Notice No. 01-372
November 2, 2001

TO:       All Exchange Members / Member Firms
          All Clearing Members

FROM:     J. Robert Collins, Jr., President

RE:       EXCHANGE TO LOWER COST OF EXCHANGE OF FUTURES FOR SWAP
TRANSACTIONS

The New York Mercantile Exchange, Inc., today announced that it would lower
the cost of exchange of futures for swap (EFS) transactions to $2.50 per
contract per side from $10 per contract per side and would apply the
discounted fee retroactively to the natural gas transactions conducted
since
the start of the program yesterday.

We are gratified that the strong response to the introduction of this
trading instrument will allow us to so heavily discount the transaction
fee.

The Exchange introduced EFS transactions in its natural gas futures market
yesterday as the first step of its plans to offer clearing services to the
over-the-counter (OTC) natural gas market.  In its first full day, there
were 11,100 contracts that changed hands in EFS transactions.

EFS transactions work similarly to exchange of futures for physical (EFP)
transactions.  Two parties are 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 are
permitted until two hours after trading terminates in the underlying
futures
contract.

EFS transactions are permitted to liquidate, initiate, and transfer futures
market positions between the two parties involved in the transaction.  The
clearing member representing each party is responsible to notify the
Exchange of the amount of futures contracts involved, the price at which
the
futures transaction should be cleared, and the identity of the parties
involved.

Year-to-date average daily volume in natural gas futures is approximately
60,000 contracts.  Yesterday's volume, including the EFS transactions was
73,364 natural gas futures contracts.
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