芝加哥商業交易所 (CME) 2007 Q3 法說會逐字稿

Good morning, ladies and gentlemen and welcome to the NYMEX Holdings Incorporated 2007 third quarter financial results conference call. 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. Please proceed, sir.

Thank you, operator. Good morning and welcome to the NYMEX Holdings 2007 third quarter earnings conference call. To obtain a copy of our earnings release issued this morning, please visit our website at 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 report on Form 10-K and 10-Q which are available on our website. With us this morning to discuss the highlights of our third quarter are NYMEX Chairman, Richard Schaeffer, President and CEO, James Newsome and CFO Ken Shifrin. At the conclusion of the formal remarks we'll open up the call for your questions. Now I'll turn the call over to our Chairman, Rich Schaeffer.

Thank you, Keil. Good morning and thank you for joining us today. We have a lot of cover this morning. It's all very positive regarding the continued progress we are making. We are very excited to speak with you today about our strong third quarter operating results and how we have been able to continue to generate even greater top line revenues and bottom line profits each year. For the third quarter of '07, total operating revenues were up 25%, to a record $173.2 million, and our net income was up 54% to a record $62.6 million or $0.66 per diluted share. Our pretax margin was a record 71% for the third quarter, compared to 60% when we IPOed. That's a good indication of how focused we've been on reducing our expenses. Just as importantly, we are very excited to speak to you today about the $72 million in Enterprise efficiency initiatives that we're about to deliver to our shareholders. This plan will help us become leaner and more profitable. We will discuss this plan in greater detail in a moment.

In addition to these positive initiatives, we are declaring a $100 million special dividend to our shareholders in addition to our regular quarterly dividend of $0.10 per share. With the continuing strength of our business and cash flow, the cash on our balance sheet and our unused borrowing capacity, we are pleased to be able to return cash to our shareholders. Finally, we are very excited that we will be partnering with the most respected market participants to launch a broad slate of new emissions related products to be launched in a few months. Jim will talk about these shortly. These products will fit perfectly with our energy complex of fossil fuel contracts given the large market players, the ability to effectively manage risk and gain direct exposure to the emissions markets. We are very excited about this and we will implement it shortly. We are tremendously well-positioned strategically and are executing on all cylinders. We continue to explore strategic opportunities, domestically and internationally, and we look forward to providing more information as soon as we're able. We remain committed to serving the energy and metals industries, as well as our investors, as the leading global exchange for commodity based derivatives. Jim.

Thank you, Mr. Chairman. During the third quarter, we set numerous daily electronic volume records on CME Globex, as well as a number of open interest records in our benchmark energy and metals contracts, such as gold, which recently surpassed the 500,000 milestone for open interest. Also during the third quarter, we finalized the launch of electronic options contracts on all of our core energy and metals contracts on CME Globex, as well as on our NYMEX ClearPort clearing platform including our gasoline, heating oil and copper options. We continue to see expanding interest in electronic trading of options as evidenced by days when as much as 20% of our natural gas options are traded electronically. We also just launched user defined and exchange defined spreads which will aid users in terms of functionality and ability to execute electronic option strategies. These types of enhancements will further facilitate greater options volume on Globex.

As for our Dubai strategic venture, the physically settled Dubai Mercantile Exchange Oman sour crude contract has continued to show consistent growth in both volume and open interest, and now commands virtually 100% of all freighting volume and open interest for Middle Eastern based crude oil contracts. The industry's strong and intense interest in becoming involved in the DME only reinforces our belief that the DME Oman contract is becoming the global sour crude benchmark. Furthermore, the Middle Eastern delivery mechanism continues to set the standard, with roughly 4,000 contracts going to delivery for November and average daily volume per month to date in October is 2,700 with open interest of almost 9,000. We're seeing open interest spread out the curb away from the spud which is indicative of growing adoption. We believe that commercial, sovereign and other participants will continue to enter this market because they realize the benefits of participating in the dynamic price discovery process of the DME contract. Within this context we continue to work with the DME to look at new contracts to enhance the ability of traders to effectively hedge their positions.

Regarding new contracts, we look closely at what will drive volume to our core layer products as well as what we would call new sector research and development for the future. New products are crucial to our business, not only because they may be successful in their own right, but because they drive business to our core products, which helps grow our primary franchise of energy and metals contracts. During the third quarter we launched a number of new contracts on CME Globex or NYMEX ClearPort, including 24 new crude oil swap futures contracts, ethanol swap futures and new alternative energy index futures contract and a new crude oil last day futures contract which has been very well received.

Looking forward, our new venture into environmental markets contracts is very exciting. As Rich said, we are partnering with the leading market participants to launch a broad slate of new emissions related products, including European carbon instruments, restructured U.S. emissions compliance products and new products for the U.S. carbon markets. NYMEX has worked extensively with the most influential utilities, hedge funds, investment banks, environmental brokers and environmental groups since March of earlier this year to establish the right set of contracts that market participants need and want to effectively manage risk and gain exposure to the emissions markets. We intend to list this new slate of contracts on the CME Globex electronic trading platform and the NYMEX ClearPort clearing platform by the end of the first quarter 2008.

Finally, from a regulatory perspective, we are very enthusiastic about recent events regarding regulation of the energy markets. We applaud the recommendations contained in the CFTC's report last week to Congress regarding new oversight of certain exempt commercial markets. The contracts that trade on exempt commercial markets that serve a significant price discovery function, (inaudible) a number of public policy concerns and warrant a higher degree of CFTC regulation and oversight as we have said for the last number of months. NYMEX agrees with the CFTC's conclusion that these contracts should be subject to large trader reporting, position limits or accountability, self-regulatory oversight obligations and emergency authority for both the CFTC and the ECM itself. These mechanisms have enabled NYMEX to provide market integrity and stability to the energy markets. We continue to believe that these changes are a benefit to the broader energy market and to NYMEX as the primary energy marketplace. Ken will now discuss our strong third quarter financial performance by the numbers. Ken.

Thank you, Jim. We had another record quarter driven by strong average daily volumes but our results were also driven by continued improvement in our operating expenses net of transaction costs. Let me recap. Total operating revenues for the third quarter ended September 30th, 2007 rose 25% to a record $173.2 million, compared to $138.3 million for the third quarter of 2006. Net income for the third quarter 2007 increased 54%, to a record $62.6 million, compared to $40.7 million for the third quarter of 2006. Diluted earnings per share for the third quarter 2007 were $0.66, based on 94.9 million shares outstanding, compared to $0.47, based on 81.6 million shares outstanding for the third quarter of 2006. For the nine months ended September 30th, 2007, NYMEX reported record total operating revenues of $501 million, a 35% increase from $372.5 million for the first nine months of 2006. Net income rose 43% to $160.5 million versus $112.5 million in the first nine months of 2006. Excluding the charge for optionable net income was $175.2 million for the nine month period.

Diluted earn earnings per share for the first nine months of 2007 was $1.69, versus $1.35 for diluted share in the 2006 period, based on 94.8 million and 79.4 million shares outstanding respectively. Optionable diluted EPS was $1.85. The effective tax rate for the nine months was 43.5%, compared to 45.5% for the nine months of 2006. For the third quarter 2007, gross average rate per contract across all venues was $1.55, while the net rate per contract, net of transaction costs was $1.28. Against last year's third quarter, (inaudible) is up from the gross average rate of $1.45 per contract and net average rate of $1.25 per contract. For the third quarter, clearing and transaction fees rose 22% to $145.3 million, market gain of revenues increased 54% to $24.9 million for the third quarter 2007, primarily driven by an increase in the number of units and revenue per unit, 135,508 and $50 respectively during the third quarter of 2007, as compared to 120,577 and $40 respectively during the third quarter of 2006.

As I mentioned, where we made the biggest difference in our results this quarter was in total operating expenses, excluding direct transaction costs, which were down 15% to $40.5 million for the 2007 third quarter as compared to $47.5 million in the third quarter of 2006 and $41.8 million last quarter. Compensation expenses were a total of $19.5 million for the third quarter of 2007, down 13% from $22.6 million for the same period last year. Non-compensation expenses, excluding direct transaction costs, were down 16% to $20.9 million for the third quarter of 2007. Again, this is a direct result of our ongoing cost cutting initiatives. Let me move on to non-operating income and expenses. Investment income was $4.9 million for the third quarter, our losses in unconsolidated subsidiaries were $2 million which relates primarily to our Dubai and (inaudible) ventures. 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 47% to $110.4 million as compared to $75.3 million in the third quarter of 2006. Pretax margin, excluding direct transaction cost, was a record 71% for the third quarter of 2007, compared to 60% in the third quarter of 2006, at the time of our RPO. This is substantial progress. Let me touch on a couple items from our balance sheet as of September 30th. At the end of the third quarter we had approximately $540 million in cash and marketable securities. Our working capital was $564 million capital expenditures were $6.2 million for the third quarter of 2007. With that, I'll turn it back to Rich.

Thanks, Ken. Now the plan. As you have seen, we continue to show strong performance in our quarterly numbers. Now I would like to speak with you about how we're taking NYMEX to the next level of performance and profitability. The plan we will execute over the next 14 months represents disciplined approach to our process of capturing the benefits of our migration from open outside trading to electronic trading and will position NYMEX of one of the more profitable and efficient exchanges. This plan is the next phase of revenue and cost improvements, which we have been working on continuously as evidenced by our increased profitability and increased gross margin. It is a comprehensive approach that will deliver substantial savings across the entire Company, with combined revenue enhancements and cost savings of at least $72 million. The key revenue enhancements are made up of a new fee schedule for NYMEX and COMEX divisions and an increase in our market data fees, a modest increase in both of those and competitive. From a cost point of view, we have initiated a broad reduction in force which will begin immediately with 55 positions and will continue into '08.

We are actively involved in exploring the sale of our building and have retained the real estate broker Cushman & Wakefield to run the process for us. We will also closely review our options in regard to the location of our existing staff and requirements for trading force space. Based on the results, this Enterprise efficiency process, we could achieve substantial tax benefits as well. NYMEX is carefully considering our options in light of our financial priorities. However, we do enjoy our location in New York City and, if possible, if we could make it work, we prefer to keep a presence in lower Manhattan. We reiterate our commitment to continuing to work with the mayor's office on a solution which addresses our needs. We believe these initiatives will put us in an even stronger position in terms of efficiency and profitability. Jim?

Thank you, Rich. NYMEX is committed to doing whatever is necessary to streamline operations and improve its performance for its customers and shareholders. The plan we are implementing arises from the transformative year that we have had at NYMEX and is a result of Management's continuing drive to create additional shareholder value. As you see in the press release, NYMEX will implement revenue enhancements of approximately $50 million based upon a new fee schedule to each of the NYMEX and COMEX divisions applied to the September 2000 average daily volume as well as an increase in the market data fees from $50 per unit to $55 per unit, effective February 1st, 2008, based on an average market data units of 135,508 from September 2007. The breakdown for projected enhancements is approximately $42 million for the new fee schedule and $8 million for the market data increase.

In terms of cost reductions we will be immediately implementing a substantial reduction in the current cost structure. We expect the cost savings components of the plan to reduce our current operating expense base by approximately $22 million on an annual basis. We will reduce our current workforce by approximately 120 positions over the next five quarters or $10 million on an annual basis, beginning immediately and continuing through 2008. But in conjunction with these reductions, we will incur severance expenses of approximately $1.4 million in the fourth quarter and approximately $2.6 million in 2008. NYMEX will retain leading real estate broker Cushman & Wakefield as Rich mentioned to evaluate the sale of our headquarters located at One North End Avenue in lower Manhattan. In the event the Company concludes the sale of its building, NYMEX expects to save approximately $12 million on an annual basis based on elimination of expenses related to that facility. NYMEX also will closely review its options with regard to the location of our existing staff and requirements for trading floor square footage. While the timing for this process is difficult to predict, the Company expect to conclude this process during the third and fourth quarters of 2008. Rich, back to you.

In conclusion, we are tremendously excited about the future of NYMEX. In this quarter we demonstrated what makes us the leader of providing risk management tools to the energy and metals industries. And through execution of our plan and achievement of our goals in efficiency and growth we look forward to an exciting year ahead. Thank you for your continued support. We'll take questions now.

(OPERATOR INSTRUCTIONS) Please stand by while we compile a list. Your first question comes from the line of Rich Repetto with Sandler O'Neill. Please proceed.

Good morning, Rich.

Good morning, guys. First question, Rich, is it's I guess the obvious question, great quarter, but it's been out in the public domain about discussions about potential mergers. How would any of the things you're doing today, which I certainly applaud, how does that impact, if at all, a potential transaction?

We believe it can only impact a transaction in a positive way. Our potential partners and people that are looking at us and talking to us expect us to run the business in a disciplined manner to continue to generate profit. Anything we do, as we're doing now, can only be an indication to both our investors who are putting their money on us and our potential partners in how we're going to run a business, should we become a partner to them.

Great. Great. And just trying to understand, maybe this is a question for Ken, but on the dividend, how does cash, like where is the ending -- I can see the marketable securities in the balance sheet looks like almost $0.5 billion. So can you go through, I might have missed it in the prepared remarks but the cash situation at the end of the quarter.

We have over $0.5 billion in cash at the end of the quarter. The majority of it obviously is in marketable securities.

I guess that answers that. And then Rich, fixed expenses continue to come down. You know, I get them as 27% of your net revenues when you net out the direct transaction cost. And you're talking about taking out more than half. I guess no other exchange operates at sort of those sort of operating -- I'm just trying to see what I'm missing here. Your fixed operating will be below $20 million when you achieve these expense reductions you're talking about.

Rich, we're in a very unique situation because we're only public a year, we talked at the time when we were going public about low hanging fruit. Now we've picked the low hanging fruit and we're paying attention to our core business. You're not missing anything. There is a lot there as a non-public entity that probably -- that wouldn't be there in a public entity. And we're addressing all those issues now. And I don't think you're missing anything. I think you'll see our plan to be a continued disciplined cost-cutting, revenue-growing exchange.

Great. Congrats on a great quarter here.

Thank you, Rich.

Your next question comes from the line of Chris Allen with Banc of America Securities. Please proceed.

Good morning, Chris.

Good morning, guys. Nice quarter.

Thank you.

Just Ken, just looking back at the cash on hand, can you just give us an idea of how much cash you need to kind of run the business and how we should think about the usage of that cash moving forward?

The actual cash amount to run the business is probably between, somewhere between $75 million and $100 million so obviously we have a lot of excess cash on hand and we do have enough cash to do exactly what we have to do. We're not leveraged at all. The only debt we have on the books is the bonds against the building, so we feel we're in a good position where we are, even with the $100 million dividend.

There's a few points here. Rich Schaeffer. Number one, it's important to note that we are going to continue along the path of exploring and not only exploring but we're talking about a number of initiatives, both in the United States and in Europe as well and elsewhere. We do not feel encumbered by a lack of cash, as Ken said, $540 million. Keep in mind, every four to five months we're netting another at least another $100 million. So we are in a tremendous position. Also, there is substantial worth to the building. So if you add the value of the building to our cash on hand of 540 and our continued 250 plus net per year, I think it keeps us in a very competitive position to continue our goal of growing our business through both acquisitions and internal growth.

Sounds good. And then just on the building, you kind of mentioned that talking to the mayor's office about possible tax efficiency, so to speak. Are there any recent examples of companies that have negotiated tax efficiencies and how should we think about that?

For competitive reasons, we don't really want to get into the real estate, other than to say we are putting our building up for sale, because it has wide ramifications from competitors to potential partners to other things. So I would rather stay off the building and the governor's office, although we have a great relationship with the mayor's office and we continue to see what we can do to support downtown Manhattan.

Great. Thanks.

We'll have to leave it at that for now.

Thanks, guys.

Your next question comes from the line of Ken Worthington with JPMorgan. Please proceed.

Hi, good morning.

Hi, Ken.

First on the building, I think you said $12 million of cost savings, if you're able to leave the building. Is that net, because you only pay about $20 million, $22 million in occupancy and equipment anyway. Does the $12 million take into consideration rent that you would pay someplace else?

Absolutely.

Okay. Just wanted to clarify that. And then I think the Battery Park City Authority and maybe the city as well gave NYMEX special tax breaks to stay in the building through 2012. What is the cost of leaving the building? What kind of penalties would you have to --

Although I won't get into the details of it, I'll tell you the arrangement holds for a $25 million cost for us should we move out early but there are a lot more details in it. Obviously for competitive reasons, tenants in the building, et cetera, we choose not to discuss. But it is not a significant cost to us relative to the value of the building.

Perfect. Just wanted to clarify that. And then is there any detail you can give us on the price increases at NYMEX and COMEX? You mentioned that you tweaked prices. Any flavor, order of magnitude, anything like that you can give us on the -- ?

The only flavor I'll give you is that the increased prices, which are substantially less than our competitors, for competitive reasons we're not going to post what those rates are at this point in time. The customers will know before the investors know, for competitive reasons. But again, they're modest but generate substantial income and we feel it will continue to keep us and remain competitive. Keep in mind, since we've gone electronic, we've actually cut the cost to our trading members and non members significantly. They don't have floor brokerage anymore. And there's substantial savings. So we make sure we carefully go out to our investors -- not our investors, our market users before we make these decisions. Ken, in the near future we'll disclose them but not at this point in time.

Thanks. And ClearPort is growing really nicely but the kind of core energy franchise is growing much faster. Why is that? What are the dynamics that are playing out there?

If you look at the makeup of our ClearPort slate, it's primarily natural gas. We've had less volatility in the natural gas markets over the last quarter and we've had higher volatility in other energy products, such as crude, so I think that's primarily the reason that you see the growth differences that you just mentioned.

Thank you very much.

Your next question comes from the line of Mike Vinciquerra with BMO Capital Markets. Please proceed.

Good morning, guys.

Good morning.

I don't know if you can answer this on the building. I don't know that much about downtown Manhattan real estate prices. But I've heard numbers thrown around that it could be as much as $0.5 billion dollars. Is that number way out in left field from what you might potentially reap from such a sale.

My lawyer is sitting right across from me, looking at me. And I'm not going to comment on numbers.

Okay. All right. Fair enough. Couple questions, housekeeping for Ken. Market data jumped sequentially in the quarter, much higher than we expected. Was there some audit gains during the quarter that drove the increase?

Yes, there were. We had audit gains in there. We had audit gains upwards of about $800,000.

Very good. Okay. Thank you. And also your marketing expenditures dropped pretty substantially. Is that something we would expect to rebound in coming quarters as you roll up these -- ?

I didn't catch that. My what.

Marketing expenditures looked like they dropped pretty meaningfully. I'm just curious if they're going to be coming back up the next couple of quarters as you roll out these new products.

That's cyclical as well. You could have higher costs. You referred to the second quarter, we had a lot of costs in the second quarter, that's what you're comparing it to. But it's cyclical, those costs.

I also want to mention in terms of marketing, we're strongly committed to marketing. And yes, can you expect that number to go up. You can also expect us to hire, even though we're letting 120 people go, we will be hiring people in areas that will drive more business to our exchange, in particular marketing is one of them. New businesses, new products, those are areas that there will be additional marketing costs and some modest additional staff as well.

Okay. Thank you. And then just one question on the $50 million in revenue synergies. Is it as simple if you look at it, you're basing it on September volume levels, is it as simple as, if we're assuming 25% volume growth for next year that we'd be looking at $62.5 million in revenue instead of 50, is it that simple to look at?

I'm not going to project volumes. You know that. You've dealt with me long enough.

Relative to your question, it would be a mathematical formula. If you believed volume would be X, then you would believe that it would be a higher number. But we're not commenting on it.

That's all I was looking for, Rich. I appreciate that. That's it guys. Thanks very much.

Your next question comes from the line of Niamh Alexander with KBW. Please proceed.

Thanks for taking my question. I'm wondering, if electronic trading has grown so unsuccessfully, how should I think about the member agreement where wouldn't NYMEX have to pay out 10% of gross revenue from key contracts if you get over that trigger level of 90%?

If we do, there's certain things that have to trigger. The Board would have to vote to close those contracts at that point in time and agree to pay. But at some point in time, if we and when we exceed 90%, there will be a 10% fee paid to the membership. There are alternatives that I care not to discuss today for our own -- for the benefit of the investors that we will address at the time. But we have that plan. We have it in our budget and have that accounted for.

Okay. And are you pretty close to that trigger now?

I would say about 80 -- roughly, broad guess, about 80% and a number of them, between 70 and 82%, something like that, but the last 10 is always the hardest. We are extremely robust in our options business and options, even though we give you the great number, the 20% of natural gas has gone electronic, the other 80 is going to be very slow in doing that. The screens are just very far away from being advanced enough from capturing the type of business we do here. So no, I think it will be quite a while before we hit that 90% Mark.

Okay. That's very helpful, thank you. Just a question on international clearing with the rule changes in the Europe and the interoperability. Isn't there an opportunity for NYMEX to do something over there and how should I think about maybe where you are in discussions.

There's a strong opportunity for us doing something over there. And we are actively and aggressively seeking the right situation over there and literally are working on that daily. So yes, with the new regulations going in place, we recognize strongly that we need to be clearing in Europe as well as here and we are going to act on that. We just can't divulge our plan at this time.

Thanks for taking my questions.

Your next question comes from the line of Jonathan Casteleyn with Wachovia Securities. Please proceed.

Hi. Good morning. Just curious how the Management team thinks about pricing and any potential impact on volume. Is there kind of an algorithm you think about that X amount of pricing would slightly decrease volume but potentially increase profits. Is there some way to thing about that stepped up formula.

We think about it every day. There is no set formula that we'll tell at what price you'll price yourself out of the market, except when you continuously price yourself less than your competitors, you can feel assured that you're not going to lose business to your competitors. If you're not going to lose it to your competitors, there is nowhere else for it to go. We do consider our clients as a very precious asset and we're very careful when we make these changes and consult them when we do it.

Sort of the timing of the fee schedule, when will that come out?

What's that?

The timing of the fee schedule?

The fee changes will go into place January 1st.

January 1st '08.

Market data, February 1st. January 1st this year for the fees and market data February 1st.

Can you update on CAREX. Is it possible to fund that venture with some of your existing contracts? And if so, do you get better economics? I think CAREX is running on ClearPort.

CAREX is running on its own system. In one hand, you'd get better economics. But on the other hand, they're 50% partners. So we are going to build that business out. We're very comfortable. We have a great relationship with our group there. We very much believe in the leadership there and we're going to build new products and it's probably going to be in the next three to five months that we have the whole business rolled out.

So you think it comes on-stream in three to five months?

Yes.

Okay. Lastly, technology is such a great asset in your business. I'm just wondering, as you basically lease some of your systems from the CME, I mean, is there technology development going on underneath that? Are you developing proprietary systems?

We have strong technology. But I'm going to let Sam Gaer, our Executive Vice President and CIO, who is sitting here, tell you about what we're doing to build our own system. The generic answer is absolutely we're doing it daily. But I'm going to let Sam take you through that.

Thank you, Rich. Yes, we continue to invest in technology and further develop our technology. I think you should note that, even though we outsource electronic trading and matching for our core products to the CME on a daily basis, we're processing every message that's coming through the CME so we've had to increase capacity more than ten-fold in the last year as far as messaging is concerned. We rolled that out flawlessly and we continue to look for further expansion of capacity. At the same time, as you know, we've launched the DME on June 1st. That's on its own system, the ClearPort trading system, the latest version of which is capable of handling multiple millions of messages in a single session. We continue to build out that system. That will also serve as the base for CAREX.

Thank you very much.

Your next question comes from the line of Rob Rutschow with Deutsche Bank. Please proceed.

Good morning, guys.

Hey, Rob.

I guess first question on the building sale, assuming that happens, is it still your intention to return that to shareholders in a special dividend?

No comment.

Okay. The ClearPort volumes in the third quarter, they're still trending upwards but were down year-over-year but I'm just wondering what the factors were there. You mentioned lower volatility. I'm wondering if you saw any fallout from Amaranth. Also I'm wondering if you can remind us what sort of initiatives you have in place to increase the amount of ClearPort volume.

If you look at the volume trends, particularly more recently Rob, it's simply due to the fact that natural gas has had less volatility. In terms of how we're addressing that, we're adding new products to the ClearPort slate every day and expanding beyond just the natural gas slate. We've got crude oil contracts going on. We've got a number of European products that we have and are going to lift and then some new contracts that are under development that we're not at detail to speak about right now. But if you look at the crude oil slate, including the new Brent slate and the emissions contracts, we're very happy with the new slates of contracts that we have going on to ClearPort and think that that will only enhance overall ClearPort volume to go along with natural gas.

Okay. Can you just put some numbers around the new contracts that you've launched, say, this year and what you expect to launch in the next year.

I can talk about two that I have on my mind. The Brent slate, we currently have over 100,000 contracts of open interest. The latest contract is the last day Brent, which we're currently trading 4,000 to 5,000 contracts a day. We've got almost 10,000 in open interest there. And then the ethanol contracts, which are two of our newest, we listed both a sugar and a corn based ethanol contract. Those obviously are competing with the Chicago Board of Trade and the New York Board of Trade current ethanol contracts. We've blown past them, both in terms of volume and open interest and it's become clear to us that the NYMEX contracts are becoming the benchmark contracts for the ethanol industry. I was just handed a note that shows that we're trading 3.2 million gallons per day -- 30.2 million gallons per day of ethanol, which is very substantial when you look at the physical ethanol marketplace.

Okay. That's great. Last question is on professional fees. They were up this quarter and just wondering if we should look for that to trend higher with the potential building sale and the cost savings plan?

Professional fees for the building sale are not a significant amount at all. So I would not say they will be much higher relative to the building sale. We continue to look at our professional fees and that's a hard one to talk about because if you're involved in transactions, your professional fees are going to tend to go higher. So I would prefer not to comment on whether I think they're going higher.

I guess my other question would just be, were they up this quarter because you had retained people to help you figure out the cost savings.

A lot of the professional fees were transaction-based fees on things that we're looking at or talking to people about. But let's just leave it at that.

Okay. Thanks a lot.

Your next question comes from the line of Dan Fannon with Jeffries.

Good morning, guys. Just in terms in volumes, a lot of the long-term (inaudible) the adoption of new users trading your products. Could you talk about those patterns versus the activity of some of your existing customers and how that's impacting volumes and maybe the impact going forward?

Well, I'll talk about that two different -- let's take them separately. Let's talk about new customers. One of the great things about our relationship with the CME is that they have a user base. How many screens are out there? In CME? How many users?

It's difficult to count how many users because of the nature of --

Approximately? Do you have any idea?

I would say north of 10,000.

North of 10,000. When we first started, we were only doing a couple hundred of those. We're trading our products. As it goes on, the number of users out of that 10,000 base continues to increase from black boxes to proprietary trading groups to hedge funds that weren't that aware of us. So that is a great resource for continued growth in our business. We still only do a small percentage of that total base of people trading here but it's an ever-increasing amount. Relative to our existing customers, they're beginning to run out of traders. The companies just keep expanding left and right. We've seen two people companies become 20 people. 20 people becoming 50. With the onset of all these new products that can be traded, just look at the ClearPort and all the other products we have, we have so many new customers. We have 140 new customers just in ethanol. So we continue to have new but, more important, our old or stable customers continue to grow their operations.

Okay. That's helpful. And then you guys have rolled out a lot of new products in the last couple of years. Can you maybe be a little bit more specific in ones that have really gained the most traction or are seeing the most volume.

Jim, you can talk to that. But I just want to mention that a lot of the products we roll out, you may not see large volume in, but we roll them out because our customers tell us they need to hedge those products. It's part of the whole energy pie. So you can't do 80% of what they need, you have to give them 100% of what they need. So even though you may see some and say, why do you have that contract, it's only trading a couple hundred a day, it's providing a service to our customers that's become invaluable to them.

Rich is exactly right. And in addition to that, a lot of the smaller contracts that we roll out, while they may do small volume, actually add additional volume to our core products and that's a key component of what we look at, listening to customers, what's the new product going to generate, what kind of business is it going to generate to the core products. And then we also have, the new products that we just talked about. Brent, ethanol, propane, the DME contracts that are all growing very, very nicely. We have the vast majority of the open share within those marketplaces and we continue to grow it. I think it's important to remember that NYMEX doesn't just take products from other exchanges and work to create arbitrage volume between the two. We create new contracts. We create new physical marketplaces. And many times it's slower to grow that volume but at the end of the day, you have tremendous contracts, strong open interest and strong overall volume and that's what we concentrate on.

Great. Thank you.

A couple more questions.

(OPERATOR INSTRUCTIONS) You have a follow-up question from the line of Chris Allen with Banc of America.

Chris, we'll get back to you in a minute. I want to cover everyone that has not spoken yet.

Your next question comes from the line of [Gary Glass] with DEG Capital. Please proceed.

Good morning.

Good morning. Thanks again for the special dividend. Keeps us old timers in the chips. I don't mean to put you on the spot. But here goes. Cranes Chicago a week or two ago came out and said that the next merger for the CME would be the New York Merc. Local New York paper said that the next merger for the New York Stock Exchange would be the New York Merc. My question to you is, are you talking to the CME? New York Merc? ISE or any other exchanges on the merger?

Next question. I'm sorry, I can't comment on that.

All right. Listen I, I appreciate it. Thanks.

Okay.

Your next question is a follow-up from Chris Allen from Banc of America Securities.

Go ahead, Chris. Sorry.

No problem, guys. Just one kind of quick follow-up. I want to preface this. This is more of an industry question rather than specifically for you guys. I just want to ask it because of your relationship with Dubai and the DME. What's your take in terms of the interest now in the Middle Eastern investment fund in this space in terms of investing in this space. Any comments on that.

Can you repeat that, Chris? Kind of broke up a little bit.

I just wanted to ask because of your relationship with Dubai and your partnership with the DME, kind of what's your take on the investment by some of the Middle Eastern investment funds in the exchange space. Thinking about it from a industry perspective, not just a NYMEX specific perspective.

Good, I'm glad you took it away from the NYMEX side. It appears to me that they're going to continue aggressively in investing in financial institutions here in the States. And without talking about NYMEX, it's -- they have been reaching out all over the place to get involved in the commodity and stock exchanges.

Great. Thanks a lot, guys.

I would now like to turn the call back over to Mr. Schaeffer for closing remarks.

Okay. In conclusion, we're tremendously excited about the future at NYMEX. In this quarter we demonstrated what makes us a leader and we thank you very much for being with us and look forward to positive things. Thank you very much.

Thank you for your participation in today's conference. This concludes the presentation. You may now disconnect and have a good day.