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Did you stand by me
No, not at all
Did you stand by me
No way
Train in Vain (Strummer/Jones)
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After a 5 month courtship, NYMEX and Optionable got married in the Spring of 2007. The honeymoon didn't last long. One month after NYMEX and Optionable exchanged vows, Optionable's largest customer, the Bank of Montreal (BMO) terminated all business with them. The Bank held a press conference during which they blamed allegedly fraudulent reports from Optionable for millions of dollars of losses the Bank had incurred trading risky natural gas derivatives.
Ouch! Many newlywed couples fight, but this scene must have been ugly. Questions such as: “Why did I marry you, you bastard!” and "How am I going to insulate myself from looking guilty by association?”, demanded answers.
The answer NYMEX came up with was simple and effective. RUN. LIKE. HELL.
One day after the Bank's announcement on May 8, 2007, NYMEX announced on May 9, 2007 that they were dating the Chicago Mercantile Exchange Group. (CME). The resulting marriage between CME and NYMEX happened in just under a year. (March 18, 2008)
I'm an Optionable shareholder. The question I want answered is: Why didn't NYMEX stand by Optionable long enough to see if BMO's accusations had merit? NYMEX alone was in a unique position to be an arbitrator between BMO and Optionable. Rather than running away, NYMEX could have conducted an impartial 'Fact Finder' inquiry into the accusations and promised to let the chips fall where they may. I may be a crazy optimist but it is my belief that BMO and Optionable could have come to an understanding about what happened and where things went wrong. Instead NYMEX chose to publicly abandon Optionable for the Chicago Merchantile Exchange. Optionable ceased doing business within days of the betrayal.
Note: NYMEX doesn't deny that it broke its vows to Optionable. NYMEX's defense is that it didn't have to honor its commitment to Optionable once BMO accused Optionable of any wrongdoing.
Here are some headlines that provide snapshots of the NYMEX/Optionable courtship and of NYMEX's subsequent betrayal of Optionable.
* January 22, 2007 - Optionable Announces NYMEX Holdings to Purchase 19 Percent of Outstanding Shares of the Company - NYMEX Chairman Richard Schaeffer said "OPEX technology is uniquely positioned to help us achieve our goals"
* Mar 9, 2007 - Optionable announces Trading of Swap Contracts on OPEX through NYMEX ClearPort
* Mar 15, 2007 - Optionable buys two NYMEX membership seats for approx $1.2 million
* April 10 2007 - NYMEX completes purchase of 19% stake in Optionable
* Apr 12, 2007 - Optionable announces Trading of NYMEX Light Sweet Crude Oil Options on OPEX
* April 27 2007 - BMO announces anticipated loss between C350 to C450M.
* May 8, 2007 - BMO announces termination of all business with Optionable
* May 9, 2007 - NYMEX announces that it will offer options trading on CME Globex in direct competition with Optionable's OPEX.
* July 2007 - Optionable ceases to generate revenue
* January 28, 2008 - CME in talks to buy NYMEX for about $11 billion
* March 18, 2008 - CME Buys NYMEX for $9.48 billion
As of this writing, NYMEX has not sold their shares in Optionable, so one could make the argument that NYMEX didn't run out on Optionable at all. It's a fair point, but I don't buy it. Why Not? 1) The speed of the betrayal. NYMEX signed a deal with Optionable's competitor ONE DAY after BMO dropped Optionable. 2) NYMEX's holding of Optionable shares has been punitive rather than supportive. It was a way for NYMEX and their new beau (CME Group) to hold Optionable's head underwater even after Optionable drown.
Image source: istockphoto.com
Disclosure: I am an Optionable shareholder.
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