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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549



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FORM 10-Q



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|x | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|- | ---------------------------------------------------------------------------------------



For the Quarterly Period Ended September 30, 2005



| ̈ | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|- | ----------------------------------------------------------------------------------------



For the Transition Period from              to



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NYMEX Holdings, Inc.



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|                         |  |                          |  |                                        
|------------------------ |  | ------------------------ |  | ---------------------------------------
|Delaware                 |  | 333-30332                |  | 13-4098266                             
|(State of Incorporation) |  | (Commission File Number) |  | (I.R.S. Employer Identification Number)



One North End Avenue

World Financial Center

New York, New York 10282-1101

(212) 299-2000



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Securities registered pursuant to Section 12(b) of the Act:



None



Securities
registered pursuant to Section 12(g) of the Act:

Common Stock



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Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes  x    No ̈



Indicate by check mark whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the Exchange
Act).    Yes  x    No ̈



Indicate by check mark whether the registrant is a shell company (as defined
in Rule 12b-2 of the Exchange Act).    Yes ̈No  x



The number of shares of NYMEX
Holdings, Inc. capital stock outstanding as of November 8, 2005 was 816. The aggregate market value of NYMEX Holdings, Inc. capital stock held by stockholders of NYMEX Holdings, Inc., as of November 4, 2005 was $2,896,800,000 based upon
the average of the bid and ask price for a NYMEX Holdings, Inc. share as of November 4, 2005.



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##### Table of Contents

TABLE OF CONTENTS





|        |  |                                                                                                                                                   |  |     
|------- |  | ------------------------------------------------------------------------------------------------------------------------------------------------- |  | ----
|        |  |                                                                                                                                                   |  | Page
|        |  | PART I: FINANCIAL INFORMATION                                                                                                                     |  |     
|        |  |                                                                                                                                                  
|Item 1. |  | Financial Statements                                                                                                                              |  |     
|        |  |                                                                                                                                                  
|        |  | Consolidated Statements of Income for the three and nine months ended September 30, 2005 and 2004 (Unaudited)                                     |  | 1   
|        |  |                                                                                                                                                  
|        |  | Consolidated Balance Sheets as of September 30, 2005 (Unaudited) and December 31, 2004                                                            |  | 2   
|        |  |                                                                                                                                                  
|        |  | Consolidated Statements of Stockholders Equity for the nine months ended September 30, 2005 (Unaudited) and for the year ended December 31, 2004 |  | 3   
|        |  |                                                                                                                                                  
|        |  | Consolidated Statements of Cash Flows for the nine months ended September 30, 2005 and 2004 (Unaudited)                                           |  | 4   
|        |  |                                                                                                                                                  
|        |  | Notes to the Unaudited Consolidated Financial Statements                                                                                          |  | 5   
|        |  |                                                                                                                                                  
|Item 2. |  | Managements Discussion and Analysis of Financial Condition and Results of Operations                                                             |  | 16  
|        |  |                                                                                                                                                  
|Item 3. |  | Quantitative and Qualitative Disclosures about Market Risk                                                                                        |  | 32  
|        |  |                                                                                                                                                  
|Item 4. |  | Controls and Procedures                                                                                                                           |  | 33  
|        |  |                                                                                                                                                  
|        |  | PART II: OTHER INFORMATION                                                                                                                        |  |     
|        |  |                                                                                                                                                  
|Item 1. |  | Legal Proceedings                                                                                                                                 |  | 35  
|        |  |                                                                                                                                                  
|Item 2. |  | Unregistered Sales of Equity Securities and Use of Proceeds                                                                                       |  | 35  
|        |  |                                                                                                                                                  
|Item 3. |  | Defaults upon Senior Securities                                                                                                                   |  | 36  
|        |  |                                                                                                                                                  
|Item 4. |  | Submission of Matters to a Vote of Security Holders                                                                                               |  | 36  
|        |  |                                                                                                                                                  
|Item 5. |  | Other Information                                                                                                                                 |  | 36  
|        |  |                                                                                                                                                  
|Item 6. |  | Exhibits                                                                                                                                          |  | 36  
|        |  |                                                                                                                                                  
|        |  | Signatures                                                                                                                                        |  | 37  



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##### Table of Contents

PART I: FINANCIAL INFORMATION



Item 1.Financial Statements



NYMEX HOLDINGS, INC. AND SUBSIDIARIES



CONSOLIDATED STATEMENTS OF INCOME (Unaudited)

(in thousands, except for share data)



|                                                                   |  |                                  |        |                                 |   |        |  |      |         |  |   |        
|------------------------------------------------------------------ |  | -------------------------------- | ------ | ------------------------------- | - | ------ |  | ---- | ------- |  | - | -------
|                                                                   |  | Three Months Ended September 30, |        | Nine Months Ended September 30,
|                                                                   |  | 2005                             |        | 2004                            |   | 2005   |  | 2004
|Revenues                                                           |  |                                  |        |                                 |   |        |  |      |         |  |   |        
|Clearing and transaction fees                                      |  | $                                | 79,498 |                                 | $ | 50,151 |  | $    | 203,565 |  | $ | 138,766
|Market data fees                                                   |  |                                  | 11,123 |                                 |   | 8,210  |  |      | 33,064  |  |   | 23,882 
|Other, net                                                         |  |                                  | 2,970  |                                 |   | 3,592  |  |      | 8,577   |  |   | 9,001  
|Investment income, net                                             |  |                                  | 3,354  |                                 |   | 1,280  |  |      | 5,730   |  |   | 1,971  
|Interest income from securities lending, net                       |  |                                  | 958    |                                 |   |       |  |      | 2,150   |  |   |       
|                                                                   |  |                                  |        |                                 |   |        |  |      |         |  |   |        
|Total revenues                                                     |  |                                  | 97,903 |                                 |   | 63,233 |  |      | 253,086 |  |   | 173,620
|                                                                   |  |                                  |        |                                 |   |        |  |      |         |  |   |        
|Expenses                                                           |  |                                  |        |                                 |   |        |  |      |         |  |   |        
|Salaries and employee benefits                                     |  |                                  | 15,229 |                                 |   | 13,942 |  |      | 45,316  |  |   | 42,944 
|Occupancy and equipment                                            |  |                                  | 7,874  |                                 |   | 7,232  |  |      | 21,518  |  |   | 19,453 
|Depreciation and amortization, net of deferred credit amortization |  |                                  | 3,697  |                                 |   | 6,853  |  |      | 11,805  |  |   | 17,397 
|General and administrative                                         |  |                                  | 15,291 |                                 |   | 8,367  |  |      | 39,460  |  |   | 21,494 
|Professional services                                              |  |                                  | 6,709  |                                 |   | 6,532  |  |      | 21,720  |  |   | 18,972 
|Telecommunications                                                 |  |                                  | 1,715  |                                 |   | 1,249  |  |      | 5,104   |  |   | 4,162  
|Marketing                                                          |  |                                  | 1,252  |                                 |   | 430    |  |      | 3,096   |  |   | 1,667  
|Other expenses                                                     |  |                                  | 2,148  |                                 |   | 1,990  |  |      | 6,608   |  |   | 6,087  
|Interest expense                                                   |  |                                  | 1,723  |                                 |   | 1,770  |  |      | 5,179   |  |   | 5,310  
|Asset impairment and disposition losses                            |  |                                  | 444    |                                 |   | 4,848  |  |      | 471     |  |   | 5,350  
|                                                                   |  |                                  |        |                                 |   |        |  |      |         |  |   |        
|Total expenses                                                     |  |                                  | 56,082 |                                 |   | 53,213 |  |      | 160,277 |  |   | 142,836
|                                                                   |  |                                  |        |                                 |   |        |  |      |         |  |   |        
|Operating income                                                   |  |                                  | 41,821 |                                 |   | 10,020 |  |      | 92,809  |  |   | 30,784 
|Loss on investment in joint venture                                |  |                                  | 196    |                                 |   |       |  |      | 196     |  |   |       
|                                                                   |  |                                  |        |                                 |   |        |  |      |         |  |   |        
|Income before provision for income taxes                           |  |                                  | 41,625 |                                 |   | 10,020 |  |      | 92,613  |  |   | 30,784 
|Provision for income taxes                                         |  |                                  | 19,200 |                                 |   | 4,437  |  |      | 42,139  |  |   | 13,637 
|                                                                   |  |                                  |        |                                 |   |        |  |      |         |  |   |        
|Net income                                                         |  | $                                | 22,425 |                                 | $ | 5,583  |  | $    | 50,474  |  | $ | 17,147 
|                                                                   |  |                                  |        |                                 |   |        |  |      |         |  |   |        
|Weighted average common shares outstanding, basic and diluted      |  |                                  | 816    |                                 |   | 816    |  |      | 816     |  |   | 816    
|                                                                   |  |                                  |        |                                 |   |        |  |      |         |  |   |        
|Basic and diluted earnings per share                               |  | $                                | 27,482 |                                 | $ | 6,842  |  | $    | 61,855  |  | $ | 21,013 
|                                                                   |  |                                  |        |                                 |   |        |  |      |         |  |   |        



See accompanying notes
to the unaudited consolidated financial statements.



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##### Table of Contents

NYMEX HOLDINGS, INC. AND SUBSIDIARIES



CONSOLIDATED BALANCE SHEETS

(in thousands, except for share data)



|                                                                                                                            |  |                    |           |                   |   |        
|--------------------------------------------------------------------------------------------------------------------------- |  | ------------------ | --------- | ----------------- | - | -------
|                                                                                                                            |  | September 30, 2005 |           | December 31, 2004
|                                                                                                                            |  | (Unaudited)        |           |                  
|Assets                                                                                                                      |  |                    |           |                   |   |        
|Current assets                                                                                                              |  |                    |           |                   |   |        
|Cash and cash equivalents                                                                                                   |  | $                  | 3,105     |                   | $ | 3,084  
|Collateral from securities lending program                                                                                  |  |                    | 3,425,948 |                   |   |       
|Securities purchased under agreements to resell                                                                             |  |                    | 30,000    |                   |   | 19,324 
|Marketable securities, at market value                                                                                      |  |                    | 99,008    |                   |   | 144,950
|Clearing and transaction fees receivable, net of allowance for member credits                                               |  |                    | 27,137    |                   |   | 17,309 
|Prepaid expenses                                                                                                            |  |                    | 6,423     |                   |   | 3,896  
|Deferred tax assets                                                                                                         |  |                    | 2,590     |                   |   | 2,590  
|Margin deposits and guaranty funds                                                                                          |  |                    | 780,606   |                   |   | 34,825 
|Other current assets                                                                                                        |  |                    | 7,410     |                   |   | 6,704  
|                                                                                                                            |  |                    |           |                   |   |        
|Total current assets                                                                                                        |  |                    | 4,382,227 |                   |   | 232,682
|Property and equipment, net                                                                                                 |  |                    | 190,057   |                   |   | 194,719
|Goodwill                                                                                                                    |  |                    | 16,329    |                   |   | 16,329 
|Other assets                                                                                                                |  |                    | 12,648    |                   |   | 10,920 
|                                                                                                                            |  |                    |           |                   |   |        
|Total assets                                                                                                                |  | $                  | 4,601,261 |                   | $ | 454,650
|                                                                                                                            |  |                    |           |                   |   |        
|Liabilities and Stockholders Equity                                                                                        |  |                    |           |                   |   |        
|Current liabilities                                                                                                         |  |                    |           |                   |   |        
|Accounts payable and accrued liabilities                                                                                    |  | $                  | 15,798    |                   | $ | 15,236 
|Accrued salaries and related liabilities                                                                                    |  |                    | 12,275    |                   |   | 5,015  
|Payable under securities lending program                                                                                    |  |                    | 3,425,948 |                   |   |       
|Margin deposits and guaranty funds                                                                                          |  |                    | 780,606   |                   |   | 34,825 
|Income tax payable                                                                                                          |  |                    | 8,648     |                   |   | 11,283 
|Other current liabilities                                                                                                   |  |                    | 39,939    |                   |   | 31,941 
|                                                                                                                            |  |                    |           |                   |   |        
|Total current liabilities                                                                                                   |  |                    | 4,283,214 |                   |   | 98,300 
|Grant for building construction deferred credit                                                                             |  |                    | 108,847   |                   |   | 110,455
|Long-term debt                                                                                                              |  |                    | 85,915    |                   |   | 85,915 
|Retirement obligation                                                                                                       |  |                    | 11,875    |                   |   | 11,622 
|Deferred income taxes                                                                                                       |  |                    | 1,997     |                   |   | 1,997  
|Other liabilities                                                                                                           |  |                    | 17,357    |                   |   | 19,579 
|                                                                                                                            |  |                    |           |                   |   |        
|Total liabilities                                                                                                           |  |                    | 4,509,205 |                   |   | 327,868
|                                                                                                                            |  |                    |           |                   |   |        
|Commitments and contingencies (Note 9)                                                                                      |  |                    |           |                   |   |        
|Stockholders equity                                                                                                        |  |                    |           |                   |   |        
|Common stock, at $0.01 par value, 816 shares authorized, issued and outstanding at September 30, 2005 and December 31,
2004 |  |                    |          |                   |   |       
|Additional paid-in capital                                                                                                  |  |                    | 69,631    |                   |   | 93,312 
|Retained earnings                                                                                                           |  |                    | 22,425    |                   |   | 33,470 
|                                                                                                                            |  |                    |           |                   |   |        
|Total stockholders equity                                                                                                  |  |                    | 92,056    |                   |   | 126,782
|                                                                                                                            |  |                    |           |                   |   |        
|Total liabilities and stockholders equity                                                                                  |  | $                  | 4,601,261 |                   | $ | 454,650
|                                                                                                                            |  |                    |           |                   |   |        



See accompanying notes
to the unaudited consolidated financial statements.



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NYMEX HOLDINGS, INC. AND SUBSIDIARIES



CONSOLIDATED STATEMENTS OF STOCKHOLDERS EQUITY

(in thousands, except for share data)



|                                                   |  |              |  |                            |   |  |                   |         |   |                            |   |         |   |  |   |         |  
|-------------------------------------------------- |  | ------------ |  | -------------------------- | - |  | ----------------- | ------- | - | -------------------------- | - | ------- | - |  | - | ------- | -
|                                                   |  | Common stock |  | Additional paid-in capital |   |  | Retained earnings |         |   | Total stockholders equity |  
|                                                   |  | Shares       |  | Amount                     |   |  |                  
|Balances at January 1, 2004                        |  | 816          |  | $                          |  |  | $                 | 93,312  |   |                            | $ | 12,103  |   |  | $ | 105,415 |  
|Net income                                         |  |             |  |                            |  |  |                   |        |   |                            |   | 27,367  |   |  |   | 27,367  |  
|Dividends declared                                 |  |              |  |                            |   |  |                   |         |   |                            |   |         |   |  |   |         |  
|Common stock, $7,353/share                         |  |             |  |                            |  |  |                   |        |   |                            |   | (6,000  | ) |  |   | (6,000  | )
|                                                   |  |              |  |                            |   |  |                   |         |   |                            |   |         |   |  |   |         |  
|Balances at December 31, 2004                      |  | 816          |  |                            |  |  |                   | 93,312  |   |                            |   | 33,470  |   |  |   | 126,782 |  
|Net income January 1, 2005 through June 30, 2005   |  |             |  |                            |  |  |                   |        |   |                            |   | 28,049  |   |  |   | 28,049  |  
|Dividends declared on June 8, 2005                 |  |              |  |                            |   |  |                   |         |   |                            |   |         |   |  |   |         |  
|Common stock, $4,412/share                         |  |             |  |                            |  |  |                   |        |   |                            |   | (3,600  | ) |  |   | (3,600  | )
|Net income July 1, 2005 through September 30, 2005 |  |             |  |                            |  |  |                   |        |   |                            |   | 22,425  |   |  |   | 22,425  |  
|Dividends declared on July 6, 2005                 |  |              |  |                            |   |  |                   |         |   |                            |   |         |   |  |   |         |  
|Common stock, $100,000/share                       |  |             |  |                            |  |  |                   | (23,681 | ) |                            |   | (57,919 | ) |  |   | (81,600 | )
|                                                   |  |              |  |                            |   |  |                   |         |   |                            |   |         |   |  |   |         |  
|Balances at September 30, 2005 (Unaudited)         |  | 816          |  | $                          |  |  | $                 | 69,631  |   |                            | $ | 22,425  |   |  | $ | 92,056  |  
|                                                   |  |              |  |                            |   |  |                   |         |   |                            |   |         |   |  |   |         |  



See accompanying notes
to the unaudited consolidated financial statements.



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##### Table of Contents

NYMEX HOLDINGS, INC. AND SUBSIDIARIES



CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)

(in thousands)



|                                                                                  |  |                                 |            |   |      |   |         |  
|--------------------------------------------------------------------------------- |  | ------------------------------- | ---------- | - | ---- | - | ------- | -
|                                                                                  |  | Nine Months Ended September 30, |           
|                                                                                  |  | 2005                            |            |   | 2004 |  
|Cash flows from operating activities                                              |  |                                 |            |   |      |   |         |  
|Net income                                                                        |  | $                               | 50,474     |   |      | $ | 17,147  |  
|Adjustments to reconcile net income to net cash provided by operating activities: |  |                                 |            |   |      |   |         |  
|Depreciation and amortization                                                     |  |                                 | 12,756     |   |      |   | 18,351  |  
|Amortization of intangibles                                                       |  |                                 | 657        |   |      |   | 654     |  
|Deferred grant credits                                                            |  |                                 | (1,983     | ) |      |   | (1,983  | )
|Deferred rental income                                                            |  |                                 | (507       | ) |      |   | (1,069  | )
|Deferred rent expense                                                             |  |                                 | (182       | ) |      |   | 132     |  
|Deferred income taxes                                                             |  |                                 |           |   |      |   | (2,124  | )
|Asset impairment and disposition loss                                             |  |                                 | 471        |   |      |   | 5,350   |  
|Decrease (increase) in operating assets:                                          |  |                                 |            |   |      |   |         |  
|Clearing and transaction fees receivable                                          |  |                                 | (9,828     | ) |      |   | (5,235  | )
|Prepaid expenses                                                                  |  |                                 | (2,527     | ) |      |   | (1,585  | )
|Margin deposits and guaranty fund assets                                          |  |                                 | (745,781   | ) |      |   | 64,912  |  
|Other current assets                                                              |  |                                 | (706       | ) |      |   | 2,392   |  
|Increase (decrease) in operating liabilities:                                     |  |                                 |            |   |      |   |         |  
|Accounts payable and accrued liabilities                                          |  |                                 | 562        |   |      |   | (2,238  | )
|Accrued salaries and related liabilities                                          |  |                                 | 7,260      |   |      |   | 6,516   |  
|Margin deposits and guaranty fund liabilities                                     |  |                                 | 745,781    |   |      |   | (64,912 | )
|Income tax payable                                                                |  |                                 | (2,635     | ) |      |   | 962     |  
|Other current liabilities                                                         |  |                                 | 11,498     |   |      |   | 10,199  |  
|Other liabilities                                                                 |  |                                 | (1,158     | ) |      |   | 833     |  
|Retirement obligation                                                             |  |                                 | 253        |   |      |   | (171    | )
|                                                                                  |  |                                 |            |   |      |   |         |  
|Net cash provided by operating activities                                         |  |                                 | 64,405     |   |      |   | 48,131  |  
|                                                                                  |  |                                 |            |   |      |   |         |  
|Cash flows from investing activities                                              |  |                                 |            |   |      |   |         |  
|(Increase) decrease in collateral from securities lending program                 |  |                                 | (3,425,948 | ) |      |   |        |  
|(Increase) decrease in securities purchased under agreements to resell            |  |                                 | (10,676    | ) |      |   | 23,550  |  
|(Increase) decrease in marketable securities                                      |  |                                 | 45,942     |   |      |   | (64,233 | )
|Capital expenditures                                                              |  |                                 | (8,565     | ) |      |   | (4,762  | )
|(Increase) decrease in other assets                                               |  |                                 | (2,385     | ) |      |   | 1,019   |  
|                                                                                  |  |                                 |            |   |      |   |         |  
|Net cash used in investing activities                                             |  |                                 | (3,401,632 | ) |      |   | (44,426 | )
|                                                                                  |  |                                 |            |   |      |   |         |  
|Cash flows from financing activities                                              |  |                                 |            |   |      |   |         |  
|Increase in obligation to return collateral under securities lending program      |  |                                 | 3,425,948  |   |      |   |        |  
|Dividends paid                                                                    |  |                                 | (88,700    | ) |      |   | (5,000  | )
|                                                                                  |  |                                 |            |   |      |   |         |  
|Net cash provided by (used in) financing activities                               |  |                                 | 3,337,248  |   |      |   | (5,000  | )
|                                                                                  |  |                                 |            |   |      |   |         |  
|Net increase (decrease) in cash and cash equivalents                              |  |                                 | 21         |   |      |   | (1,295  | )
|Cash and cash equivalents, beginning of period                                    |  |                                 | 3,084      |   |      |   | 1,763   |  
|                                                                                  |  |                                 |            |   |      |   |         |  
|Cash and cash equivalents, end of period                                          |  | $                               | 3,105      |   |      | $ | 468     |  
|                                                                                  |  |                                 |            |   |      |   |         |  



See accompanying notes
to the unaudited consolidated financial statements.



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##### Table of Contents

NYMEX HOLDINGS, INC. AND SUBSIDIARIES



NOTES TO THE UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS



1.
Basis of Presentation and Summary of Significant Accounting Policies



Nature of Business



NYMEX Holdings,
Inc. (NYMEX Holdings) was incorporated in 2000 as a stock corporation in Delaware, and is the successor to the New York Mercantile Exchange which was established in 1872. The two principal operating subsidiaries of NYMEX Holdings are New
York Mercantile Exchange, Inc. (NYMEX Exchange or NYMEX Division) and Commodity Exchange, Inc. (COMEX or COMEX Division), which is a wholly-owned subsidiary of NYMEX Exchange. Where appropriate, each
division will be discussed separately, and collectively will be referred to as the Exchange. When discussing NYMEX Holdings together with its subsidiaries, reference is being made to the Company.



The Company demutualized on November 17, 2000, at which time the book
value of the assets and liabilities of New York Mercantile Exchange carried over to the NYMEX Division.



In August 2004, NYMEX Europe Exchange Holdings Limited (Europe Holdings) was incorporated as a wholly-owned subsidiary of NYMEX Holdings, and
in March 2005 NYMEX Europe Limited (Europe Limited) was incorporated as an operating and wholly-owned subsidiary of Europe Holdings. Where appropriate, each European subsidiary will be discussed separately, and collectively will be
referred to as the Europe Exchange. Europe Exchange is an independent UK-based exchange which provides an open-outcry trading facility in London, England. All trades executed on Europe Exchange are cleared through the Companys
clearinghouse in New York.



In June 2005, the Company and Dubai
Holding announced the formation of the Dubai Mercantile Exchange (DME), a 50/50 joint-venture to develop the Middle Easts first energy futures exchange. It is expected that the DME will initially trade sour crude and fuel oil
products. It will be based in the Dubai International Financial Centre (DIFC), a financial free zone designed to promote financial services within the United Arab Emirates. In addition, the DME will be regulated by the Dubai
Financial Services Authority, a regulatory body established within the DIFC. The Company anticipates that the DME will open for trading in 2006.



The Company exists principally to provide facilities to buy, sell and clear energy and precious and base metals commodities for future delivery under
rules intended to protect the interests of market participants. The Company itself does not own commodities, trade for its own account, or otherwise engage in market activities. The Company provides the physical facilities necessary to conduct an
open outcry auction market, electronic trading systems, systems for the matching and clearing of trades executed on the Exchange, and systems for the clearing of certain bilateral trades executed in the over-the-counter (OTC) market.
These services facilitate price discovery, hedging and liquidity in the energy and metals markets. Transactions executed on the Exchange mitigate the risk of counter-party default because the Companys clearinghouse acts as the counter-party to
every trade. To manage the risk of financial nonperformance, the Exchange requires members to post margin. Trading on the Exchange is regulated by the Commodity Futures Trading Commission. Trading on the Europe Exchange is regulated by the UKs
Financial Services Authority.



Significant Accounting Policies



The Companys significant accounting policies
are described in the notes of the December 31, 2004 audited consolidated financial statements included in its Annual Report on Form 10-K.



5



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##### Table of Contents

NYMEX HOLDINGS, INC. AND SUBSIDIARIES



NOTES TO THE UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS(Continued)



Basis of Presentation



The unaudited consolidated financial statements include the accounts of NYMEX Holdings and its subsidiaries and have been
prepared in accordance with U.S. generally accepted accounting principles. Certain reclassifications have been made to the unaudited consolidated financial statements to conform to the current presentation.



The accompanying unaudited consolidated financial statements should be read
in conjunction with the audited consolidated financial statements and notes thereto in Item 15(a) of NYMEX Holdings, Inc. Annual Report on Form 10-K for the year ended December 31, 2004.



Principles of Consolidation



The accompanying unaudited consolidated financial statements include the
accounts of NYMEX Holdings and its wholly-owned subsidiaries: NYMEX Division; COMEX Division; COMEX Clearing Association, Inc. (CCA); NYMEX Technology Corporation (which became inactive in November 1996); Tradingear Acquisition LLC;
Europe Holdings; and Europe Limited. Intercompany balances and transactions have been eliminated in consolidation. COMEX Division and CCA were acquired by the Company in 1994. While CCA is still in existence, its operations were consolidated into
the NYMEX Division in May 2003.



Earnings per Share



In accordance with Statement of Financial Accounting Standards
(SFAS) No. 128, Earnings per Share,basic net earnings per common share excludes dilution and is computed by dividing net income by the weighted average of the Companys common shares outstanding for the
period. Diluted net earnings per common share reflect the potential dilution that could occur if securities or other contracts to issue common stock were exercised or converted into common stock. The Company does not have common stock
equivalents, therefore, diluted earnings per share is equal to basic earnings per share.



Recent Accounting Pronouncements and Changes



In March 2005, the Financial Accounting Standards Board (FASB) issued Interpretation No. 47, Accounting for Conditional Asset Retirement Obligationsan interpretation of FASB Statement
No. 143(FIN No. 47), to clarify the timing of the recording of certain asset retirement obligations required by SFAS No. 143, Accounting for Asset Retirement Obligations. FIN No. 47 is effective
December 31, 2005. The Company is evaluating what impact this pronouncement will have regarding its asset retirement obligations, but currently believes that its implementation will not have a material impact on its consolidated results of
operations and financial condition.



2. Securities Lending



In 2005, the Company entered into an agreement with JPMorgan
Chase & Co. (JPMorgan) to participate in a securities lending program. Under this program, JPMorgan, as agent, lends on an overnight basis, a portion of the clearing members securities on deposit in the Companys
margin deposits and guaranty fund to third parties in return for cash collateral. JPMorgan, in turn, invests the cash collateral overnight in various investments on behalf of the Company in accordance with the Companys internal investment
guidelines. Interest expense is then paid to the third party for the cash collateral the Company controlled during the transaction, and a fee is paid to JPMorgan for administering the transaction. The fee paid to JPMorgan is recorded in general and
administrative expenses on the Companys consolidated statements of income. At September 30, 2005, the fair value of the securities on loan was approximately $3.4 billion. Interest income and interest expense recognized



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NYMEX HOLDINGS, INC. AND SUBSIDIARIES



NOTES TO THE UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS(Continued)



under the securities lending program was $21.2 million and $20.2 million, respectively, for the three months ended September 30, 2005 and $41.2 million
and $39.0 million, respectively, for the nine months ended September 30, 2005.



3. Collateralization



In connection with
reverse repurchase agreements, the Company receives collateral that is held in custody by the Companys banks. At September 30, 2005, and December 31, 2004, the Company accepted collateral in the form of U.S. Treasury bills that
it is permitted by contract or industry practice to sell or re-pledge. The fair value of such collateral at September 30, 2005 and December 31, 2004 was $30.0 million and $19.3 million, respectively.



4. Allowance for Doubtful Accounts and Credits



Clearing and transaction fees receivable are carried net of allowances for
member credits, which are based upon expected billing adjustments. Allowances for member credits were $385,000 and $256,000 at September 30, 2005 and December 31, 2004, respectively. The Company believes the allowances are adequate to
cover member credits. The Company also believes the likelihood of incurring material losses due to non-collectibility is remote and, therefore, no allowance for doubtful accounts is necessary.



An allowance for doubtful accounts was established for market data accounts
receivable to cover potential non-collectible vendor receivables as well as future adjustments by the market data vendor customers. This allowance was $64,000 and $121,000 at September 30, 2005 and December 31, 2004, respectively, which
the Company believes is sufficient to cover potential bad debts and subsequent credits. At September 30, 2005, the combined amounts due from vendors with the ten highest receivable balances represented 91% of the total accounts receivable
balance. Accounts receivable for market data revenues are included in other current assets on the Companys consolidated balance sheets.



Other revenues consist of rental income from tenants leasing space in the Companys headquarters building, compliance fines assessed for violation of
trading rules and procedures, fees charged to members for the use of telephone equipment and trading booths provided by the Company, fees charged for access to the NYMEX ACCESS® electronic trading system and other miscellaneous revenues. Other revenues are recognized on an accrual basis in the
period during which the Company derives economic value, with the exception of compliance fines, which are recognized when cash is received. The Company has established a reserve for non-collectible receivables of $472,000 and $665,000 at
September 30, 2005 and December 31, 2004, respectively, and believes the amount is sufficient to cover potential bad debts and subsequent credits. Accounts receivable for other revenues are included in other current assets on the
Companys consolidated balance sheets.



5. Notes Payable



The Company issued long-term debt totaling $100 million
during 1996 and 1997 to provide completion financing for the Companys trading facility and headquarters. This issuance contained three series, each with different maturities, interest rates and repayment schedules. Series A notes require
annual principal repayments from 2001 to 2010, and a final payment of principal in 2011. Series B notes require annual principal repayments from 2011 to 2020, and a final payment of principal in 2021. Series C notes require annual principal
repayments from 2022 to 2025, and a final payment of principal in 2026. The notes represent senior unsecured obligations of the Company and are not secured by the facility, the Companys interest therein, or any other collateral. The notes are
subject to a prepayment penalty in the event they are paid off prior to their scheduled maturities. The Company believes that any economic benefit derived from early redemption of these notes would be offset by the



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NYMEX HOLDINGS, INC. AND SUBSIDIARIES



NOTES TO THE UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS(Continued)



redemption penalty. These notes place certain limitations on the Companys ability to incur additional indebtedness. At September 30, 2005 and
December 31, 2004, the notes payable balance, including the current portion, was $88.7 million.



6. Incentive Programs



The Company has various discretionary rebate programs that reduce operating costs of certain market participants. These programs were designed to provide incentives to third parties to establish business with the Company and are recorded in
general and administrative expenses on the consolidated statements of income. During the three-month periods ended September 30, 2005 and 2004, these programs totaled $7.3 million and $4.0 million, respectively. During the nine-month periods
ended September 30, 2005 and 2004, these programs totaled $17.1 million and $8.9 million, respectively.



7. Supplemental Disclosures of Cash Flow Information



Supplemental disclosures of cash flow information for the nine months ended September 30, 2005 and 2004 are as follows:



|                                                  |  |                                 |        |      |   |       
|------------------------------------------------- |  | ------------------------------- | ------ | ---- | - | ------
|                                                  |  | Nine Months Ended September 30,
|                                                  |  | 2005                            |        | 2004
|                                                  |  | (in thousands)                 
|Cash paid for:                                    |  |                                 |        |      |   |       
|Interest                                          |  | $                               | 42,455 |      | $ | 3,524 
|                                                  |  |                                 |        |      |   |       
|Income taxes                                      |  | $                               | 44,773 |      | $ | 14,677
|                                                  |  |                                 |        |      |   |       
|Noncash investing and financing activities:       |  |                                 |        |      |   |       
|Purchase of assets under capital lease obligation |  | $                               |       |      | $ | 955   
|                                                  |  |                                 |        |      |   |       



8. Margin Deposits and Guaranty
Funds



The Company is required, under the Commodity
Exchange Act, to maintain separate accounts for cash and securities that are deposited by clearing members, at banks approved by the Company, as margin for house and customer accounts. These margin deposits are used by members to meet their
obligations to the Company for margin requirements on open futures and options positions, as well as delivery obligations.



Each clearing member firm is required to maintain a security deposit, in the form of cash or U.S. Treasury securities, ranging from $100,000 to $2.0
million, per division, based upon such clearing member firms reported regulatory capital, in a fund known as a guaranty fund. Historically, separate and distinct guaranty funds were maintained for the NYMEX Division and the COMEX Division.
Effective May 16, 2003, the NYMEX Division assumed all of the clearing functions of the COMEX Division. Accordingly, the deposits were aggregated and are now maintained in a single guaranty fund (the Guaranty Fund) which may be used
for any loss sustained by the Company as a result of the failure of a clearing member to discharge its obligations on either division. Although there is now one Guaranty Fund for both divisions, separate contribution amounts are calculated for each
division.



Every member and non-member executing transactions
on the Companys divisions must be guaranteed by a clearing member and clear their transactions through the Companys clearinghouse. This requirement also applies to transactions conducted outside of the Exchange which clear through NYMEX
ClearPort® Clearing. Clearing members of the NYMEX
Division and COMEX Division require their customers to maintain deposits in accordance with Company margin requirements. Margin deposits and Guaranty Funds are posted by clearing



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NYMEX HOLDINGS, INC. AND SUBSIDIARIES



NOTES TO THE UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS(Continued)



members with the Companys clearinghouse. In the event of a clearing member default, the Company satisfies the clearing members obligations on the
underlying contract by drawing on the defaulting clearing members Guaranty Funds. If those resources are insufficient, the Company may fund the obligations from its own financial resources or draw on Guaranty Funds posted by non-defaulting
clearing members. The Company also maintains a $100 million default insurance policy. This insurance coverage is available to protect the Company and clearing members in the event that a default in excess of $130 million occurs.



The Company is entitled to earn interest on cash balances posted as margin
deposits and Guaranty Funds. Such balances are included in the Companys consolidated balance sheets, and are generally invested overnight in securities purchased under agreements to resell.



The following table sets forth margin deposits and Guaranty Fund balances
held by the Company on behalf of clearing members at September 30, 2005 and December 31, 2004 (in thousands):



|                                                        |  |                    |            |                   |   |             |  |                 |            |                |   |             |  |   |         |  |   |           
|------------------------------------------------------- |  | ------------------ | ---------- | ----------------- | - | ----------- |  | --------------- | ---------- | -------------- | - | ----------- |  | - | ------- |  | - | ----------
|                                                        |  | September 30, 2005 |            | December 31, 2004
|                                                        |  | Margin Deposits    |            | Guaranty Funds    |   | Total Funds |  | Margin Deposits |            | Guaranty Funds |   | Total Funds
|Cash and securities earning interest for NYMEX Holdings |  |                    |            |                   |   |             |  |                 |            |                |   |             |  |   |         |  |   |           
|Cash                                                    |  | $                  | 81         |                   | $ | 5,305       |  | $               | 5,386      |                | $ | 521         |  | $ | 54      |  | $ | 575       
|Securities held for resale                              |  |                    | 772,945    |                   |   | 2,275       |  |                 | 775,220    |                |   | 31,950      |  |   | 2,300   |  |   | 34,250    
|                                                        |  |                    |            |                   |   |             |  |                 |            |                |   |             |  |   |         |  |   |           
|Total cash and securities                               |  |                    | 773,026    |                   |   | 7,580       |  |                 | 780,606    |                |   | 32,471      |  |   | 2,354   |  |   | 34,825    
|                                                        |  |                    |            |                   |   |             |  |                 |            |                |   |             |  |   |         |  |   |           
|Cash and securities earning interest for members        |  |                    |            |                   |   |             |  |                 |            |                |   |             |  |   |         |  |   |           
|Money market funds                                      |  |                    | 3,993,950  |                   |   |            |  |                 | 3,993,950  |                |   | 2,914,820   |  |   |        |  |   | 2,914,820 
|U.S. Treasuries                                         |  |                    | 15,037,084 |                   |   | 146,551     |  |                 | 15,183,635 |                |   | 7,322,495   |  |   | 148,026 |  |   | 7,470,521 
|Letters of credit                                       |  |                    | 1,641,838  |                   |   |            |  |                 | 1,641,838  |                |   | 511,002     |  |   |        |  |   | 511,002   
|                                                        |  |                    |            |                   |   |             |  |                 |            |                |   |             |  |   |         |  |   |           
|Total cash and securities                               |  |                    | 20,672,872 |                   |   | 146,551     |  |                 | 20,819,423 |                |   | 10,748,317  |  |   | 148,026 |  |   | 10,896,343
|                                                        |  |                    |            |                   |   |             |  |                 |            |                |   |             |  |   |         |  |   |           
|Total funds                                             |  | $                  | 21,445,898 |                   | $ | 154,131     |  | $               | 21,600,029 |                | $ | 10,780,788  |  | $ | 150,380 |  | $ | 10,931,168
|                                                        |  |                    |            |                   |   |             |  |                 |            |                |   |             |  |   |         |  |   |           



9. Commitments and Contingencies



Contractual Obligations



In connection with its operating activities, the Company enters into certain
contractual obligations. The Companys material contractual cash obligations include long-term debt, operating leases, a capital lease and other contracts. A summary of the Companys future cash payments associated with its contractual
cash obligations outstanding as of September 30, 2005, as well as an estimate of the timing in which these commitments are expected to expire, are set forth in the following table:



|                              |  |                        |       |      |   |        |  |      |        |      |   |            |  |       |        |  |   |         |  |   |        
|----------------------------- |  | ---------------------- | ----- | ---- | - | ------ |  | ---- | ------ | ---- | - | ---------- |  | ----- | ------ |  | - | ------- |  | - | -------
|                              |  | Payments Due by Period
|                              |  | 2005                   |       | 2006 |   | 2007   |  | 2008 |        | 2009 |   | Thereafter |  | Total
|                              |  | (in thousands)        
|Contractual Obligations       |  |                        |       |      |   |        |  |      |        |      |   |            |  |       |        |  |   |         |  |   |        
|Long-term debt principal      |  | $                      | 2,817 |      | $ | 2,817  |  | $    | 2,817  |      | $ | 2,817      |  | $     | 2,817  |  | $ | 74,647  |  | $ | 88,732 
|Long-term debt interest       |  |                        | 3,418 |      |   | 6,626  |  |      | 6,416  |      |   | 6,205      |  |       | 5,994  |  |   | 47,570  |  |   | 76,229 
|Operating leasesfacilities   |  |                        | 1,086 |      |   | 4,216  |  |      | 4,053  |      |   | 4,029      |  |       | 4,056  |  |   | 11,652  |  |   | 29,092 
|Operating leasesequipment    |  |                        | 595   |      |   | 1,727  |  |      | 1,074  |      |   | 579        |  |       |       |  |   |        |  |   | 3,975  
|Capital lease                 |  |                        | 120   |      |   | 327    |  |      |       |      |   |           |  |       |       |  |   |        |  |   | 447    
|Other long-term obligations   |  |                        | 800   |      |   | 800    |  |      | 800    |      |   | 800        |  |       | 800    |  |   | 7,803   |  |   | 11,803 
|                              |  |                        |       |      |   |        |  |      |        |      |   |            |  |       |        |  |   |         |  |   |        
|Total contractual obligations |  | $                      | 8,836 |      | $ | 16,513 |  | $    | 15,160 |      | $ | 14,430     |  | $     | 13,667 |  | $ | 141,672 |  | $ | 210,278
|                              |  |                        |       |      |   |        |  |      |        |      |   |            |  |       |        |  |   |         |  |   |        



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NYMEX HOLDINGS, INC. AND SUBSIDIARIES



NOTES TO THE UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS(Continued)



The Company occupies premises under leases, including a land lease, with various lessors that expire
in 2005 through 2069. For the three months ended September 30, 2005 and 2004, rental expense for facilities and the land lease amounted to $1.2 million and $0.9 million, respectively. For the nine months ended September 30, 2005 and 2004,
rental expense for facilities and the land lease amounted to $2.8 million and $1.9 million, respectively.



The Company leases space to tenants in its headquarters facility and records the associated rental income in other revenue in the consolidated statements
of income. For the three months ended September 30, 2005 and 2004, rental income amounted to $2.1 million and $2.9 million, respectively. For the nine months ended September 30, 2005 and 2004, rental income amounted to $6.1 million and
$6.5 million, respectively. Future minimum rental income for the years 2005 through 2009 are as follows:



|      |  |               |       
|----- |  | ------------- | ------
|      |  | (inthousands)
|2005  |  | $             | 2,113 
|2006  |  |               | 8,083 
|2007  |  |               | 7,614 
|2008  |  |               | 5,776 
|2009  |  |               | 4,959 
|      |  |               |       
|Total |  | $             | 28,545
|      |  |               |       



In accordance with the
DME shareholders agreement, the Company will be required to contribute capital to the joint-venture in an aggregate amount of $9.8 million over a five-year period, contingent upon the DMEs achievement of certain agreed upon performance
targets. On September 6, 2005, the first contribution of $2.5 million was made.



Financial Guarantees



The Company adopted FIN No. 45, effective January 1, 2003. The Company has certain guarantee arrangements in its clearing process as well as other financial guarantees discussed below:



Included in marketable securities are investments that are pledged as
collateral with one of the Companys investment managers relating to a membership seat financing program. Under this program, the investment manager extends credit to individuals purchasing NYMEX Division memberships. The program requires that
the Company pledge assets to the investment manager in an amount equal to at least 118% of the loan value. In the event a member defaults on a loan, the investment manager has the right to seize the Companys collateral for the amount of the
default, and the Company has the right to liquidate the members interest in NYMEX Division to reimburse its loss of collateral. At September 30, 2005, there were total seat loan balances of $9.7 million and securities pledged against the
seat loan balances of $11.4 million.



The Company serves a
clearinghouse function, standing as a financial intermediary on every open futures and options transaction cleared. Through its clearinghouse, the Company maintains a system of guarantees for performance of obligations owed to buyers and sellers.
This system of guarantees is supported by several mechanisms, including margin deposits and guaranty funds posted by clearing members with the Companys clearinghouse. The amount of margin deposits on hand will fluctuate over time as a result
of, among other things, the extent of open positions held at any point in time by market participants in NYMEX Division and COMEX Division contracts and the margin rates then in effect for such contracts. The Company is required, under the Commodity
Exchange Act, to maintain separate accounts for cash and securities that are deposited by clearing members, at banks approved by the Company, as margin for house and customer accounts. These clearing deposits are used by members to meet their
obligations to the Company for margin requirements on open futures and options positions, as well as delivery obligations.



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NYMEX HOLDINGS, INC. AND SUBSIDIARIES



NOTES TO THE UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS(Continued)



During 2004, the Company established additional retail customer protection supported by a commitment
of at least $10 million available at all times to promptly reimburse retail customers in the event that their clearing member defaults as a result of a default by another customer where margin funds from the retail customers account are used
to address the default. Retail customers are defined as those that do not otherwise qualify as eligible contract participants under the requirements of the Commodity Exchange Act, and are not floor traders or floor brokers on the
Exchange or family members of an Exchange floor trader or floor broker who maintains an account at the same clearing firm.



There were no events of default during the three and nine months ended September 30, 2005, in any of the above arrangements, in which a liability
should be recognized in accordance with FIN No. 45.



Legal
Proceedings



Set forth below is a description of
material litigation to which the Company is a party, as of September 30, 2005. Although there can be no assurance as to the ultimate outcome, the Company believes it has a meritorious defense and is vigorously defending the matter described
below. The final outcome of any litigation, however, cannot be predicted with certainty, and an adverse resolution of this matter could have a material adverse effect on the Companys consolidated results of operations, financial position or
cash flows.



The Company has been named as a defendant in the
following legal action:



New York
Mercantile Exchange, Inc. v. IntercontinentalExchange, Inc.On November 20, 2002, NYMEX Exchange commenced an action in United States District Court for the Southern District of New York against IntercontinentalExchange, Inc.
(ICE). The amended complaint alleges claims for: (a) copyright infringement by ICE arising out of ICEs uses of certain NYMEX Exchange settlement prices; (b) service mark infringement by reason of use by ICE of the service
marks NYMEX and NEW YORK MERCANTILE EXCHANGE; (c) violation of trademark anti-dilution statutes; and (d) interference with contractual relationships. On January 6, 2003, ICE served an Answer and Counterclaims, in which ICE alleges
five counterclaims against NYMEX Exchange as follows: (1) a claim for purported violation of Section 2 of the Sherman Act, 15 U.S.C. § 2, for NYMEX Exchanges allegedly trying to maintain a monopoly in the execution of the North
America energy futures and expand the alleged monopoly into the execution and clearing of North American OTC energy contracts by attempting to deny ICE access to NYMEX Exchange settlement prices; (2) a claim for purported violation of
Section 1 of the Sherman Act by conspiring with certain of its members to restrain trade by attempting to deny ICE access to NYMEX Exchange settlement prices; (3) a claim for alleged violation of Section 2 of the Sherman Act by NYMEX
Exchange purportedly denying ICE access to NYMEX Exchanges settlement prices which are allegedly an essential facility; (4) a claim for purported violation of Section 1 of the Sherman Act and Section 3 of the Clayton
Act by NYMEX Exchange allegedly tying execution services for North American energy futures and options to clearing services; and (5) a claim for purported violation of the Lanham Act through false advertising with respect to certain services
offered by NYMEX Exchange and services offered by ICE. The counterclaims request damages and trebled damages in amounts not specified yet by ICE in addition to injunctive and declaratory relief.



On August 11, 2003, the Court issued an opinion
dismissing certain counterclaims and one affirmative defense, with leave to replead. On or about August 28, 2003, NYMEX Exchange was served with ICEs First Amended Counterclaims in which ICE made four counterclaims against NYMEX Exchange
principally alleging violations of U.S. antitrust laws, including claims regarding monopoly leveraging.



By Order and Opinion dated June 30, 2004, the Court granted NYMEX Exchanges motion and dismissed all of the antitrust
counterclaims asserted against NYMEX Exchange.



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NYMEX HOLDINGS, INC. AND SUBSIDIARIES



NOTES TO THE UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS(Continued)



By Order and Opinion dated September 29, 2005, the Court (1) granted
ICEs motion for summary judgment to the extent of dismissing NYMEX Exchanges federal claims for copyright and trademark infringement and dismissing without prejudice (by declining to exercise supplemental jurisdiction), NYMEX
Exchanges state law claims for violation of trademark anti-dilution statutes and interference with contractual relationships, and (2) denied NYMEX Exchanges cross-motion for partial summary judgment on copyright infringement and
tortious interference with contract. On October 13, 2005, NYMEX Exchange filed a notice of appeal with the United States Court of Appeals for the Second Circuit. This case is ongoing.



10. Segment Reporting



The Company considers operating results for two business segments: Open Outcry and Electronic Trading and Clearing. Open
Outcry is the trading and clearing of NYMEX Division and COMEX Division futures and options contracts on the trading floors of the Exchange. In addition, Open Outcry includes the trading and clearing of Europe Limited futures contracts on the
trading floor of the Companys London subsidiary, which opened during the third quarter of 2005. Electronic Trading and Clearing consists of NYMEX ACCESS®, NYMEX ClearPort® Trading and NYMEX ClearPort® Clearing. The Corporate/Other column represents income earned on the Companys investments net of fees, fees incurred on its securities lending
activities and interest expense incurred on its obligations. The Company reports revenue on a segment basis. Total revenues presented for each segment include clearing and transaction fees related to such segment and a pro rated portion of market
data fees. Other revenues are attributed entirely to Open Outcry. Depreciation and amortization and other operating expenses, excluding interest and securities lending fees, are allocated based on the proportion of total revenues attributed to each
segment. The prior year segment information has been reclassified to reflect this methodology of reporting each segment.



Financial information relating to these business segments is set forth below (in thousands):



|                                         |  |                                       |        |                                      |   |                   |  |       |       |             |   |                               |  |                   |         |       |   |        |  |   |       |  |   |        
|---------------------------------------- |  | ------------------------------------- | ------ | ------------------------------------ | - | ----------------- |  | ----- | ----- | ----------- | - | ----------------------------- |  | ----------------- | ------- | ----- | - | ------ |  | - | ----- |  | - | -------
|                                         |  | Three Months Ended September 30, 2005 |        | Nine Months Ended September 30, 2005
|                                         |  | Open Outcry                           |        | Electronic Trading & Clearing        |   | Corporate / Other |  | Total |       | Open Outcry |   | Electronic Trading & Clearing |  | Corporate / Other |         | Total
|Total revenues                           |  | $                                     | 57,237 |                                      | $ | 36,354            |  | $     | 4,312 |             | $ | 97,903                        |  | $                 | 161,858 |       | $ | 83,348 |  | $ | 7,880 |  | $ | 253,086
|Depreciation and amortization            |  |                                       | 2,197  |                                      |   | 1,500             |  |       |      |             |   | 3,697                         |  |                   | 7,792   |       |   | 4,013  |  |   |      |  |   | 11,805 
|Other operating expenses                 |  |                                       | 30,517 |                                      |   | 19,905            |  |       | 1,963 |             |   | 52,385                        |  |                   | 94,231  |       |   | 48,524 |  |   | 5,717 |  |   | 148,472
|                                         |  |                                       |        |                                      |   |                   |  |       |       |             |   |                               |  |                   |         |       |   |        |  |   |       |  |   |        
|Operating income                         |  |                                       | 24,523 |                                      |   | 14,949            |  |       | 2,349 |             |   | 41,821                        |  |                   | 59,835  |       |   | 30,811 |  |   | 2,163 |  |   | 92,809 
|Loss on investment in joint venture      |  |                                       |       |                                      |   |                  |  |       | 196   |             |   | 196                           |  |                   |        |       |   |       |  |   | 196   |  |   | 196    
|                                         |  |                                       |        |                                      |   |                   |  |       |       |             |   |                               |  |                   |         |       |   |        |  |   |       |  |   |        
|Income before provision for income taxes |  |                                       | 24,523 |                                      |   | 14,949            |  |       | 2,153 |             |   | 41,625                        |  |                   | 59,835  |       |   | 30,811 |  |   | 1,967 |  |   | 92,613 
|Provision for income taxes               |  |                                       | 11,340 |                                      |   | 6,881             |  |       | 979   |             |   | 19,200                        |  |                   | 27,225  |       |   | 14,019 |  |   | 895   |  |   | 42,139 
|                                         |  |                                       |        |                                      |   |                   |  |       |       |             |   |                               |  |                   |         |       |   |        |  |   |       |  |   |        
|Net income                               |  | $                                     | 13,183 |                                      | $ | 8,068             |  | $     | 1,174 |             | $ | 22,425                        |  | $                 | 32,610  |       | $ | 16,792 |  | $ | 1,072 |  | $ | 50,474 
|                                         |  |                                       |        |                                      |   |                   |  |       |       |             |   |                               |  |                   |         |       |   |        |  |   |       |  |   |        



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NOTES TO THE UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS(Continued)



|                                                          |  |                                       |        |                                      |   |                  |  |   |       |   |            |   |                             |  |                  |         |  |       |        |  |   |        |   |  |   |        
|--------------------------------------------------------- |  | ------------------------------------- | ------ | ------------------------------------ | - | ---------------- |  | - | ----- | - | ---------- | - | --------------------------- |  | ---------------- | ------- |  | ----- | ------ |  | - | ------ | - |  | - | -------
|                                                          |  | Three Months Ended September 30, 2004 |        | Nine Months Ended September 30, 2004
|                                                          |  | OpenOutcry                            |        | ElectronicTrading &Clearing          |   | Corporate /Other |  |   | Total |   | OpenOutcry |   | ElectronicTrading &Clearing |  | Corporate /Other |         |  | Total
|Total revenues                                            |  | $                                     | 46,258 |                                      | $ | 15,695           |  | $ | 1,280 |   |            | $ | 63,233                      |  | $                | 133,740 |  | $     | 37,909 |  | $ | 1,971  |   |  | $ | 173,620
|Depreciation and amortization                             |  |                                       | 5,146  |                                      |   | 1,707            |  |   |      |   |            |   | 6,853                       |  |                  | 13,555  |  |       | 3,842  |  |   |       |   |  |   | 17,397 
|Other operating expenses                                  |  |                                       | 33,356 |                                      |   | 11,234           |  |   | 1,770 |   |            |   | 46,360                      |  |                  | 93,598  |  |       | 26,531 |  |   | 5,310  |   |  |   | 125,439
|                                                          |  |                                       |        |                                      |   |                  |  |   |       |   |            |   |                             |  |                  |         |  |       |        |  |   |        |   |  |   |        
|Operating income (loss)                                   |  |                                       | 7,756  |                                      |   | 2,754            |  |   | (490  | ) |            |   | 10,020                      |  |                  | 26,587  |  |       | 7,536  |  |   | (3,339 | ) |  |   | 30,784 
|Loss on investment in joint venture                       |  |                                       |       |                                      |   |                 |  |   |      |   |            |   |                            |  |                  |        |  |       |       |  |   |       |   |  |   |       
|                                                          |  |                                       |        |                                      |   |                  |  |   |       |   |            |   |                             |  |                  |         |  |       |        |  |   |        |   |  |   |        
|Income (loss) before provision (benefit) for income taxes |  |                                       | 7,756  |                                      |   | 2,754            |  |   | (490  | ) |            |   | 10,020                      |  |                  | 26,587  |  |       | 7,536  |  |   | (3,339 | ) |  |   | 30,784 
|Provision (benefit) for income taxes                      |  |                                       | 3,433  |                                      |   | 1,221            |  |   | (217  | ) |            |   | 4,437                       |  |                  | 11,777  |  |       | 3,339  |  |   | (1,479 | ) |  |   | 13,637 
|                                                          |  |                                       |        |                                      |   |                  |  |   |       |   |            |   |                             |  |                  |         |  |       |        |  |   |        |   |  |   |        
|Net income (loss)                                         |  | $                                     | 4,323  |                                      | $ | 1,533            |  | $ | (273  | ) |            | $ | 5,583                       |  | $                | 14,810  |  | $     | 4,197  |  | $ | (1,860 | ) |  | $ | 17,147 
|                                                          |  |                                       |        |                                      |   |                  |  |   |       |   |            |   |                             |  |                  |         |  |       |        |  |   |        |   |  |   |        



The Company does not
account for, and does not report to management, its assets (other than goodwill and other intangible assets for SFAS No. 142 reporting purposes) or capital expenditures by business segment. Foreign source revenues and long-lived assets located
in foreign countries are not material to the consolidated results of operations and financial position of the Company and are, therefore, not disclosed separately.



11. Members Retirement Plan and Benefits



The Company maintains a retirement and benefit plan under the COMEX Members Recognition and Retention Plan
(MRRP). This plan provides benefits to certain members of the COMEX Division based on long-term membership, and participation is limited to individuals who were COMEX Division members prior to the Companys acquisition of COMEX in
1994. No new participants were permitted into the plan after the date of the acquisition. The annual benefit payments are $12,500 ($2,000 for options members) for ten years for vested participants. Under the terms of the COMEX merger agreement, the
Company is required to fund the plan with a minimum annual contribution of $400,000 until it is fully funded. The Company funded the plan by $800,000 in each of the years ended December 31, 2004, 2003 and 2002. Based on continued funding of
$800,000 per year, and certain actuarial assumptions, the Company expects the plan to be fully funded in 2019. The annual contribution may be reduced if actuarial assumptions indicate that full funding can be achieved without making the entire
funding contributions indicated above. Corporate contributions are charged against current operations. All benefits to be paid under the COMEX MRRP shall be based upon reasonable actuarial assumptions which, in turn, are based upon the amounts that
are available and are expected to be available to pay benefits, except that the benefits paid to any individual will not exceed the amounts stated above. Quarterly distributions from the COMEX MRRP began in the second quarter of 2002. Subject to the
foregoing, the board of directors of the Company reserves the right to amend or terminate the COMEX MRRP upon an affirmative vote of 60% of the eligible COMEX Division plan participants.



12. Postretirement Benefits other than Pensions



The Companys postretirement benefit costs are developed from actuarial valuations. Inherent in these valuations are
key assumptions, including the discount rate and expected long-term rate of return on plan assets.



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##### Table of Contents

NYMEX HOLDINGS, INC. AND SUBSIDIARIES



NOTES TO THE UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS(Continued)



Material changes in its postretirement benefit costs may occur in the future due to changes in these assumptions, changes in the number of plan participants,
changes in the level of benefits provided, and changes in asset levels. The Company provides certain health care and life insurance benefit plans for qualifying retired employees. Substantially all of the Companys employees may become eligible
for these benefits if they reach specified age and years of service criteria while working for the Company. The benefits are provided through certain insurance companies. The Company expects to fund its share of such benefit costs principally on a
pay-as-you-go basis.



In December 2003, the Medicare
Prescription Drug, Improvement and Modernization Act of 2003 (the Act) became law in the United States. The Act introduces a prescription drug benefit under Medicare as well as a federal subsidy to sponsors of retiree health care benefit
plans that provide a benefit that is at least actuarially equivalent to the Medicare benefit. In accordance with FASB Staff Position No. 106-1, Accounting and Disclosure Requirements Related to the Medicare Prescription Drug, Improvement and
Modernization Act of 2003, the Company elected to defer recognition of the effects of the Act in any measures of the benefit obligation or cost. In May 2004, the FASB issued Staff Position No. 106-2 (FAS No. 106-2) under
the same title. FAS No. 106-2 provides guidance on accounting for the benefits attributable to new government subsidies for companies that provide prescription drug benefits to retirees. The Company has concluded that it will likely not be
eligible to receive a subsidy. Therefore, the Act is not expected to have a material effect on the Companys consolidated results of operations, financial position or cash flows. The measurement date used to determine postretirement benefit
measures for the postretirement benefit plan is December 31 of each year.



Accrued postretirement benefit costs are included in other non-current liabilities in the consolidated balance sheets. The accrued postretirement obligations recorded in the balance sheet at September 30, 2005
and December 31, 2004 exceed the amount of the accumulated obligations.



The following table presents the funded status of such plans, reconciled with amounts recognized in the Companys unaudited consolidated financial statements (in thousands):



|                                             |  |                                  |     |   |                                 |   |     |      |  |   |      |   |  |   |     |  
|-------------------------------------------- |  | -------------------------------- | --- | - | ------------------------------- | - | --- | ---- |  | - | ---- | - |  | - | --- | -
|                                             |  | Three Months Ended September 30, |     |   | Nine Months Ended September 30, |  
|                                             |  | 2005                             |     |   | 2004                            |   |     | 2005 |  |   | 2004 |  
|Service costs                                |  | $                                | 88  |   |                                 | $ | 123 |      |  | $ | 264  |   |  | $ | 253 |  
|Interest costs                               |  |                                  | 88  |   |                                 |   | 119 |      |  |   | 264  |   |  |   | 245 |  
|Amortization of prior service costs          |  |                                  | (14 | ) |                                 |   | (15 | )    |  |   | (42  | ) |  |   | (43 | )
|Amortization of net (gain) loss              |  |                                  | 6   |   |                                 |   | 7   |      |  |   | 18   |   |  |   | 5   |  
|                                             |  |                                  |     |   |                                 |   |     |      |  |   |      |   |  |   |     |  
|Total net period postretirement benefit cost |  | $                                | 168 |   |                                 | $ | 234 |      |  | $ | 504  |   |  | $ | 460 |  
|                                             |  |                                  |     |   |                                 |   |     |      |  |   |      |   |  |   |     |  



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NYMEX HOLDINGS, INC. AND SUBSIDIARIES



NOTES TO THE UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS(Continued)



13. Consolidated Statements of Stockholders Equity



Prior to the Companys demutualization in November 2000, earnings and
paid-in-capital were combined and reported in Members Equityon its consolidated financial statements. At the date of demutualization, the balance in Members Equitywas transferred to Additional Paid-in-Capital.Subsequent to demutualization, earnings are being reported in Retained Earningson the Companys consolidated statements of stockholders equity.



On July 6, 2005, the board of directors of the Company voted to declare and distribute a special cash dividend of $81.6
million to stockholders of record as of July 15, 2005. On the date of declaration, the balance in Retained Earningswas $57.9 million. The amount of the distribution in excess of the balance in Retained Earnings, which totaled
$23.7 million, was reported as a reduction to Additional Paid-in-Capital on the Companys consolidated statements of stockholders equity at September 30, 2005. The Company anticipates that there will be sufficient earnings and
profits at December 31, 2005 such that the entire distribution will be treated as a dividend for income tax purposes.



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##### Table of Contents

Item 2.Managements Discussion and Analysis of Financial Condition and Results of Operations



Overview



Throughout this document NYMEX Holdings, Inc. will be referred to as NYMEX Holdings and, together with its subsidiaries, as the
Company. The two principal operating subsidiaries of NYMEX Holdings are New York Mercantile Exchange, Inc. (NYMEX Exchange or NYMEX Division) and Commodity Exchange, Inc. (COMEX or COMEX
Division), which is a wholly-owned subsidiary of NYMEX Exchange. Where appropriate, each division will be discussed separately, and collectively will be discussed as the Exchange. When discussing NYMEX Holdings together with its
subsidiaries, reference is being made to the Company.



In August 2004, NYMEX Europe Exchange Holdings Limited (Europe Holdings) was incorporated as a wholly-owned subsidiary of NYMEX Holdings, and in March 2005 NYMEX Europe Limited (Europe Limited) was incorporated as
an operating and wholly-owned subsidiary of Europe Holdings. Where appropriate, each European subsidiary will be discussed separately, and collectively will be referred to as the Europe Exchange. Europe Exchange is an independent
UK-based exchange which provides an open-outcry trading facility in London, England. All trades executed on Europe Exchange are cleared through the Companys clearinghouse in New York.



In June 2005, the Company and Dubai Holding announced the formation of the
Dubai Mercantile Exchange (DME), a 50/50 joint-venture to develop the Middle Easts first energy futures exchange. It is expected that the DME will initially trade sour crude and fuel oil products. It will be based in the
Dubai International Financial Centre (DIFC), a financial free zone designed to promote financial services within the United Arab Emirates. In addition, the DME will be regulated by the Dubai Financial Services Authority, a
regulatory body established within the DIFC. The Company anticipates that the DME will open for trading in 2006.



Since its founding 133 years ago, the Exchange has evolved into a major provider of financial services to the energy and metals industries. A core
component of the business is the revenue derived from the Exchanges trading facilities and from providing clearing and settlement services through its clearinghouse to a wide range of participants in these industries. A significant amount of
revenue is also derived from the sale of market data. Based upon 2004 volume of approximately 169 million contracts transacted and/or cleared on the Exchange, the Exchange is the largest physical commodity based futures exchange in the world
and the third largest futures exchange in the United States. NYMEX Exchange is the largest exchange in the world for the trading of energy futures and options contracts, including contracts for crude oil, unleaded gasoline, heating oil and natural
gas, and is the largest exchange in North America for the trading of platinum group metals contracts. COMEX is the largest marketplace for gold and silver futures and options contracts, and is the largest exchange in North America for futures and
options contracts for copper and aluminum. Participants in the Exchanges markets include a wide variety of customers involved in the production, consumption and trading of energy and metals products. Market participants use the Exchange for
both hedging and speculative purposes. NYMEX ClearPort® Clearing is the mechanism by which individually negotiated off-exchange trades are submitted to the Exchange for clearing of specified products. The NYMEX ClearPort® Clearing system enables market participants to take advantage of the financial depth
and security of the NYMEX Exchange clearinghouse along with access to more than 180 energy futures contracts.



Note Regarding Forward-Looking Statements



The Company may, in discussions of its future plans, objectives and expected performance in periodic reports filed by the Company with the Securities and Exchange Commission (or documents incorporated by reference
therein) and in written and oral presentations made by the Company, include projections or other forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 or Section 21E of the Securities Exchange Act of
1934, as amended (the 1934 Act). Such projections and forward-looking statements are based on assumptions, which the Company believes are reasonable but are, by their nature, inherently uncertain. Some of the important factors that could
cause actual results to differ from any such



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projections or other forward-looking statements are discussed below, and in other reports filed by the Company under the 1934 Act, including in the
Companys December 31, 2004 Annual Report on Form 10-K. The Companys forward-looking statements are based on information available to the Company today, and except as required by law, the Company undertakes no obligation to update
any forward-looking statement, whether as a result of new information, future events or otherwise. Actual results and experience may differ materially from forward-looking statements as a result of many factors, including: changes in general
economic and industry conditions in various markets in which the Companys contracts are traded; increased competitive activity; fluctuations in prices of the underlying commodities as well as for trading floor administrative expenses related
to the trading and clearing of contracts; the ability to control costs and expenses; changes to legislation or regulations; protection and validity of the Companys intellectual property rights and rights licensed from others; and other
unanticipated events and conditions. It is not possible for the Company to foresee or identify all such factors.



Market Conditions



For the three months ended September 30, 2005, the total volume of futures and options contracts traded and cleared was 59.8 million contracts,
an increase of 16.1 million contracts or 36.8% from 43.7 million contracts for the same period last year.



For the nine months ended September 30, 2005, the total volume of futures and options contracts traded and cleared was 160.5 million contracts,
an increase of 36.8 million contracts or 29.7% from 123.7 million contracts for the same period last year.



Provided below is a discussion of the Companys three significant components of trading and clearing operations: (i) NYMEX Division;
(ii) COMEX Division; and (iii) NYMEX ClearPort® Clearing. NYMEX Division and COMEX Division information presented in the following discussion excludes contracts cleared through NYMEX ClearPort® Clearing. Included in the NYMEX Division volumes are futures contracts of Europe Limited, the Companys European
subsidiary, that are traded on the subsidiaries trading floor in London, England, which opened during the current quarter. Trading and clearing volumes discussed in this managements discussion and analysis are expressed as
round-turns, which are matched buys and sells of the underlying contracts. These volumes include futures settlement and options exercise transactions for which transaction fees are assessed. Open interest represents the number of
contracts at September 30, 2005 and 2004 for which clearing members and their customers are obligated to the Companys clearinghouse and are required to make or take future delivery of the physical commodity (or in certain cases be settled
by cash), or close out the position with an offsetting sale or purchase prior to contract expiration. Options open interest represents unexpired, unexercised option contracts.



Energy MarketsNYMEX Division



For the three months ended September 30, 2005, the volume of futures and options contracts traded and cleared on the NYMEX Division was
43.0 million contracts, an increase of 10.1 million contracts or 30.7% from 32.9 million contracts for the same period last year. Futures contracts volume was 34.3 million contracts, an increase of 7.7 million contracts or
28.9% from 26.6 million contracts for the same period last year. Options contracts volume was 8.7 million contracts, an increase of 2.4 million contracts or 38.1% from 6.3 million contracts for the same period last year.



For the nine months ended September 30, 2005, the volume
of futures and options contracts traded and cleared on the NYMEX Division was 113.0 million contracts, an increase of 20.8 million contracts or 22.6% from 92.2 million contracts for the same period last year. Futures contracts volume
was 90.8 million contracts, an increase of 15.5 million contracts or 20.6% from 75.3 million contracts for the same period last year. Options contracts volume was 22.2 million contracts, an increase of 5.3 million contracts
or 31.4% from 16.9 million contracts for the same period last year.



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##### Table of Contents

The following tables set forth trading and clearing volumes and open interest for the Companys
major energy futures and options products.



NYMEX Division
Contracts Traded and Cleared

(in thousands)



|                              |  |                                          |  |         |  |        |  |         |  |         |  |       
|----------------------------- |  | ---------------------------------------- |  | ------- |  | ------ |  | ------- |  | ------- |  | ------
|                              |  | For the Three Months Ended September 30,
|                              |  | 2005                                     |  | 2004   
|                              |  | Futures                                  |  | Options |  | Total  |  | Futures |  | Options |  | Total 
|Light sweet crude oil         |  | 16,384                                   |  | 4,273   |  | 20,657 |  | 14,054  |  | 3,346   |  | 17,400
|Henry Hub natural gas         |  | 5,527                                    |  | 3,142   |  | 8,669  |  | 5,259   |  | 2,274   |  | 7,533 
|N.Y. heating oil              |  | 3,416                                    |  | 344     |  | 3,760  |  | 3,108   |  | 253     |  | 3,361 
|N.Y. harbor unleaded gasoline |  | 3,711                                    |  | 319     |  | 4,030  |  | 3,289   |  | 205     |  | 3,494 
|Other                         |  | 5,230                                    |  | 624     |  | 5,854  |  | 923     |  | 170     |  | 1,093 
|                              |  |                                          |  |         |  |        |  |         |  |         |  |       
|Total                         |  | 34,268                                   |  | 8,702   |  | 42,970 |  | 26,633  |  | 6,248   |  | 32,881
|                              |  |                                          |  |         |  |        |  |         |  |         |  |       



NYMEX Division
Contracts Traded and Cleared

(in thousands)



|                              |  |                                         |  |         |  |         |  |         |  |         |  |       
|----------------------------- |  | --------------------------------------- |  | ------- |  | ------- |  | ------- |  | ------- |  | ------
|                              |  | For the Nine Months Ended September 30,
|                              |  | 2005                                    |  | 2004   
|                              |  | Futures                                 |  | Options |  | Total   |  | Futures |  | Options |  | Total 
|Light sweet crude oil         |  | 46,999                                  |  | 11,861  |  | 58,860  |  | 40,277  |  | 8,859   |  | 49,136
|Henry Hub natural gas         |  | 15,462                                  |  | 7,488   |  | 22,950  |  | 13,873  |  | 6,179   |  | 20,052
|N.Y. heating oil              |  | 10,110                                  |  | 850     |  | 10,960  |  | 9,529   |  | 501     |  | 10,030
|N.Y. harbor unleaded gasoline |  | 10,373                                  |  | 931     |  | 11,304  |  | 10,037  |  | 820     |  | 10,857
|Other                         |  | 7,803                                   |  | 1,074   |  | 8,877   |  | 1,587   |  | 492     |  | 2,079 
|                              |  |                                         |  |         |  |         |  |         |  |         |  |       
|Total                         |  | 90,747                                  |  | 22,204  |  | 112,951 |  | 75,303  |  | 16,851  |  | 92,154
|                              |  |                                         |  |         |  |         |  |         |  |         |  |       



NYMEX Division
Contracts Open Interest

(in thousands)



|                              |  |                  |  |         |  |       |  |         |  |         |  |      
|----------------------------- |  | ---------------- |  | ------- |  | ----- |  | ------- |  | ------- |  | -----
|                              |  | At September 30,
|                              |  | 2005             |  | 2004   
|                              |  | Futures          |  | Options |  | Total |  | Futures |  | Options |  | Total
|Light sweet crude oil         |  | 872              |  | 2,047   |  | 2,919 |  | 703     |  | 1,410   |  | 2,113
|Henry Hub natural gas         |  | 547              |  | 1,155   |  | 1,702 |  | 376     |  | 927     |  | 1,303
|N.Y. heating oil              |  | 171              |  | 135     |  | 306   |  | 190     |  | 119     |  | 309  
|N.Y. harbor unleaded gasoline |  | 136              |  | 75      |  | 211   |  | 154     |  | 50      |  | 204  
|Other                         |  | 55               |  | 122     |  | 177   |  | 55      |  | 52      |  | 107  
|                              |  |                  |  |         |  |       |  |         |  |         |  |      
|Total                         |  | 1,781            |  | 3,534   |  | 5,315 |  | 1,478   |  | 2,558   |  | 4,036
|                              |  |                  |  |         |  |       |  |         |  |         |  |      



Light Sweet Crude Oil



For the three months ended September 30, 2005,
futures contract volume was 16.4 million contracts, an increase of 2.3 million contracts or 16.3% from 14.1 million contracts for the same period last year. Options contract volume was 4.3 million contracts, an increase of
1.0 million contracts or 30.3% from 3.3 million contracts for the same period last year. Total futures and options contract volume was 20.7 million contracts, an increase of 3.3 million contracts or 19.0% from 17.4 million
contracts for the same period last year.



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For the nine months ended September 30, 2005, futures contract volume was 47.0 million
contracts, an increase of 6.7 million contracts or 16.6% from 40.3 million contracts for the same period last year. Options contract volume was 11.9 million contracts, an increase of 3.1 million contracts or 35.2% from
8.8 million contracts for the same period last year. Total futures and options contract volume was 58.9 million contracts, an increase of 9.8 million contracts or 20.0% from 49.1 million contracts for the same period last year.



The Company believes that increases in futures and options
contract volume for the three and nine months ended September 30, 2005 were due, in part, to the price volatility of crude oil. The price volatility was caused by historically high price levels, continued strong global demand for crude oil and
continued supply concerns. Seasonal factors also contributed to the price volatility, with the late winter cold spell in the Northern Hemisphere affecting the first quarter of 2005, and the severe hurricane season in the Gulf of Mexico disrupting
oil refineries during the third quarter of 2005.



Henry Hub Natural Gas



For the three months ended September 30, 2005,
futures contract volume was 5.5 million contracts, an increase of 0.3 million contracts or 5.8% from 5.2 million contracts for the same period last year. Options contract volume was 3.1 million contracts, an increase of
0.8 million contracts or 34.8% from 2.3 million contracts for the same period last year. Total futures and options contracts volume was 8.6 million contracts, an increase of 1.1 million contracts or 14.7% from 7.5 million
contracts for the same period last year.



For the nine months
ended September 30, 2005, futures contract volume was 15.5 million contracts, an increase of 1.6 million contracts or 11.5% from 13.9 million contracts for the same period last year. Options contract volume was 7.5 million
contracts, an increase of 1.3 million contracts or 21.0% from 6.2 million contracts for the same period last year. Total futures and options contracts volume was 23.0 million contracts, an increase of 2.9 million contracts or
14.4% from 20.1 million contracts for the same period last year.



The Company believes that increases in futures and options contract volume for the three and nine months ended September 30, 2005 were due, in part, to significant fluctuations in the price of natural gas during 2005. During the third
quarter of 2005, there was a significant increase in price due to record warm weather in the Northeast. This resulted in increased usage to generate electricity for the summers high air conditioning demand. In addition, there were continued
concerns about the North American natural gas supply, which resulted in higher trading activity. The increased summer usage resulted in a steady decline in the natural gas inventories. The hurricanes in the Gulf of Mexico caused damage to production
facilities, which halted their processing ability and further strengthened supply concerns.



New York Heating Oil



For the three months ended September 30, 2005, futures contract volume was 3.4 million contracts, an increase of 0.3 million contracts or 9.7% from 3.1 million contracts for the same period last year. Options contract
volume was 0.4 million contracts, an increase of 0.1 million contracts or 33.3% from 0.3 million contracts for the same period last year. Total futures and options contracts volume was 3.8 million contracts, an increase of
0.4 million contracts or 11.8% from 3.4 million contracts for the same period last year.



For the nine months ended September 30, 2005, futures contract volume was 10.1 million contracts, an increase of 0.6 million contracts or
6.3% from 9.5 million contracts for the same period last year. Options contract volume was 0.9 million contracts, an increase of 0.4 million contracts or 80.0% from 0.5 million contracts for the same period last year. Total
futures and options contracts volume was 11.0 million contracts, an increase of 1.0 million contracts or 10.0% from 10.0 million contracts for the same period last year.



The Company believes that increases in futures and options contract volume for the three and nine months ended
September 30, 2005 were due, in part, to the continuing strong global demand for petroleum products, including heating oil. In addition, concerns surrounding limited refining capacity and historically high prices



19



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continue to cause higher volatility in the heating oil market, resulting in increased trading activity. The refining capacity concerns were strengthened
during the third quarter of 2005, as severe hurricanes in the Gulf of Mexico caused disruptions to refineries in the area. Finally, high price differentials between heating oil and crude oil have also resulted in increased trading activity.



New York Harbor Unleaded Gasoline



For the three months ended September 30, 2005, futures contract volume
was 3.7 million contracts, an increase of 0.4 million contracts or 12.1% from 3.3 million contracts for the same period last year. Options contract volume was 0.3 million contracts, an increase of 0.1 million contracts or
50.0% from 0.2 million contracts for the same period last year. Total futures and options contracts volume was 4.0 million contracts, an increase of 0.5 million contracts or 14.3% from 3.5 million contracts for the same period
last year.



For the nine months ended September 30, 2005,
futures contract volume was 10.4 million contracts, an increase of 0.4 million contracts or 4.0% from 10.0 million contracts for the same period last year. Options contract volume was 0.9 million contracts, an increase of
0.1 million contracts or 12.5% from 0.8 million contracts for the same period last year. Total futures and options contracts volume was 11.3 million contracts, an increase of 0.5 million contracts or 4.6% from 10.8 million
contracts for the same period last year.



The Company believes
that increases in futures and options contract volume for the three and nine months ended September 30, 2005 were due, in part, to volatility caused by the price of gasoline. Gasoline prices rose to historically high levels during the third
quarter of 2005. Contributing to the price volatility was the disruption to refineries resulting from the hurricanes in the Gulf of Mexico. Finally, high price differentials between gasoline and crude oil have also resulted in increased trading
activity.



Metals MarketCOMEX Division



For the three months ended September 30, 2005, the volume of futures
and options contracts traded and cleared for the COMEX Division was 7.7 million contracts, an increase of 0.9 million contracts or 13.2% from 6.8 million contracts for the same period last year. Futures contract volume was
6.6 million contracts, an increase of 1.3 million contracts or 24.5% from 5.3 million contracts for the same period last year. Options contract volume was 1.1 million contracts, a decrease of 0.4 million contracts or 26.7%
from 1.5 million contracts for the same period last year.



For the nine months ended September 30, 2005, the volume of futures and options contracts traded and cleared for the COMEX Division was 22.5 million contracts, a decrease of 0.2 million contracts or 0.9% from
22.7 million contracts for the same period last year. Futures contract volume was 19.5 million contracts, an increase of 0.9 million contracts or 4.8% from 18.6 million contracts for the same period last year. Options contract
volume was 3.0 million contracts, a decrease of 1.1 million contracts or 26.8% from 4.1 million contracts for the same period last year.



20



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##### Table of Contents

The following tables set forth trading and clearing volumes and open interest for the Companys
major metals futures and options products.



COMEX Division
Contracts Traded and Cleared

(in thousands)



|                  |  |                                          |  |         |  |       |  |         |  |         |  |      
|----------------- |  | ---------------------------------------- |  | ------- |  | ----- |  | ------- |  | ------- |  | -----
|                  |  | For the Three Months Ended September 30,
|                  |  | 2005                                     |  | 2004   
|                  |  | Futures                                  |  | Options |  | Total |  | Futures |  | Options |  | Total
|Gold              |  | 4,216                                    |  | 804     |  | 5,020 |  | 3,442   |  | 1,253   |  | 4,695
|Silver            |  | 1,429                                    |  | 260     |  | 1,689 |  | 1,072   |  | 223     |  | 1,295
|High grade copper |  | 949                                      |  | 31      |  | 980   |  | 756     |  | 34      |  | 790  
|Aluminum          |  | 6                                        |  |        |  | 6     |  | 14      |  |        |  | 14   
|                  |  |                                          |  |         |  |       |  |         |  |         |  |      
|Total             |  | 6,600                                    |  | 1,095   |  | 7,695 |  | 5,284   |  | 1,510   |  | 6,794
|                  |  |                                          |  |         |  |       |  |         |  |         |  |      



COMEX Division
Contracts Traded and Cleared

(in thousands)



|                  |  |                                         |  |         |  |        |  |         |  |         |  |       
|----------------- |  | --------------------------------------- |  | ------- |  | ------ |  | ------- |  | ------- |  | ------
|                  |  | For the Nine Months Ended September 30,
|                  |  | 2005                                    |  | 2004   
|                  |  | Futures                                 |  | Options |  | Total  |  | Futures |  | Options |  | Total 
|Gold              |  | 12,083                                  |  | 2,168   |  | 14,251 |  | 11,878  |  | 3,246   |  | 15,124
|Silver            |  | 4,186                                   |  | 754     |  | 4,940  |  | 4,018   |  | 703     |  | 4,721 
|High grade copper |  | 3,133                                   |  | 117     |  | 3,250  |  | 2,624   |  | 163     |  | 2,787 
|Aluminum          |  | 29                                      |  |        |  | 29     |  | 71      |  |        |  | 71    
|                  |  |                                         |  |         |  |        |  |         |  |         |  |       
|Total             |  | 19,431                                  |  | 3,039   |  | 22,470 |  | 18,591  |  | 4,112   |  | 22,703
|                  |  |                                         |  |         |  |        |  |         |  |         |  |       



COMEX Division
Contracts Open Interest

(in thousands)



|                  |  |                  |  |         |  |       |  |         |  |         |  |      
|----------------- |  | ---------------- |  | ------- |  | ----- |  | ------- |  | ------- |  | -----
|                  |  | At September 30,
|                  |  | 2005             |  | 2004   
|                  |  | Futures          |  | Options |  | Total |  | Futures |  | Options |  | Total
|Gold              |  | 365              |  | 274     |  | 639   |  | 290     |  | 630     |  | 920  
|Silver            |  | 127              |  | 81      |  | 208   |  | 93      |  | 91      |  | 184  
|High grade copper |  | 107              |  | 12      |  | 119   |  | 97      |  | 18      |  | 115  
|Aluminum          |  | 3                |  |        |  | 3     |  | 10      |  |        |  | 10   
|                  |  |                  |  |         |  |       |  |         |  |         |  |      
|Total             |  | 602              |  | 367     |  | 969   |  | 490     |  | 739     |  | 1,229
|                  |  |                  |  |         |  |       |  |         |  |         |  |      



Gold



For the three months ended September 30, 2005, futures contract volume
was 4.2 million contracts, an increase of 0.8 million contracts or 23.5% from 3.4 million contracts for the same period last year. Options contract volume was 0.8 million contracts, a decrease of 0.5 million contracts or
38.5% from 1.3 million contracts for the same period last year. Total futures and options contract volume was 5.0 million contracts, an increase of 0.3 million contracts or 6.4% from 4.7 million contracts for the same period last
year.



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##### Table of Contents

For the nine months ended September 30, 2005, futures contract volume was 12.1 million
contracts, an increase of 0.2 million contracts or 1.7% from 11.9 million contracts for the same period last year. Options contract volume was 2.2 million contracts, a decrease of 1.0 million contracts or 31.3% from
3.2 million contracts for the same period last year. Total futures and options contract volume was 14.3 million contracts, a decrease of 0.8 million contracts or 5.3% from 15.1 million contracts for the same period last year.



The Company believes that increases in futures contract volume
for the three and nine months ended September 30, 2005 was due, in part, to the fear of increased inflation as a result of rapidly rising energy prices, uncertainty regarding geopolitical conditions and a weak U.S. currency compared to other
international currencies. The decrease in options contract volume can be attributed to a period of reduced market volatility.



Silver



For the three months ended September 30, 2005, futures contract volume was 1.4 million contracts, an increase of 0.3 million contracts or
27.3% from 1.1 million contracts for the same period last year. Options contract volume was 260,000 contracts, an increase of 37,000 contracts or 16.6% from 223,000 contracts for the same period last year. Total futures and options contract
volume was 1.7 million contracts, an increase of 0.4 million contracts or 30.8% from 1.3 million contracts for the same period last year.



For the nine months ended September 30, 2005, futures contract volume was 4.2 million contracts, an increase of 0.2 million contracts or
5.0% from 4.0 million contracts for the same period last year. Options contract volume was 0.7 million contracts, a slight increase compared to the same period last year. Total futures and options contract volume was 4.9 million
contracts, an increase of 0.2 million contracts or 4.3% from 4.7 million contracts for the same period last year.



The Company believes that increases in futures and options contract volume for the three and nine months ended September 30, 2005 were due, in part,
to the increase appeal of silver as an alternative investment, which resulted in an increase in demand and, in turn, a decline in inventories. Additionally, the uncertainty regarding global geopolitical conditions and a weak U.S. currency versus
other international currencies, has led to increased hedging and speculative demand for silver futures and options.



High Grade Copper



For the three months ended September 30, 2005, futures contract volume was 0.9 million contracts, an increase of 0.2 million contracts or
28.6% from 0.7 million contracts for the same period last year. Options contract volume was 31,000 contracts, essentially flat compared to the same period last year. Total futures and options contract volume was 1.0 million contracts, an
increase of 0.2 million contracts or 25.0% from 0.8 million contracts for the same period last year.



For the nine months ended September 30, 2005, futures contract volume was 3.1 million contracts, an increase of 0.5 million contracts or
19.2% from 2.6 million contracts for the same period last year. Options contract volume decreased to 117,000 contracts from 163,000 contracts for the same period last year. Total futures and options contract volume was 3.3 million
contracts, an increase of 0.5 million contracts or 17.9% from 2.8 million contracts for the same period last year.



The Company believes that the increases in futures contract volume for the three and nine months ended September 30, 2005 were due, in part, to
declining global warehouse stocks as a result of increased international demand, strong housing starts and supply disruptions in various parts of the world, which contributed to increased hedging and speculative demand for copper futures.



NYMEX ClearPort® Clearing



For the three months ended September 30, 2005, futures and options contract clearing volume was 9.1 million
contracts, an increase of 5.1 million contracts or over 100% from 4.0 million contracts for the same period last year.



22



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##### Table of Contents

For the nine months ended September 30, 2005, futures and options contract clearing volume was
25.1 million contracts, an increase of 16.3 million contracts or almost 200% from 8.8 million contracts for the same period last year.



For the three and nine months ended September 30, 2005, there was significant growth in natural gas clearing volume through NYMEX ClearPort® Clearing. The Company believes this growth was due, in
part, to traditional over-the-counter market participants seeking credit risk mitigation provided by the Companys clearinghouse for off-Exchange trade execution activities. In addition, significant growth in the number of different natural gas
products offered during the current period and the launch of new products for petroleum, electricity and coal on NYMEX ClearPort® Clearing contributed to this increase.



NYMEX ClearPort® Clearing Contracts

(in thousands)



|                   |  |                                          |  |         |  |       |  |         |  |         |  |      
|------------------ |  | ---------------------------------------- |  | ------- |  | ----- |  | ------- |  | ------- |  | -----
|                   |  | For the Three Months Ended September 30,
|                   |  | 2005                                     |  | 2004   
|                   |  | Futures                                  |  | Options |  | Total |  | Futures |  | Options |  | Total
|Natural gas        |  | 6,778                                    |  | 1,954   |  | 8,732 |  | 2,957   |  | 762     |  | 3,719
|Electricity        |  | 323                                      |  | 22      |  | 345   |  | 146     |  |        |  | 146  
|Petroleum products |  | 16                                       |  | 35      |  | 51    |  | 114     |  |        |  | 114  
|Coal               |  | 13                                       |  |        |  | 13    |  | 2       |  |        |  | 2    
|Other              |  | 1                                        |  |        |  | 1     |  |        |  |        |  |     
|                   |  |                                          |  |         |  |       |  |         |  |         |  |      
|Total              |  | 7,131                                    |  | 2,011   |  | 9,142 |  | 3,219   |  | 762     |  | 3,981
|                   |  |                                          |  |         |  |       |  |         |  |         |  |      



NYMEX ClearPort® Clearing Contracts

(in thousands)



|                   |  |                                         |  |         |  |        |  |         |  |         |  |      
|------------------ |  | --------------------------------------- |  | ------- |  | ------ |  | ------- |  | ------- |  | -----
|                   |  | For the Nine Months Ended September 30,
|                   |  | 2005                                    |  | 2004   
|                   |  | Futures                                 |  | Options |  | Total  |  | Futures |  | Options |  | Total
|Natural gas        |  | 18,746                                  |  | 4,738   |  | 23,484 |  | 7,243   |  | 812     |  | 8,055
|Electricity        |  | 1,206                                   |  | 28      |  | 1,234  |  | 385     |  |        |  | 385  
|Petroleum products |  | 198                                     |  | 146     |  | 344    |  | 368     |  | 4       |  | 372  
|Coal               |  | 22                                      |  |        |  | 22     |  | 6       |  |        |  | 6    
|Other              |  | 1                                       |  |        |  | 1      |  |        |  |        |  |     
|                   |  |                                         |  |         |  |        |  |         |  |         |  |      
|Total              |  | 20,173                                  |  | 4,912   |  | 25,085 |  | 8,002   |  | 816     |  | 8,818
|                   |  |                                         |  |         |  |        |  |         |  |         |  |      



NYMEX ClearPort® Clearing Open Interest

(in thousands)



|                   |  |                  |  |         |  |       |  |         |  |         |  |      
|------------------ |  | ---------------- |  | ------- |  | ----- |  | ------- |  | ------- |  | -----
|                   |  | At September 30,
|                   |  | 2005             |  | 2004   
|                   |  | Futures          |  | Options |  | Total |  | Futures |  | Options |  | Total
|Natural gas        |  | 3,425            |  | 1,548   |  | 4,973 |  | 1,751   |  | 432     |  | 2,183
|Electricity        |  | 239              |  | 24      |  | 263   |  | 72      |  |        |  | 72   
|Petroleum products |  | 74               |  | 26      |  | 100   |  | 106     |  | 3       |  | 109  
|Coal               |  | 4                |  |        |  | 4     |  | 1       |  |        |  | 1    
|                   |  |                  |  |         |  |       |  |         |  |         |  |      
|Total              |  | 3,742            |  | 1,598   |  | 5,340 |  | 1,930   |  | 435     |  | 2,365
|                   |  |                  |  |         |  |       |  |         |  |         |  |      



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##### Table of Contents

Results of Operations for the Three and Nine Months Ended September 30, 2005 and 2004



Overview



Net income for the three months ended September 30, 2005 was $22.4 million, an increase of $16.8 million from $5.6
million for the same period last year. This increase was the result of revenues increasing by $34.7 million, which was partially offset by increases in operating expenses and income taxes of $2.9 million and $14.8 million, respectively. In
addition, the Company incurred a $0.2 million loss on its joint venture investment.



Net income for the nine months ended September 30, 2005 was $50.5 million, an increase of $33.3 million from $17.2 million for the same period last year. This increase was the result of revenues increasing by
$79.5 million, which was partially offset by increases in operating expenses and income taxes of $17.5 million and $28.5 million, respectively. In addition, the Company incurred a $0.2 million loss on its joint venture investment.



The increase in revenues for both the three- and nine-month periods was due
to an increase in clearing and transaction fees from higher trading and clearing volumes, market data fees from the implementation of a new price structure which went into effect on January 1, 2005, as well as increased investment income.
Additionally, the Company earned revenue from securities lending activities which began during the first quarter of 2005. The increase in operating expenses for both the three- and nine-month periods was due primarily to increases in general and
administrative expenses.



The following table summarizes the
components of net income for the three and nine months ended September 30, 2005 and 2004 (in thousands, except for share data):



|                                         |  |                                  |        |                                 |   |        |  |      |         |  |   |        
|---------------------------------------- |  | -------------------------------- | ------ | ------------------------------- | - | ------ |  | ---- | ------- |  | - | -------
|                                         |  | Three Months Ended September 30, |        | Nine Months Ended September 30,
|                                         |  | 2005                             |        | 2004                            |   | 2005   |  | 2004
|Total revenues                           |  | $                                | 97,903 |                                 | $ | 63,233 |  | $    | 253,086 |  | $ | 173,620
|Total expenses                           |  |                                  | 56,082 |                                 |   | 53,213 |  |      | 160,277 |  |   | 142,836
|                                         |  |                                  |        |                                 |   |        |  |      |         |  |   |        
|Operating income                         |  |                                  | 41,821 |                                 |   | 10,020 |  |      | 92,809  |  |   | 30,784 
|Loss on investment in joint venture      |  |                                  | 196    |                                 |   |       |  |      | 196     |  |   |       
|                                         |  |                                  |        |                                 |   |        |  |      |         |  |   |        
|Income before provision for income taxes |  |                                  | 41,625 |                                 |   | 10,020 |  |      | 92,613  |  |   | 30,784 
|Provision for income taxes               |  |                                  | 19,200 |                                 |   | 4,437  |  |      | 42,139  |  |   | 13,637 
|                                         |  |                                  |        |                                 |   |        |  |      |         |  |   |        
|Net income                               |  | $                                | 22,425 |                                 | $ | 5,583  |  | $    | 50,474  |  | $ | 17,147 
|                                         |  |                                  |        |                                 |   |        |  |      |         |  |   |        
|Basic and diluted earnings per share     |  | $                                | 27,482 |                                 | $ | 6,842  |  | $    | 61,855  |  | $ | 21,013 
|                                         |  |                                  |        |                                 |   |        |  |      |         |  |   |        



Revenue



Clearing and Transaction Fees



For the three months ended September 30, 2005, clearing and transaction
fees were $79.5 million, an increase of $29.3 million or 58.4% from $50.2 million for the same period last year. For the nine months ended September 30, 2005, clearing and transaction fees were $203.6 million, an increase of $64.8 million or
46.7% from $138.8 million for the same period last year. The increases for both the three- and nine-month periods were due to higher floor trading and NYMEX ACCESS® volumes on the NYMEX Division, higher NYMEX ClearPort® Clearing volumes, higher e-miNYSMvolumes and a higher average revenue per contract.



For the three and nine months ended September 30, 2005, revenue per contract was $1.33 and $1.27, respectively, increases of $0.18 and $0.15 per
contract, respectively, compared to the comparable prior year periods. These increases were due to the floor customer trading mix and an increase in the percentage of trades executed on NYMEX ClearPort® Clearing and NYMEX ACCESS®, which charge higher rates per trade.



24



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##### Table of Contents

Market Data Fees



For the three months ended September 30, 2005, market data fees were $11.1 million, an increase of $2.9 million or 35.4% from $8.2 million
for the same period last year. For the nine months ended September 30, 2005, market data fees were $33.1 million, an increase of $9.2 million or 38.5% from $23.9 million for the same period last year. The increases for both the three- and
nine-month periods were due primarily to the implementation of a new price structure that went into effect on January 1, 2005. Increases in the number of market data devices being utilized, for which the Company charges fees, also contributed
to the increases. In addition, the Company began to charge separate vendor administrative fees for the NYMEX Division and COMEX Division in May of 2004. Prior to this, vendors were being charged only one administrative fee for access to market data
of both divisions.



Other, Net



For the three months ended September 30, 2005, other revenues were $3.0
million, a decrease of $0.6 million or 16.7% from $3.6 million for the same period last year. For the nine months ended September 30, 2005, other revenues were $8.6 million, a decrease of $0.4 million or 4.4% from $9.0 million for the same
period last year. The decreases for both the three- and nine-month periods were due primarily to additional rental income recorded in the third quarter of 2004 from the Board of Trade of the City of New York, Inc. (NYBOT) offset, in
part, by increases in rental income from the Companys other tenants during 2005.



Investment Income, Net



For the three
months ended September 30, 2005, investment income was $3.4 million, an increase of $2.1 million or over 100% from $1.3 million for the same period last year. For the nine months ended September 30, 2005, investment income was $5.7
million, an increase of $3.7 million or over 100% from $2.0 million for the same period last year. The increases for both the three- and nine-month periods were due primarily to interest income, as a result of a larger amount of investment
assets in the current year periods coupled with higher interest rates. This increase was offset, in part, by lower realized gains on fixed income securities in 2005 compared to the prior year.



Interest Income from Securities Lending, Net



In 2005, the Company entered into an agreement with JPMorgan
Chase & Co. (JPMorgan) to participate in a securities lending program (see Note 2 to the unaudited consolidated financial statements). For the three and nine months ended September 30, 2005, interest income from securities
lending, net was $1.0 million and $2.2 million, respectively.



Operating Expenses



Salaries and Employee Benefits



For the three months ended September 30, 2005,
salaries and employee benefits were $15.2 million, an increase of $1.3 million or 9.4% from $13.9 million for the same period last year. For the nine months ended September 30, 2005, salaries and employee benefits were $45.3 million, an
increase of $2.4 million or 5.6% from $42.9 million for the same period last year. The increases for both the three- and nine-month periods were due primarily to higher employee costs attributable to an increase in the number of employees, as well
as higher overall compensation levels, compared to the same period last year. In addition, the Company incurred additional temporary staffing during the current year periods to assist in the start-up of its trading floors in Dublin, Ireland and
London, England. For the nine months ended September 30, 2005, the increase was partially offset by a decline in 2005 severance costs, as the Company incurred additional severance in the second quarter of 2004 with respect to one of its senior
executives.



25



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##### Table of Contents

Occupancy and Equipment



For the three months ended September 30, 2005, occupancy and equipment expenses were $7.9 million, an increase of $0.7
million or 9.7% from $7.2 million for the same period last year. For the nine months ended September 30, 2005, occupancy and equipment expenses were $21.5 million, an increase of $2.0 million or 10.3% from $19.5 million for the same period last
year. The increases for both the three- and nine-month periods were due primarily to rent and associated expenses incurred by the Company on its trading floors and office space in Dublin, Ireland and London, England, which were not in existence
during the prior year periods. The Company also incurred additional costs in third quarter of 2005 related to security enhancements at its corporate headquarters located in downtown New York City.



Depreciation and Amortization



For the three months ended September 30, 2005, depreciation and
amortization expenses were $3.7 million, a decrease of $3.2 million or 46.4% from $6.9 million for the same period last year. For the nine months ended September 30, 2005, depreciation and amortization expenses were $11.8 million, a decrease of
$5.6 million or 32.2% from $17.4 million for the same period last year. The decreases for both the three- and nine-month periods were due primarily to the write-off of fixed assets during the quarter ended September 30, 2004, which was a result
of the Company identifying, through an internal review, a material weakness in its internal controls relating to the acquisition, tracking and disposition of property and equipment. This resulted in a lower fixed asset base during the three- and
nine-month periods ended September 30, 2005 which, in turn, yielded lower depreciation compared to the same periods last year. The Company is currently in the process of remediating this weakness and has instituted new asset-tagging procedures,
new controls over the disposition of assets, and a monthly review process that verifies the valuation, categorization and estimated useful life of all fixed asset additions. In addition, the Company will be implementing new automated processes to
replace certain manual processes.



General and Administrative



For the three months ended September 30, 2005,
general and administrative expenses were $15.3 million, an increase of $6.9 million or 82.1% from $8.4 million for the same period last year. For the nine months ended September 30, 2005, general and administrative expenses were $39.5 million,
an increase of $18.0 million or 83.7% from $21.5 million for the same period last year. On September 12, 2005, the Company launched an open outcry futures exchange in London, England, which resulted in additional costs not present in the prior
year periods. Upon opening the London trading floor, the Company ceased its operations in Dublin, Ireland. The increases for both the three- and nine-month periods were due primarily to transaction incentives the Company incurred during the current
year periods, which it believes are necessary to promote trading in London and, previously, in Dublin. The Company expects to incur increased incentive costs in the near future for its London initiative. Travel related costs associated with the
establishment and operation of the Companys trading floors in London and, previously, in Dublin also contributed to the current year increases.



Professional Services



For the three months ended September 30, 2005, professional services expenses were $6.7 million, an increase of $0.2 million or 3.1% from $6.5
million for the same period last year. For the nine months ended September 30, 2005, professional services expenses were $21.7 million, an increase of $2.7 million or 14.2% from $19.0 million for the same period last year. The increases for
both the three- and nine-month periods were due primarily to higher financial and legal consulting fees the Company incurred to support its business expansion initiatives, as well as technical consulting to support its technology initiatives.



Telecommunications



For the three months ended September 30, 2005, telecommunications
expenses were $1.7 million, an increase of $0.5 million or 41.7% from $1.2 million for the same period last year. For the nine months ended



26



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##### Table of Contents

September 30, 2005, telecommunications expenses were $5.1 million, an increase of $0.9 million or 21.4% from $4.2 million for the same period last year.
The increases for both the three- and nine-month periods were due primarily to higher data communication expenses in the current year periods needed to support the growth in market data fees, as well as costs associated with the London trading floor
and, previously, with the Dublin trading floor.



Marketing



For the three months ended September 30, 2005,
marketing expenses were $1.3 million, an increase of $0.9 million or over 200% from $0.4 million for the same period last year. For the nine months ended September 30, 2005, marketing expenses were $3.1 million, an increase of $1.4 million
or 82.4% from $1.7 million for the same period last year. The increases for both the three- and nine-month periods were due primarily to higher advertising and other marketing expenses attributable to the Companys international expansion
initiatives.



Other Expenses



For the three months ended September 30, 2005, other expenses were $2.1
million, an increase of $0.1 million or 5.0% from $2.0 million for the same period last year. For the nine months ended September 30, 2005, other expenses were $6.6 million, an increase of $0.5 million or 8.2% from $6.1 million for the
same period last year. The increases for both the three- and nine-month periods were due primarily to higher charitable contributions in the current year periods.



Interest Expense



For the three and nine months ended September 30, 2005, interest expense was $1.7 million and $5.2 million, respectively, down slightly from the
same periods last year. The decreases for both the three- and nine-month periods were due to a lower principal balance on the Companys long-term debt during the current year periods.



Asset Impairment and Disposition Losses



The loss on impairment and disposition of property and equipment for the
three and nine months ended September 30, 2005 was $0.4 million and $0.5 million, respectively. The Company, in the normal course of business, records charges for the impairment and disposal of assets which it determines to be obsolete.



Provision for Income Taxes



The Companys effective tax rate was 45.5% for the nine months ended
September 30, 2005, compared to 44.3% for the same period last year. The difference between the effective tax rates was due primarily to a lower proportion of tax-exempt income as a result of higher pre-tax income in the current year, as well
as the non-deductibility of certain losses and/or expenses the Company has incurred in relation to an international joint venture agreement.



Financial Condition and Cash Flows



Liquidity and Capital Resources



At September 30, 2005, the Company had $132.1 million in cash and cash equivalents, securities purchased under agreements to resell and marketable
securities. Working capital at September 30, 2005 was $99.0 million.



Cash Flow; Sources and Uses of Cash



The Companys principal sources of cash are fees collected from clearing members for trading and/or clearing futures and options transactions, fees collected from market data vendors for distribution of the



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##### Table of Contents

Companys proprietary contract price information, and rent collected from tenants leasing space in the Companys headquarters building. Principal
uses of cash include operating expenses, income taxes, capital expenditures, debt service, dividends and payments made to members and third parties under certain incentive programs.



The following table is a summary of significant cash flow categories for the nine months ended September 30, 2005 and
2004:



|                                                     |  |                                 |            |   |      |   |         |  
|---------------------------------------------------- |  | ------------------------------- | ---------- | - | ---- | - | ------- | -
|                                                     |  | Nine Months Ended September 30, |           
|                                                     |  | 2005                            |            |   | 2004 |  
|                                                     |  | (in thousands)                  |           
|Net cash flow provided by (used in):                 |  |                                 |            |   |      |   |         |  
|Operating activities                                 |  | $                               | 64,405     |   |      | $ | 48,131  |  
|Investing activities                                 |  |                                 | (3,401,632 | ) |      |   | (44,426 | )
|Financing activities                                 |  |                                 | 3,337,248  |   |      |   | (5,000  | )
|                                                     |  |                                 |            |   |      |   |         |  
|Net increase (decrease) in cash and cash equivalents |  | $                               | 21         |   |      | $ | (1,295  | )
|                                                     |  |                                 |            |   |      |   |         |  



Net cash provided by
operating activities includes cash inflows related to operating revenues, net of cash outflows related to operating expenses, income taxes and payments to members and third parties under certain incentive programs.



Net cash provided by operating activities for the nine months ended
September 30, 2005 was $64.4 million, an increase of $16.3 million compared to the same period last year. This increase was due primarily to an increase in operating revenues offset, in part, by an increase in income tax payments and payments
made under the Companys incentive programs during the current year period.



Under a securities lending program with JPMorgan, the Company lends out securities in exchange for cash collateral which, in turn, is invested on an overnight basis. The cash collateral received is recorded as a
liability and presented in financing activities on the Companys consolidated statements of cash flows. The corresponding investment is recorded as an asset and presented in investing activities on the Companys consolidated statements of
cash flows.



Net cash provided by investing activities for the
nine months ended September 30, 2005, exclusive of securities purchased under the securities lending program, was $24.3 million, an increase of $68.7 million compared to the same period last year. This increase was due primarily to a transfer
of marketable securities into operating cash to fund the payment of an $81.6 million dividend to the Companys common stockholders during the current year period.



Net cash used in financing activities for the nine months ended September 30, 2005, exclusive of cash received under
the securities lending program, was $88.7 million, an increase of $83.7 million compared to the same period last year. This represents payments of cash dividends to the Companys common stockholders of $108,700 per share compared to $6,127 per
share in the prior year period. The Company reserves the right to pay discretionary future dividends.



The Company believes that its cash flows from operations and existing working capital will be sufficient to meet its needs for the foreseeable future,
including capital expenditures, debt service and dividends. Subject to certain limitations under existing long-term note agreements, the Company has the ability, and may seek to raise capital through the issuance of debt or equity in the private and
public capital markets.



Investment Policy



The Company maintains cash and short-term investments in an amount
sufficient to meet its working capital requirements. The Companys investment policies are designed to maintain a high degree of liquidity,



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emphasizing safety of principal and total after-tax return. Excess cash on hand is generally invested overnight in securities purchased under agreements to
resell and short-term marketable securities. Cash that is not required to meet daily working capital requirements is invested primarily in high-grade tax-exempt municipal bonds and obligations of the United States government and its agencies. The
Company also invests in equity securities. At September 30, 2005 and December 31, 2004, cash and investments were as follows:



|                                                |  |                    |         |                   |   |        
|----------------------------------------------- |  | ------------------ | ------- | ----------------- | - | -------
|                                                |  | September 30, 2005 |         | December 31, 2004
|                                                |  | (in thousands)    
|Cash and cash equivalents                       |  | $                  | 3,105   |                   | $ | 3,084  
|Securities purchased under agreements to resell |  |                    | 30,000  |                   |   | 19,324 
|Marketable securities                           |  |                    | 99,008  |                   |   | 144,950
|                                                |  |                    |         |                   |   |        
|                                                |  | $                  | 132,113 |                   | $ | 167,358
|                                                |  |                    |         |                   |   |        



Included in marketable
securities at September 30, 2005 are investments totaling $11.8 million relating to the COMEX Division Members Recognition and Retention Plan (MRRP) (see Note 11 to the unaudited consolidated financial statements). Also,
included in marketable securities are investments that are pledged as collateral with one of the Companys investment managers relating to a membership seat financing program (see Note 9 to the unaudited consolidated financial statements).



Clearinghouse



The Company serves a clearinghouse function, standing as a financial
intermediary on every open futures and options transaction cleared. Through its clearinghouse, the Company maintains a system of guarantees for performance of obligations owed to buyers and sellers. This system of guarantees is supported by several
mechanisms, including margin deposits and guaranty funds posted by clearing members with the Companys clearinghouse. The amount of margin deposits on hand will fluctuate over time as a result of, among other things, the extent of open
positions held at any one point in time by market participants in NYMEX Division and COMEX Division contracts and the margin rates then in effect for such contracts.



The Company is required, under the Commodity Exchange Act, to maintain separate accounts for cash and securities that are
deposited by clearing members, at banks approved by the Company, as margin for house and customer accounts. These clearing deposits are used by members to meet their obligations to the Company for margin requirements on open futures and options
positions, as well as delivery obligations.



Each clearing
member firm is required to maintain a security deposit, in the form of cash or U.S. Treasury securities, ranging from $100,000 to $2.0 million, per division, based upon such clearing member firms reported regulatory capital, in a fund known as
a guaranty fund. Historically, separate and distinct guaranty funds were maintained for the NYMEX Division and the COMEX Division. Effective May 16, 2003, the NYMEX Division assumed all of the clearing functions of the COMEX Division.
Accordingly, the deposits were aggregated and are now maintained in a single guaranty fund (the Guaranty Fund) which may be used for any loss sustained by the Company as a result of the failure of a clearing member to discharge its
obligations on either division. Although there is now one Guaranty Fund for both divisions, separate contribution amounts are calculated for each division.



Every member and non-member executing transactions on the Companys divisions must be guaranteed by a clearing member and clear their transactions
through the Companys clearinghouse. This requirement also applies to transactions conducted outside of the Exchange which clear through NYMEX ClearPort® Clearing. Clearing members of the NYMEX Division and COMEX Division require their customers to maintain deposits in accordance with Company
margin requirements. Margin deposits and Guaranty Funds are posted by clearing members with the Companys clearinghouse. In the event of a clearing member default, the Company satisfies the clearing members obligations on the underlying
contract by drawing on the defaulting clearing members Guaranty Funds. If those resources are insufficient, the Company may fund the obligations from its own financial



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resources or draw on Guaranty Funds posted by non-defaulting clearing members. The Company also maintains a $100 million default insurance policy. This
insurance coverage is available to protect the Company and clearing members in the event that a default in excess of $130 million occurs. Additionally, the Company intends to enter into a revolving credit agreement during 2005. This agreement would
provide a line of credit which could be drawn upon in the event of a clearing member default. Such an arrangement would provide the Company with same-day funds to settle such clearing member default, while providing enough time for an efficient
distribution from the Guaranty Fund. Proceeds from the sale of Guaranty Fund securities would be used to repay borrowings under the line of credit.



During 2004, the Company established additional retail customer protection supported by a commitment of at least $10 million available at all times to
promptly reimburse retail customers in the event that their clearing member defaults as a result of a default by another customer where margin funds from the retail customers account are used to address the default. Retail customers are
defined as those that do not otherwise qualify as eligible contract participants under the requirements of the Commodity Exchange Act, and are not floor traders or floor brokers on the Exchange or family members of an Exchange floor
trader or floor broker who maintains an account at the same clearing firm.



The Exchange, as a self-regulatory organization, has instituted detailed risk-management policies and procedures to guard against default risk with respect to contracts traded and/or cleared on the Exchange. In order
to manage the risk of financial non-performance, the Exchange (i) has established that clearing members maintain at least $5 million in minimum working capital; (ii) limits the number of net open contracts that can be held by any clearing
member, based upon that clearing members capital; (iii) requires clearing members to post original margin collateral for all open positions, and to collect original margin from their customers; (iv) pays and collects variation margin
on a marked-to-market basis at least twice daily; (v) requires clearing members to collect variation margin from their customers; (vi) requires deposits to the Guaranty Fund from clearing members which would be available to cover financial
non-performance; and (vii) has broad assessment authority to recoup financial losses. The Exchange also has extensive surveillance and compliance operations and procedures to monitor and enforce compliance with rules pertaining to the trading,
position sizes, delivery obligations and financial condition of members. In addition, the clearing member, as all member firms, must own and hold two memberships, or seats, at the Exchange.



As part of the Exchanges powers and procedures designed to support
contract obligations in the event of a default, the Exchange may levy assessments on any of its clearing members if there are insufficient funds available to cover a deficit. The maximum assessment on each clearing member firm is the lesser of $30
million or 40% of such clearing member firms reported regulatory capital.



The Company is entitled to earn interest on cash and investment balances recorded as margin deposits and Guaranty Funds. Such balances are included in the Companys consolidated balance sheets, and are generally
invested overnight in securities purchased under agreements to resell. The table in Note 8 to the unaudited consolidated financial statements, Margin Deposits and Guaranty Funds,sets forth Guaranty Fund balances held by the Company on behalf
of clearing members at September 30, 2005 and December 31, 2004.



Future Cash Requirements



In connection with
its operating activities, the Company enters into certain contractual obligations. The Companys material contractual cash obligations include long-term debt, operating leases, a capital lease and other contracts.



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A summary of the Companys future cash payments associated with its contractual cash obligations
outstanding as of September 30, 2005, as well as an estimate of the timing in which these commitments are expected to expire, are set forth in the following table:



|                              |  |                        |       |      |   |        |  |      |        |      |   |            |  |       |        |  |   |         |  |   |        
|----------------------------- |  | ---------------------- | ----- | ---- | - | ------ |  | ---- | ------ | ---- | - | ---------- |  | ----- | ------ |  | - | ------- |  | - | -------
|                              |  | Payments Due by Period
|                              |  | 2005                   |       | 2006 |   | 2007   |  | 2008 |        | 2009 |   | Thereafter |  | Total
|                              |  | (in thousands)        
|Contractual Obligations       |  |                        |       |      |   |        |  |      |        |      |   |            |  |       |        |  |   |         |  |   |        
|Long-term debt principal      |  | $                      | 2,817 |      | $ | 2,817  |  | $    | 2,817  |      | $ | 2,817      |  | $     | 2,817  |  | $ | 74,647  |  | $ | 88,732 
|Long-term debt interest       |  |                        | 3,418 |      |   | 6,626  |  |      | 6,416  |      |   | 6,205      |  |       | 5,994  |  |   | 47,570  |  |   | 76,229 
|Operating leasesfacilities   |  |                        | 1,086 |      |   | 4,216  |  |      | 4,053  |      |   | 4,029      |  |       | 4,056  |  |   | 11,652  |  |   | 29,092 
|Operating leasesequipment    |  |                        | 595   |      |   | 1,727  |  |      | 1,074  |      |   | 579        |  |       |       |  |   |        |  |   | 3,975  
|Capital lease                 |  |                        | 120   |      |   | 327    |  |      |       |      |   |           |  |       |       |  |   |        |  |   | 447    
|Other long-term obligations   |  |                        | 800   |      |   | 800    |  |      | 800    |      |   | 800        |  |       | 800    |  |   | 7,803   |  |   | 11,803 
|                              |  |                        |       |      |   |        |  |      |        |      |   |            |  |       |        |  |   |         |  |   |        
|Total contractual obligations |  | $                      | 8,836 |      | $ | 16,513 |  | $    | 15,160 |      | $ | 14,430     |  | $     | 13,667 |  | $ | 141,672 |  | $ | 210,278
|                              |  |                        |       |      |   |        |  |      |        |      |   |            |  |       |        |  |   |         |  |   |        



The Companys
senior notes are subject to a prepayment penalty in the event they are paid off prior to their scheduled maturities. The Company believes that any economic benefits derived from early redemption of these notes would be offset by the redemption
penalty. These notes place certain limitations on the Companys ability to incur additional indebtedness.



In accordance with the DME shareholders agreement, the Company will be required to contribute capital to the joint-venture in an aggregate amount of $9.8
million over a five-year period, contingent upon the DMEs achievement of certain agreed upon performance targets. On September 6, 2005, the first contribution of $2.5 million was made.



Other Matters



In February 2004, the Commodity Futures Trading Commission (CFTC) issued an order requiring, among other things,
that the Company establish and maintain a permanent retail customer protection mechanism supported by a commitment of not less than $10 million, which must be available at all times to reimburse retail customers trading on the Exchange whose
original margin might be lost in the default of another customer of their clearing member. The Company has established the retail customer protection mechanism. Based on historical patterns, the Company believes that the likelihood of a default that
would require reimbursement under this mechanism is remote. Therefore, the Company has not established, and does not expect in the future to establish, a liability related to this commitment.



In September 2005, the Company announced that it signed a non-binding letter
of intent with a private equity firm, by which such firm would invest $135 million for a 10% equity stake in the Company. The proposed transaction values the Company at $1.35 billion after the investment. It is expected that the net proceeds from
the investment would be distributed to the Companys stockholders, and that the private equity firm would not participate in that distribution. Consummation of the transaction will require the approval of the Companys stockholders and of
the CFTC. Therefore, there can be no assurance that the proposed investment in the Company will be completed on its currently proposed terms or will ever be completed, or that the required stockholder and CFTC approvals will be obtained.



The Company has been closely monitoring the activities of Refco LLC, a
clearing member of both its NYMEX Division and COMEX Division. Refco LLC is a subsidiary of Refco Inc. Refco Inc. and certain subsidiaries filed for protection under Chapter 11 of the United States Bankruptcy Code on October 17, 2005. To the best of
the Companys knowledge, none of Refco Inc.s regulated subsidiaries, including the futures brokerage business conducted through Refco LLC, have filed for bankruptcy protection. All customer positions and funds held by Refco LLC are
specifically segregated from its assets in compliance with CFTC regulations



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and Exchange rules. In addition, the Company has placed restrictions on the withdrawal of any capital (including any excess capital) by Refco LLC, without
the Companys prior approval. Refco LLC accounted for approximately 15% of the Companys clearing and market data revenue at September 30, 2005 and owed the Company approximately $4.2 million at September 30, 2005. This amount has been
collected and, as of the date of this report, Refco LLC has met all of its obligations to the Company. The Company, however, invoices Refco LLC 30 days in arrears, and as a result, the Company cannot provide any assurances that it will be able to
collect such billings in the future.



Responsibility for Financial Reporting



The Companys management is responsible for the
preparation, integrity and objectivity of the unaudited consolidated financial statements and related notes, and the other financial information contained in this Form 10-Q. Such financial statements have been prepared in accordance with U.S.
generally accepted accounting principles and are considered by management to present fairly the Companys consolidated financial position, results of operations and cash flows. These unaudited consolidated financial statements include certain
amounts that are based on managements estimates and judgments, giving due consideration to materiality.



Item 3.Quantitative and Qualitative Disclosures about Market Risk



The table below provides information about the Companys debt securities portfolio and long-term debt including expected principal and interest cash
flows for the years 2005 through 2009 and thereafter:



Principal Amounts by Expected Maturity

At September 30, 2005

(in thousands)



|                |  |           |         |          |   |        |  |                                |         |  |      |  
|--------------- |  | --------- | ------- | -------- | - | ------ |  | ------------------------------ | ------- |  | ---- | -
|Year            |  | Principal |         | Interest |   | Total  |  | Weighted Average Interest Rate |        
|Assets          |  |           |         |          |   |        |  |                                |         |  |      |  
|Debt Securities |  |           |         |          |   |        |  |                                |         |  |      |  
|2005            |  | $         | 6       |          | $ | 543    |  | $                              | 549     |  | 1.79 | %
|2006            |  |           | 314     |          |   | 2,482  |  |                                | 2,796   |  | 4.61 | %
|2007            |  |           | 657     |          |   | 2,636  |  |                                | 3,293   |  | 4.90 | %
|2008            |  |           | 1,780   |          |   | 2,652  |  |                                | 4,432   |  | 4.96 | %
|2009            |  |           | 6,638   |          |   | 2,633  |  |                                | 9,271   |  | 5.03 | %
|Thereafter      |  |           | 47,719  |          |   | 14,534 |  |                                | 62,253  |  | 4.38 | %
|                |  |           |         |          |   |        |  |                                |         |  |      |  
|Total           |  | $         | 57,114  |          | $ | 25,480 |  | $                              | 82,594  |  |      |  
|                |  |           |         |          |   |        |  |                                |         |  |      |  
|Fair Value      |  | $         | 61,611  |          |   |        |  |                                |         |  |      |  
|                |  |           |         |          |   |        |  |                                |         |  |      |  
|Liabilities     |  |           |         |          |   |        |  |                                |         |  |      |  
|Corporate Debt  |  |           |         |          |   |        |  |                                |         |  |      |  
|2005            |  | $         | 2,817   |          | $ | 3,418  |  | $                              | 6,235   |  | 7.71 | %
|2006            |  |           | 2,817   |          |   | 6,626  |  |                                | 9,443   |  | 7.71 | %
|2007            |  |           | 2,817   |          |   | 6,416  |  |                                | 9,233   |  | 7.72 | %
|2008            |  |           | 2,817   |          |   | 6,205  |  |                                | 9,022   |  | 7.73 | %
|2009            |  |           | 2,817   |          |   | 5,994  |  |                                | 8,811   |  | 7.74 | %
|Thereafter      |  |           | 74,647  |          |   | 47,570 |  |                                | 122,217 |  | 7.75 | %
|                |  |           |         |          |   |        |  |                                |         |  |      |  
|Total           |  | $         | 88,732  |          | $ | 76,229 |  | $                              | 164,961 |  |      |  
|                |  |           |         |          |   |        |  |                                |         |  |      |  
|Fair Value      |  | $         | 111,287 |          |   |        |  |                                |         |  |      |  
|                |  |           |         |          |   |        |  |                                |         |  |      |  



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Interest Rate Risk



Investment Income



The Companys investment income consists primarily of interest income and realized and unrealized gains and losses on the market values of its
investments. Given the composition of its investment portfolio, the Companys investment income is highly sensitive to fluctuation in interest rates. Investment income for the three months ended September 30, 2005 was $3.4 million compared
to $1.3 million for the same period last year. Investment income for the nine months ended September 30, 2005 was $5.7 million compared to $2.0 million for the same period last year. The fair value of the Companys marketable securities,
including equity and short-term debt securities was $99.0 million at September 30, 2005. Based on portfolio compositions at September 30, 2005, and assuming a 10% change in market values, the Company would have recognized losses of $9.9
million.



Debt



The weighted average interest rate on the Companys long-term debt is
7.75%. The debt contains a redemption premium, the amount of which varies with changes in interest rates. Therefore, the fair market value of the Companys long-term debt is highly sensitive to changes in interest rates. Although the market
value of the debt will fluctuate with interest rates, the Companys interest expense will not vary with changes in market interest rates if the debt is paid off in accordance with stated principal repayment schedules. As of the date of this
report, the Company does not expect to pay down any series of its long-term debt prior to stated maturities. However, the Company may pursue future financing strategies that involve early repayment of its current debt, or issuance of new debt,
potentially increasing its sensitivity to changes in interest rates.



Credit
Risk



NYMEX Division bylaws authorize its board of
directors to fix the annual dues of NYMEX Division members and to levy assessments as it determines to be necessary. Such dues and assessments are payable at such time as NYMEX Divisions board of directors may determine. NYMEX Divisions
board of directors may waive the payment of dues by all NYMEX Division members or by individual members as it determines. COMEX Division provides its board of directors with similar powers relating to dues, assessments and fees with respect to COMEX
Division members, provided that such dues and assessments (or fee surcharges in lieu thereof) may not be imposed (other than in connection with certain merger-related events) without the consent of the COMEX Governors Committee and that the ability
of COMEX Divisions board of directors to impose such fees are subject to the limitations.



The Exchange, as a self-regulatory organization, has instituted detailed risk-management policies and procedures to guard against default risk with
respect to contracts traded and/or cleared on the Exchange. The Exchange also has extensive surveillance and compliance operations and procedures to monitor and to enforce compliance with rules pertaining to the trading, position sizes and financial
condition of members. As described herein, the Exchange has powers and procedures designed to support contract obligations in the event that a contract default occurs on the Exchange, including authority to levy assessments on any of its clearing
members if, after a default by another clearing member, there are insufficient funds available to cover a deficit. The maximum assessment on each clearing member firm is the lesser of $30 million or 40% of such clearing member firms reported
regulatory capital.



Despite the Companys authority to
levy assessments or impose fees, there can be no assurance that the relevant members will have the financial resources available to pay, or will not choose to be expelled from membership rather than pay, any dues, fees or assessments. The Company
believes that assessment liabilities of a member arising prior to expulsion are contractual in nature and, accordingly, survive expulsion. In addition, the Exchange would have recourse to such member and the proceeds from the Companys sale of
such members seat would apply towards any outstanding obligations to the Exchange of such member. Recourse to a members seat, however, may not be of material value in the case of large defaults that result in assessments greater than the
seat value, particularly when the seat value declines markedly in price as a consequence of the default.



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Moreover, despite the risk mitigation techniques adopted by, and other powers and procedures implemented
by the Company, which are designed to, among other things, minimize the potential risks associated with the occurrence of contract defaults on the Company, there can be no assurance that these powers and procedures will prevent contract defaults or
will otherwise function to preserve the liquidity of the Company.



Item 4.Controls and Procedures



(a)Evaluation of Disclosure Controls and Procedures. The Companys Principal Executive Officer and Principal Financial Officer, after evaluating the effectiveness of the Companys disclosure
controls and procedures (as such term is defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (the Exchange Act)) as of the end of the period covered by this Quarterly Report on Form 10-Q, have
concluded that, based on such evaluation, the Companys disclosure controls and procedures were not effective in reporting, on a timely basis, information required to be disclosed by the Company in the reports that the Company files or submits
under the Exchange Act, and this Quarterly Report on Form 10-Q, due to a previously-reported material weakness in its internal controls relating to the acquisition, tracking and disposition of its property and equipment, as described in Item 9A
of the Companys Annual Report on Form 10-K for the fiscal year ended December 31, 2004. As described in more detail below, the Company believes that additional remedial efforts and further review are prudent before it deems such material
weakness to be fully remediated. Accordingly, in preparing its financial statements at and for the three and nine months ended September 30, 2005, the Company performed additional procedures relating to property and equipment to ensure that the
Companys financial statements filed in this Quarterly Report on Form 10-Q were fairly stated in all material respects in accordance with U.S. generally accepted accounting principles.



(b)Changes in Internal Controls. There were no changes, other
than as discussed below, in the Companys internal control over financial reporting identified in connection with the evaluation of such internal control that occurred during the Companys last fiscal quarter that have materially affected,
or are reasonably likely to materially affect, the Companys internal control over financial reporting.



1. The Company has implemented policies and procedures reasonably assured to remediate the material weakness described in (a) above.
Specifically, the Company has instituted new asset-tagging procedures, new controls over the disposition of assets, and a monthly review process that verifies the valuation, categorization and estimated useful life of all fixed asset additions.
These remediation efforts were tested as of September 30, 2005, and no exceptions were noted. The Company is also implementing new automated processes to replace certain manual processes. Since the final testing and review is not yet complete,
the Company believes that it cannot state that the material weakness in its internal controls relating to the acquisition, tracking and disposition of its property and equipment (as described in Item 9A of the Companys Annual Report on
Form 10-K for the fiscal year ended December 31, 2004) has been fully remediated and, therefore, must continue to report that its disclosure controls and procedures were not effective.



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PART II: OTHER INFORMATION



Item 1.Legal Proceedings



Set forth below is a description of material litigation to which the Company is a party, as of September 30, 2005. Although there can be no assurance as to the ultimate outcome, the Company believes it has a
meritorious defense and is vigorously defending the matter described below. The final outcome of any litigation, however, cannot be predicted with certainty, and an adverse resolution of this matter could have a material adverse effect on the
Companys consolidated results of operations, financial position or cash flows.



The Company has been named as a defendant in the following legal action:



New York Mercantile Exchange, Inc. v. IntercontinentalExchange, Inc.On November 20, 2002, NYMEX Exchange commenced an action
in United States District Court for the Southern District of New York against IntercontinentalExchange, Inc. (ICE). The amended complaint alleges claims for: (a) copyright infringement by ICE arising out of ICEs uses of
certain NYMEX Exchange settlement prices; (b) service mark infringement by reason of use by ICE of the service marks NYMEX and NEW YORK MERCANTILE EXCHANGE; (c) violation of trademark anti-dilution statutes; and (d) interference with
contractual relationships. On January 6, 2003, ICE served an Answer and Counterclaims, in which ICE alleges five counterclaims against NYMEX Exchange as follows: (1) a claim for purported violation of Section 2 of the Sherman Act, 15
U.S.C. § 2, for NYMEX Exchanges allegedly trying to maintain a monopoly in the execution of the North America energy futures and expand the alleged monopoly into the execution and clearing of North American OTC energy contracts by
attempting to deny ICE access to NYMEX Exchange settlement prices; (2) a claim for purported violation of Section 1 of the Sherman Act by conspiring with certain of its members to restrain trade by attempting to deny ICE access to NYMEX
Exchange settlement prices; (3) a claim for alleged violation of Section 2 of the Sherman Act by NYMEX Exchange purportedly denying ICE access to NYMEX Exchanges settlement prices which are allegedly an essential
facility; (4) a claim for purported violation of Section 1 of the Sherman Act and Section 3 of the Clayton Act by NYMEX Exchange allegedly tying execution services for North American energy futures and options to clearing
services; and (5) a claim for purported violation of the Lanham Act through false advertising with respect to certain services offered by NYMEX Exchange and services offered by ICE. The counterclaims request damages and trebled damages in
amounts not specified yet by ICE in addition to injunctive and declaratory relief.



On August 11, 2003, the Court issued an opinion dismissing certain counterclaims and one affirmative defense, with leave to replead.
On or about August 28, 2003, NYMEX Exchange was served with ICEs First Amended Counterclaims in which ICE made four counterclaims against NYMEX Exchange principally alleging violations of U.S. antitrust laws, including claims regarding
monopoly leveraging.



By Order and Opinion
dated June 30, 2004, the Court granted NYMEX Exchanges motion and dismissed all of the antitrust counterclaims asserted against NYMEX Exchange.



By Order and Opinion dated September 29, 2005, the Court (1) granted ICEs motion for summary judgment to the extent of
dismissing NYMEX Exchanges federal claims for copyright and trademark infringement and dismissing without prejudice (by declining to exercise supplemental jurisdiction), NYMEX Exchanges state law claims for violation of trademark
anti-dilution statutes and interference with contractual relationships, and (2) denied NYMEX Exchanges cross-motion for partial summary judgment on copyright infringement and tortious interference with contract. On October 13, 2005,
NYMEX Exchange filed a notice of appeal with the United States Court of Appeals for the Second Circuit. This case is ongoing.



Item 2.Unregistered Sales of Equity Securities and Use of Proceeds



Not applicable



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Item 3.Defaults upon Senior Securities



Not applicable



Item 4.Submission of Matters to a Vote of Security Holders



Not applicable



Item 5.Other Information



Not applicable



Item 6.Exhibits



|     |  |                                                                                                                                      
|---- |  | -------------------------------------------------------------------------------------------------------------------------------------
|31.1 |  | Certification of the Principal Executive Officer pursuant to § 302 of the Sarbanes-Oxley Act of 2002.                                
|     | 
|31.2 |  | Certification of the Principal Financial Officer pursuant to § 302 of the Sarbanes-Oxley Act of 2002.                                
|     | 
|32   |  | Certification of the Principal Executive Officer and Principal Financial Officer pursuant to § 906 of the Sarbanes-Oxley Act of 2002.



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SIGNATURES



Pursuant to the
requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.



|                       |  |  |  |                      |  |                            |  |                                                             
|---------------------- |  |  |  | -------------------- |  | -------------------------- |  | ------------------------------------------------------------
|                       |  |  |  | NYMEX HOLDINGS, INC.
|                       |  |  | 
|Date: November 8, 2005 |  |  |  | By:                  |  | /s/    MITCHELL
STEINHAUSE
|                       |  |  |  |                      |  | Name:                      |  | Mitchell Steinhause                                         
|                       |  |  |  |                      |  | Title:                     |  | Chairman (Principal Executive
Officer)                      
|                       |  |  | 
|Date: November 8, 2005 |  |  |  | By:                  |  | /s/    KENNETH D.
SHIFRIN 
|                       |  |  |  |                      |  | Name:                      |  | Kenneth D. Shifrin                                          
|                       |  |  |  |                      |  | Title:                     |  | Acting Chief Financial Officer (Principal
Financial Officer)



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