What is the New York Commodity Exchange (COMEX)?

Commodity exchanges are trading organisations that engage in transactions that involve the buying, and selling of futures related to the commodities market. The commodity exchange maintains a physical location where trading activity takes place. Nowadays, a commodity exchange will also provide online access to trading activity, including the ability to trade on the exchange by electronic means.

One of the most well known commodity exchanges in the world today is Commodity Exchange, Inc. of New York. It is located in the Manhattan area of New York City. It is known simply as COMEX; the particular commodity exchange has been around for decades, and has a solid reputation throughout the investment community. COMEX is particularly well known for metal futures, although it also engages in other commodity options trading.

COMEX was first established in New York in 1933. During the first forty years of survival, COMEX focused on trading copper, silver, and aluminum. In 1974, changes in laws in the United States made it possible for US investors once again to hold gold as an investment, and asset; this began to change. On 31 December 1974, the New York Commodity Exchange launched its first gold futures contract. Options on gold futures were added later in 1982.

During 1980s, COMEX, and the New York Mercantile Exchange began to discuss the possibility of a merger. The two exchanges officially became a single unit on 3 August 1994. Although, NYMEX fully own and operate COMEX, its futures contracts are still functionally listed as a separate exchange.

Now in New York exchange, trading is conducted through two divisions: the NYMEX Division, which is home to the energy, platinum, and palladium markets, and the COMEX Division, where metals like gold, silver, and copper and the FTSE 100 index options are traded.

The COMEX gold futures contract was launched on 31 December 1974, and is based on 100 ounces of gold. All prices are quoted in multiples of ten cents per ounce. COMEX futures are listed on the present calendar month. All the Deliveries are made in registered depository receipts issued by exchange-approved depositories in New York. Turnover of COMEX is usually eight to nine million contracts annually, but in 1999 rose to 9.58 million.

The option provides the right to buy or sell a COMEX gold futures contract at the stated price on, or before the expiration date. Usually, contracts are based on 100 ounces of gold. Each option is an American option, which can be exercised at any time before expiration date. On the first trading day of any option, contract month 13 strike prices are listed for each contract. New strike prices are added in accordance to futures price fluctuations. The turnover from options was usually one to two million contracts annually through the 1990s, but in 1999 reached 2.8 million.

Now a division of New York Mercantile Exchange, formerly known as the Commodity Exchange, COMEX is the leading U.S market for metals futures, and options of trading. COMEX has adjusted the hours of operation to more accurately reflect the world wide nature of the client base, and open earlier in the day in order to accommodate investors in a wider range of times zones around the world.

 Source: EzineArticles