From: exchangeinfo@nymex.com
To: sara.shackleton@enron.com
Date: 2000-11-09 14:04:00+00:00
Subject: (00-387) Termination of Members Retention and Retirement Plan

Notice No. 00-387
November 9, 2000

TO:  NYMEX Division Members

FROM:  The Board of Directors

RE:  Termination of Members Retention and Retirement Plan


As you have been previously advised, on Wednesday, October 4, 2000 the
Board of Directors voted unanimously to terminate the New York
Mercantile Exchange Members Retention and Retirement Plan (the Plan)
conditioned upon the Exchange receiving a satisfactory Private Letter
Ruling from the IRS in connection with the Exchange's pending
demutualization plan.  On October 17, 2000, the Exchange held an open
members meeting to discuss the termination of the Plan and to answer
any questions.  At the meeting, a number of members requested that the
Board review its decision to use the 8.5% discount rate recommended by
Deloitte & Touche in connection with termination of the Plan.  At the
members meeting, it was agreed that the Board would review the
discount rate issue again at its next regular meeting.

Following the members meeting, the Exchange obtained two additional
professional opinions from actuaries.  One opinion stated that the
appropriate range of discount rates that should be used in terminating
the Plan should be between 7.8% and 8.1% and recommended using a
discount rate of 8.0%.  The third opinion recommended that the
appropriate range should be between 7.47% and 8.32% depending upon
various credit and other related actuarial issues.  Each of the
actuaries (including Deloitte & Touche) attended the Board meeting on
November 2, 2000 to present the rationale in support of their
respective recommendations and to answer any questions posed by
members of the Board.

The Board was advised by the Exchange's General Counsel, as well as by
two independent outside counsels, that in order to avoid even the
appearance of a conflict of interest, the Board should delegate
authority to choose an appropriate discount rate to a committee of
Directors who do not have any financial interest in the Plan.  The
Board passed a resolution in which it approved the recommendation of
its Counsel and delegated authority to select an appropriate discount
rate to a special committee (the Committee) composed of five Directors
who did not have an interest in the Plan.

After the Board formed the Committee, the members of the Committee,
the actuaries and the legal advisors left the room to discuss the
matter privately.  After thoroughly reviewing the matter, the
Committee returned and unanimously resolved and determined that the
appropriate discount rate that should be used in connection with the
termination of the Plan is 8.0%.

On October 23, 2000, the Exchange received a satisfactory Private
Letter Ruling from the IRS.  At its meeting on November 2, 2000, the
Board set a target closing date of November 15, 2000 for the
demutualization transaction.

Eligible participants of the Plan who are members at the time of the
closing of demutualization will receive service credit under the plan
through December 31, 2000.  All other rules regarding eligibility and
continuous service requirements will be applied according to the terms
and conditions set forth in the Plan.

Under the terms of the Plan, in the event of termination, Qualified
Participants (i.e. those participants with at least 15 years of
Continuous Service, as defined in the Plan) are entitled to a payout
equal to the net present value (NPV) of the scheduled ten-year benefit
payment that they would otherwise have received if the Plan had not
terminated, to the extent of the assets held in trust for this
purpose.  If there are remaining assets in trust after making payment
to the Qualified Participants, those remaining assets are to be
distributed to participants with Continuous Service (as defined in the
Plan) between 10 years and 14 years.  These 10 - 14 year participants
are entitled to the NPV of a fraction of the benefits they would have
received had the Plan remained in place until their normal retirement
age; the numerator of the fraction is the number of whole years of
Continuous Service and the denominator is 15.  If there are not
sufficient assets to pay each 10 -14 year participant their calculated
sums, then each 10 - 14 year participant will receive a pro rata
distribution.  These 10 - 14 year  participants must be members of
record at the time of the closing of demutualization in order to be
eligible to receive any distribution.

The Exchange is reviewing the census data and other pertinent
considerations with its actuaries, and all preliminary calculations
should be regarded as tentative and subject to change pending the
results of that review.  At this time, the Board believes that there
are sufficient assets to pay each Qualified Participant his or her
lump-sum benefit, based upon the approved a discount rate of 8.0%.  At
this time, it appears that after making payments to Qualified
Participants, the remaining assets will be sufficient to provide pro
rata benefits to 10 - 14 year participants.  10 - 14 year participants
can calculate their approximate distribution amount by multiplying the
NPV benefit of their corresponding age (see attached Schedule) by the
fraction of their whole years of service (10/15, 11/15, 12/15, 13/15,
or 14/15) by twenty-six (26%) (which at this time appears to be the
approximate  percentage of "remaining assets" available compared to
the total of all partial benefits otherwise calculated).

Qualified Participants who are already receiving benefits received
their last quarterly payment in October 2000.  Remaining obligations
to such participants will be valued in the same manner as other
Qualified Participants.

It is anticipated that actual payouts under the termination procedure
will be made in mid-January 2001.

As of December 31, 2000 it is expected that total Plan assets will be
approximately $33.5 million.  Regardless of the discount rate used,
100% of the assets of the Plan will be distributed.  Using a discount
rate of 8.0% the Qualified Participants will receive approximately $30
million or ninety percent (90%) of the total Plan assets and 10 - 14
year participants will receive the balance.

For illustrative purposes, and subject to the conditions noted above,
the attached Schedule represents an approximation of the anticipated
lump-sum payment to a Qualified Participant who has reached the age
indicated (but who has not yet begun receiving quarterly benefits) as
of December 31, 2000.

In the event that any member has any questions in connection with
termination of the Plan, please contact Chris Bowen at 299-2200 or
Suellen Galish at 299-2215.  Copies of  both the original and amended
Plans are available.

Separate But Related Matter

Contrary to erroneous information which has been disseminated by
others, neither the original Members Retention and Retirement Plan nor
the amended Plan provides for member votes on amendments.  In
accordance with Section 8 of the original Plan, in 1997 the amended
Plan was approved by a three fourths (3/4) vote of the Board.  Section
8 of both the original and amended Plan provides that "the Board of
Directors of NYMEX may at anytime, amend or terminate this Plan in
whole or in part, upon the affirmative vote of three fourths (3/4) of
the entire Board".  Section 8 of the Plan further specifically
describes how the Plan assets are to be distributed in the event of
termination.  Section 8(C) (1) states that the net present value of
lump sum termination payments shall be "calculated by using the
applicable interest rate determined by the Board in its sole
discretion, in good faith, and such determination shall be conclusive
and binding on all parties".  Section 11, entitled Authorization of
the Plan and which remains unchanged  from the original Plan, only
applies to the original authorization of the Plan which occurred in
1990.

Again, contrary to erroneous assertions that have been made, neither
the original Plan nor the amended Plan makes any reference to a specific 
discount rate that should be used in calculating NPV.  In fact, the estates 
of two deceased former members
(Mel Miller and Leon Grappel) that erroneously have been reported to
have received lump sum payments based upon a discount rate of 6.0%
actually received payments based upon discount rates of  7.4% (paid in
1992) and 7.2% (paid in 1993), respectively.

Inaccurate contentions and allegations diminish and undermine what we
are seeking to achieve as a global financial institution.

Attachment


Age @ 12/31/00   NPV Benefit (8.0% discount)

59.5     $204,100
58.5       194,600
57.5       185,600
56.5       177,000
55.5       168,800
54.5       161,000
53.5       153,600
52.5       146,500
51.5       139,700
50.5       133,200
49.5       127,000
48.5       121,200
47.5       115,600
46.5       110,200
45.5       105,100
44.5       100,200
43.5         95,600
42.5         91,200
41.5         87,000
40.5         82,900
39.5         79,100
38.5         75,400
37.5         71,900
36.5         68,600
35.5         65,400
34.5         62,400
33.5         59,500
32.5         56,800
31.5         54,100
30.5         51,600


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