity Futures Trading
Commission approval; timely performance and cooperative effort of exchange
partners; and changes in financial or business conditions at the Exchange.