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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 March 31, 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 ̈



The number of shares of NYMEX Holdings, Inc. capital stock outstanding as of May 10, 2005 was 816. The aggregate market
value of NYMEX Holdings, Inc. capital stock held by stockholders of NYMEX Holdings, Inc., as of May 5, 2005 was $1,715,640,000 based upon the average of the bid and ask price for a NYMEX Holdings, Inc. share as of May 5, 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 months ended March 31, 2005 and 2004 (Unaudited)                                               |  | 1   
|        |  |                                                                                                                                               
|        |  | Consolidated Balance Sheets as of March 31, 2005 (Unaudited) and December 31, 2004                                                             |  | 2   
|        |  |                                                                                                                                               
|        |  | Consolidated Statements of Stockholders Equity for the three months ended March 31, 2005 (Unaudited) and for the year ended December 31, 2004 |  | 3   
|        |  |                                                                                                                                               
|        |  | Consolidated Statements of Cash Flows for the three months ended March 31, 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                                                          |  | 15  
|        |  |                                                                                                                                               
|Item 3. |  | Quantitative and Qualitative Disclosures about Market Risk                                                                                     |  | 28  
|        |  |                                                                                                                                               
|Item 4. |  | Controls and Procedures                                                                                                                        |  | 29  
|        |  |                                                                                                                                               
|        |  | PART II: OTHER INFORMATION                                                                                                                     |  |     
|        |  |                                                                                                                                               
|Item 1. |  | Legal Proceedings                                                                                                                              |  | 31  
|        |  |                                                                                                                                               
|Item 2. |  | Unregistered Sales of Equity Securities and Use of Proceeds                                                                                    |  | 31  
|        |  |                                                                                                                                               
|Item 3. |  | Defaults upon Senior Securities                                                                                                                |  | 31  
|        |  |                                                                                                                                               
|Item 4. |  | Submission of Matters to a Vote of Security Holders                                                                                            |  | 32  
|        |  |                                                                                                                                               
|Item 5. |  | Other Information                                                                                                                              |  | 32  
|        |  |                                                                                                                                               
|Item 6. |  | Exhibits                                                                                                                                       |  | 32  
|        |  |                                                                                                                                               
|        |  | Signatures                                                                                                                                     |  | 33  



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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 March 31,
|                                                                   |  | 2005                         |        | 2004
|Revenues                                                           |  |                              |        |      |   |       
|Clearing and transaction fees, net of member rebates               |  | $                            | 58,415 |      | $ | 42,881
|Market data fees, net                                              |  |                              | 11,049 |      |   | 7,693 
|Other, net                                                         |  |                              | 2,695  |      |   | 2,663 
|Investment income, net                                             |  |                              | 89     |      |   | 1,028 
|Interest income from securities lending, net                       |  |                              | 432    |      |   |      
|                                                                   |  |                              |        |      |   |       
|Total revenues                                                     |  |                              | 72,680 |      |   | 54,265
|                                                                   |  |                              |        |      |   |       
|Expenses                                                           |  |                              |        |      |   |       
|Salaries and employee benefits                                     |  |                              | 15,103 |      |   | 13,632
|Occupancy and equipment                                            |  |                              | 6,974  |      |   | 5,978 
|Depreciation and amortization, net of deferred credit amortization |  |                              | 4,146  |      |   | 5,291 
|General and administrative                                         |  |                              | 9,083  |      |   | 6,498 
|Professional services                                              |  |                              | 8,384  |      |   | 5,744 
|Telecommunications                                                 |  |                              | 1,736  |      |   | 1,454 
|Marketing                                                          |  |                              | 751    |      |   | 754   
|Other expenses                                                     |  |                              | 2,196  |      |   | 2,008 
|Interest expense                                                   |  |                              | 1,725  |      |   | 1,770 
|Asset impairment and disposition losses                            |  |                              | 8      |      |   | 64    
|                                                                   |  |                              |        |      |   |       
|Total expenses                                                     |  |                              | 50,106 |      |   | 43,193
|                                                                   |  |                              |        |      |   |       
|Income before provision for income taxes                           |  |                              | 22,574 |      |   | 11,072
|Provision for income taxes                                         |  |                              | 10,152 |      |   | 4,830 
|                                                                   |  |                              |        |      |   |       
|Net income                                                         |  | $                            | 12,422 |      | $ | 6,242 
|                                                                   |  |                              |        |      |   |       
|Weighted average common shares outstanding, basic and diluted      |  |                              | 816    |      |   | 816   
|                                                                   |  |                              |        |      |   |       
|Basic and diluted earnings per share                               |  | $                            | 15,223 |      | $ | 7,650 
|                                                                   |  |                              |        |      |   |       



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)



|                                                                                                                        |  |                |           |                   |   |        
|----------------------------------------------------------------------------------------------------------------------- |  | -------------- | --------- | ----------------- | - | -------
|                                                                                                                        |  | March 31, 2005 |           | December 31, 2004
|                                                                                                                        |  | (Unaudited)    |           |                  
|Assets                                                                                                                  |  |                |           |                   |   |        
|Current assets                                                                                                          |  |                |           |                   |   |        
|Cash and cash equivalents                                                                                               |  | $              | 4,824     |                   | $ | 3,084  
|Collateral from securities lending program                                                                              |  |                | 1,454,918 |                   |   |       
|Securities purchased under agreements to resell                                                                         |  |                | 29,430    |                   |   | 19,324 
|Marketable securities, at market value                                                                                  |  |                | 145,227   |                   |   | 144,950
|Clearing and transaction fees receivable, net of allowance for member credits                                           |  |                | 21,661    |                   |   | 17,309 
|Prepaid expenses                                                                                                        |  |                | 3,845     |                   |   | 3,896  
|Deferred tax assets                                                                                                     |  |                | 2,590     |                   |   | 2,590  
|Margin deposits and guaranty funds                                                                                      |  |                | 290,281   |                   |   | 34,825 
|Other current assets                                                                                                    |  |                | 6,863     |                   |   | 6,704  
|                                                                                                                        |  |                |           |                   |   |        
|Total current assets                                                                                                    |  |                | 1,959,639 |                   |   | 232,682
|                                                                                                                        |  |               
|Property and equipment, net                                                                                             |  |                | 192,576   |                   |   | 194,719
|Goodwill                                                                                                                |  |                | 16,329    |                   |   | 16,329 
|Other assets                                                                                                            |  |                | 10,627    |                   |   | 10,920 
|                                                                                                                        |  |                |           |                   |   |        
|Total assets                                                                                                            |  | $              | 2,179,171 |                   | $ | 454,650
|                                                                                                                        |  |                |           |                   |   |        
|Liabilities and Stockholders Equity                                                                                    |  |                |           |                   |   |        
|Current liabilities                                                                                                     |  |                |           |                   |   |        
|Accounts payable and accrued liabilities                                                                                |  | $              | 16,898    |                   | $ | 15,236 
|Accrued salaries and related liabilities                                                                                |  |                | 6,785     |                   |   | 5,015  
|Payable under securities lending program                                                                                |  |                | 1,454,918 |                   |   |       
|Margin deposits and guaranty funds                                                                                      |  |                | 290,281   |                   |   | 34,825 
|Income tax payable                                                                                                      |  |                | 13,184    |                   |   | 11,283 
|Other current liabilities                                                                                               |  |                | 30,556    |                   |   | 31,941 
|                                                                                                                        |  |                |           |                   |   |        
|Total current liabilities                                                                                               |  |                | 1,812,622 |                   |   | 98,300 
|                                                                                                                        |  |               
|Grant for building construction deferred credit                                                                         |  |                | 109,919   |                   |   | 110,455
|Long-term debt                                                                                                          |  |                | 85,915    |                   |   | 85,915 
|Retirement obligation                                                                                                   |  |                | 11,464    |                   |   | 11,622 
|Deferred income taxes                                                                                                   |  |                | 1,997     |                   |   | 1,997  
|Other liabilities                                                                                                       |  |                | 18,050    |                   |   | 19,579 
|                                                                                                                        |  |                |           |                   |   |        
|Total liabilities                                                                                                       |  |                | 2,039,967 |                   |   | 327,868
|                                                                                                                        |  |                |           |                   |   |        
|Commitments and contingencies (Note 9)                                                                                  |  |                |           |                   |   |        
|Stockholders equity                                                                                                    |  |                |           |                   |   |        
|Common stock, at $0.01 par value, 816 shares authorized, issued and outstanding at March 31, 2005 and December 31, 2004 |  |                |          |                   |   |       
|Additional paid-in capital                                                                                              |  |                | 93,312    |                   |   | 93,312 
|Retained earnings                                                                                                       |  |                | 45,892    |                   |   | 33,470 
|                                                                                                                        |  |                |           |                   |   |        
|Total stockholders equity                                                                                              |  |                | 139,204   |                   |   | 126,782
|                                                                                                                        |  |                |           |                   |   |        
|Total liabilities and stockholders equity                                                                              |  | $              | 2,179,171 |                   | $ | 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                             |  |             |  |                            |  |                   |   |       |                            |   | 12,422 |   |  |   | 12,422  |  
|                                       |  |              |  |                            |   |                   |   |        |                            |   |        |   |  |   |         |  
|Balances at March 31, 2005 (Unaudited) |  | 816          |  | $                          |  |                   | $ | 93,312 |                            | $ | 45,892 |   |  | $ | 139,204 |  
|                                       |  |              |  |                            |   |                   |   |        |                            |   |        |   |  |   |         |  



See accompanying notes
to the unaudited consolidated financial statements.



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NYMEX HOLDINGS, INC. AND SUBSIDIARIES



CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)

(in thousands)



|                                                                                  |  |                             |            |   |      |   |         |  
|--------------------------------------------------------------------------------- |  | --------------------------- | ---------- | - | ---- | - | ------- | -
|                                                                                  |  | Three Months EndedMarch 31, |           
|                                                                                  |  | 2005                        |            |   | 2004 |  
|Cash flows from operating activities                                              |  |                             |            |   |      |   |         |  
|Net income                                                                        |  | $                           | 12,422     |   |      | $ | 6,242   |  
|Adjustments to reconcile net income to net cash provided by operating activities: |  |                             |            |   |      |   |         |  
|Depreciation and amortization                                                     |  |                             | 4,463      |   |      |   | 5,616   |  
|Amortization of intangibles                                                       |  |                             | 219        |   |      |   | 211     |  
|Deferred grant credits                                                            |  |                             | (661       | ) |      |   | (661    | )
|Deferred rental income                                                            |  |                             | (169       | ) |      |   |        |  
|Deferred rent expense                                                             |  |                             | (41        | ) |      |   | 82      |  
|Deferred income taxes                                                             |  |                             |           |   |      |   | (348    | )
|Asset impairment and disposition loss                                             |  |                             | 8          |   |      |   | 64      |  
|Decrease (increase) in operating assets:                                          |  |                             |            |   |      |   |         |  
|Clearing and transaction fees receivable                                          |  |                             | (4,352     | ) |      |   | (4,005  | )
|Prepaid expenses                                                                  |  |                             | 51         |   |      |   | (78     | )
|Margin deposits and guaranty fund assets                                          |  |                             | (255,456   | ) |      |   | 1,953   |  
|Other current assets                                                              |  |                             | (159       | ) |      |   | 1,260   |  
|Increase (decrease) in operating liabilities:                                     |  |                             |            |   |      |   |         |  
|Accounts payable and accrued liabilities                                          |  |                             | 1,662      |   |      |   | (249    | )
|Accrued salaries and related liabilities                                          |  |                             | 1,770      |   |      |   | 1,297   |  
|Margin deposits and guaranty fund liabilities                                     |  |                             | 255,456    |   |      |   | (1,953  | )
|Income tax payable                                                                |  |                             | 1,901      |   |      |   | 1,297   |  
|Other current liabilities                                                         |  |                             | 2,115      |   |      |   | 2,034   |  
|Other liabilities                                                                 |  |                             | (1,194     | ) |      |   | 28      |  
|Retirement obligation                                                             |  |                             | (158       | ) |      |   | (10     | )
|                                                                                  |  |                             |            |   |      |   |         |  
|Net cash provided by operating activities                                         |  |                             | 17,877     |   |      |   | 12,780  |  
|                                                                                  |  |                             |            |   |      |   |         |  
|Cash flows from investing activities                                              |  |                             |            |   |      |   |         |  
|(Increase) decrease in collateral from securities lending program                 |  |                             | (1,454,918 | ) |      |   |        |  
|(Increase) decrease in securities purchased under agreements to resell..          |  |                             | (10,106    | ) |      |   | (8,136  | )
|(Increase) decrease in marketable securities                                      |  |                             | (277       | ) |      |   | (2,358  | )
|Capital expenditures                                                              |  |                             | (2,328     | ) |      |   | (1,559  | )
|(Increase) decrease in other assets                                               |  |                             | 74         |   |      |   | 594     |  
|                                                                                  |  |                             |            |   |      |   |         |  
|Net cash used in investing activities                                             |  |                             | (1,467,555 | ) |      |   | (11,459 | )
|                                                                                  |  |                             |            |   |      |   |         |  
|Cash flows from financing activities                                              |  |                             |            |   |      |   |         |  
|Increase in obligation to return collateral under securities lending program      |  |                             | 1,454,918  |   |      |   |        |  
|Dividends paid                                                                    |  |                             | (3,500     | ) |      |   | (2,500  | )
|                                                                                  |  |                             |            |   |      |   |         |  
|Net cash provided by (used in) financing activities                               |  |                             | 1,451,418  |   |      |   | (2,500  | )
|                                                                                  |  |                             |            |   |      |   |         |  
|Net increase (decrease) in cash and cash equivalents                              |  |                             | 1,740      |   |      |   | (1,179  | )
|Cash and cash equivalents, beginning of period                                    |  |                             | 3,084      |   |      |   | 1,763   |  
|                                                                                  |  |                             |            |   |      |   |         |  
|Cash and cash equivalents, end of period                                          |  | $                           | 4,824      |   |      | $ | 584     |  
|                                                                                  |  |                             |            |   |      |   |         |  



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.



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. Trading on the Exchange is regulated by the Commodity Futures Trading Commission. To manage the risk of financial nonperformance, the Exchange requires members to post margin.



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.



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. Quarterly results are not necessarily indicative of results for any subsequent period.



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); and Tradingear Acquisition LLC.
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.



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NYMEX HOLDINGS, INC. AND SUBSIDIARIES



NOTES TO THE UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS(Continued)



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. For the
three months ended March 31, 2005 and 2004, basic and diluted earnings per share were $15,223 and $7,650, respectively.



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. At March 31, 2005, the fair value of the securities on loan was approximately $1.4 billion. Interest
income and interest expense recognized under this securities lending program was $6.9 million and $6.5 million, respectively, for the three months ended March 31, 2005.



3. Collateralization



In connection with reverse repurchase agreements, the Company receives collateral that is held in custody by the Companys banks. At March 31, 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 March 31, 2005 and December 31, 2004 was $29.4
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 March 31, 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 $122,000 and $121,000 at March 31, 2005 and December 31, 2004, respectively, which the



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##### Table of Contents

NYMEX HOLDINGS, INC. AND SUBSIDIARIES



NOTES TO THE UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS(Continued)



Company believes is sufficient to cover potential bad debts and subsequent credits. At March 31, 2005, the combined amounts due from vendors with the ten
highest receivable balances represented 89% 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 $704,000 and $665,000 at March 31, 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 redemption penalty. These notes place certain limitations on the Companys ability to incur additional indebtedness. At March 31, 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. During the three-month period ended March 31, 2005, these programs totaled $2.8 million, compared to
$2.3 million in the prior year period.



7. Supplemental Disclosures of Cash
Flow Information



Supplemental disclosures of cash flow
information for the three months ended March 31, 2005 and 2004 are as follows:



|               |  |                              |       |      |   |      
|-------------- |  | ---------------------------- | ----- | ---- | - | -----
|               |  | Three Months Ended March 31,
|               |  | 2005                         |       | 2004
|               |  | (in thousands)              
|Cash paid for: |  |                              |       |      |   |      
|Interest       |  | $                            | 6,519 |      | $ |     
|               |  |                              |       |      |   |      
|Income taxes   |  | $                            | 8,250 |      | $ | 3,876
|               |  |                              |       |      |   |      



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##### Table of Contents

NYMEX HOLDINGS, INC. AND SUBSIDIARIES



NOTES TO THE UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS(Continued)



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 ClearPortSMClearing. 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 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.



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.



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##### Table of Contents

NYMEX HOLDINGS, INC. AND SUBSIDIARIES



NOTES TO THE UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS(Continued)



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



|                                                        |  |                 |            |                   |   |             |  |                 |            |                |   |             |  |   |         |  |   |           
|------------------------------------------------------- |  | --------------- | ---------- | ----------------- | - | ----------- |  | --------------- | ---------- | -------------- | - | ----------- |  | - | ------- |  | - | ----------
|                                                        |  | March 31, 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                                                    |  | $               | 4,901      |                   | $ | 5           |  | $               | 4,906      |                | $ | 521         |  | $ | 54      |  | $ | 575       
|Securities held for resale                              |  |                 | 278,400    |                   |   | 6,975       |  |                 | 285,375    |                |   | 31,950      |  |   | 2,300   |  |   | 34,250    
|                                                        |  |                 |            |                   |   |             |  |                 |            |                |   |             |  |   |         |  |   |           
|Total cash and securities                               |  |                 | 283,301    |                   |   | 6,980       |  |                 | 290,281    |                |   | 32,471      |  |   | 2,354   |  |   | 34,825    
|                                                        |  |                 |            |                   |   |             |  |                 |            |                |   |             |  |   |         |  |   |           
|Cash and securities earning interest for members        |  |                 |            |                   |   |             |  |                 |            |                |   |             |  |   |         |  |   |           
|Money market funds                                      |  |                 | 2,409,075  |                   |   |            |  |                 | 2,409,075  |                |   | 2,914,820   |  |   |        |  |   | 2,914,820 
|U.S. treasuries                                         |  |                 | 8,551,810  |                   |   | 143,920     |  |                 | 8,695,730  |                |   | 7,322,495   |  |   | 148,026 |  |   | 7,470,521 
|Letters of credit                                       |  |                 | 583,002    |                   |   |            |  |                 | 583,002    |                |   | 511,002     |  |   |        |  |   | 511,002   
|                                                        |  |                 |            |                   |   |             |  |                 |            |                |   |             |  |   |         |  |   |           
|Total cash and securities                               |  |                 | 11,543,887 |                   |   | 143,920     |  |                 | 11,687,807 |                |   | 10,748,317  |  |   | 148,026 |  |   | 10,896,343
|                                                        |  |                 |            |                   |   |             |  |                 |            |                |   |             |  |   |         |  |   |           
|Total funds                                             |  | $               | 11,827,188 |                   | $ | 150,900     |  | $               | 11,978,088 |                | $ | 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 March 31, 2005, as well as an estimate of the timing in which these commitments are expected to expire, are set forth on 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       |  |                        | 6,837  |      |   | 6,626  |  |      | 6,416  |      |   | 6,205      |  |       | 5,994  |  |   | 47,569  |  |   | 79,647 
|Operating leasesfacilities   |  |                        | 3,000  |      |   | 3,720  |  |      | 3,579  |      |   | 3,551      |  |       | 3,579  |  |   | 9,145   |  |   | 26,574 
|Operating leasesequipment    |  |                        | 874    |      |   | 615    |  |      | 52     |      |   |           |  |       |       |  |   |        |  |   | 1,541  
|Capital lease                 |  |                        | 358    |      |   | 327    |  |      |       |      |   |           |  |       |       |  |   |        |  |   | 685    
|Other long-term obligations   |  |                        | 800    |      |   | 800    |  |      | 800    |      |   | 800        |  |       | 800    |  |   | 7,438   |  |   | 11,438 
|                              |  |                        |        |      |   |        |  |      |        |      |   |            |  |       |        |  |   |         |  |   |        
|Total contractual obligations |  | $                      | 14,686 |      | $ | 14,905 |  | $    | 13,664 |      | $ | 13,373     |  | $     | 13,190 |  | $ | 138,799 |  | $ | 208,617
|                              |  |                        |        |      |   |        |  |      |        |      |   |            |  |       |        |  |   |         |  |   |        



The Company occupies
premises under leases, including a land lease, with various lessors that expire in 2005 through 2069. For the three months ended March 31, 2005 and 2004, rental expense for facilities and the land lease amounted to $0.8 million and $0.5 million,
respectively.



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##### Table of Contents

NYMEX HOLDINGS, INC. AND SUBSIDIARIES



NOTES TO THE UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS(Continued)



The Company leases space to tenants in its headquarters facility. Rental income recorded from these
leases was $2.0 million and $1.8 million for the three months ended March 31, 2005 and 2004, respectively, and is recorded in other revenue in the consolidated statements of income. Future minimum rental income for the years 2005 through 2009 are as
follows:



|      |  |                |       
|----- |  | -------------- | ------
|      |  | (in thousands)
|2005  |  | $              | 6,339 
|2006  |  |                | 8,083 
|2007  |  |                | 7,614 
|2008  |  |                | 5,776 
|2009  |  |                | 4,959 
|      |  |                |       
|Total |  | $              | 32,771
|      |  |                |       



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 March 31, 2005, there were total seat loan balances of $12.0 million and securities pledged against the seat loan balances of $14.2 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.



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 months
ended March 31, 2005, in any of the above arrangements, in which a liability should be recognized in accordance with FIN No. 45.



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##### Table of Contents

NYMEX HOLDINGS, INC. AND SUBSIDIARIES



NOTES TO THE UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS(Continued)



Legal Proceedings



Set forth below is a description of material litigation to which the Company is a party, as of March 31, 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. 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.
Electronic Trading and Clearing consists of NYMEX ACCESS®, NYMEX ClearPortSMTrading and NYMEX ClearPortSMClearing. The Corporate/Other column represents income earned on the Companys investments, as well as 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, are allocated based on the proportion of total revenues attributed to each segment. The prior year segment information has been restated to reflect this
methodology of reporting each segment.



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##### Table of Contents

NYMEX HOLDINGS, INC. AND SUBSIDIARIES



NOTES TO THE UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS(Continued)



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



|                                                          |  |                                   |        |                                 |   |                   |  |   |        |   |  |   |       
|--------------------------------------------------------- |  | --------------------------------- | ------ | ------------------------------- | - | ----------------- |  | - | ------ | - |  | - | ------
|                                                          |  | Three Months Ended March 31, 2005
|                                                          |  | Open Outcry                       |        | Electronic Trading and Clearing |   | Corporate / Other |  |   | Total 
|Total revenues                                            |  | $                                 | 50,318 |                                 | $ | 21,841            |  | $ | 521    |   |  | $ | 72,680
|Depreciation and amortization                             |  |                                   | 2,891  |                                 |   | 1,255             |  |   |       |   |  |   | 4,146 
|Other operating expenses                                  |  |                                   | 30,846 |                                 |   | 13,389            |  |   | 1,725  |   |  |   | 45,960
|                                                          |  |                                   |        |                                 |   |                   |  |   |        |   |  |   |       
|Income (loss) before provision (benefit) for income taxes |  |                                   | 16,581 |                                 |   | 7,197             |  |   | (1,204 | ) |  |   | 22,574
|Provision (benefit) for income taxes                      |  |                                   | 7,455  |                                 |   | 3,239             |  |   | (542   | ) |  |   | 10,152
|                                                          |  |                                   |        |                                 |   |                   |  |   |        |   |  |   |       
|Net income (loss)                                         |  | $                                 | 9,126  |                                 | $ | 3,958             |  | $ | (662   | ) |  | $ | 12,422
|                                                          |  |                                   |        |                                 |   |                   |  |   |        |   |  |   |       



|                                                          |  |                                   |        |                                 |   |                   |  |   |       |   |  |   |       
|--------------------------------------------------------- |  | --------------------------------- | ------ | ------------------------------- | - | ----------------- |  | - | ----- | - |  | - | ------
|                                                          |  | Three Months Ended March 31, 2004
|                                                          |  | Open Outcry                       |        | Electronic Trading and Clearing |   | Corporate / Other |  |   | Total
|Total revenues                                            |  | $                                 | 43,196 |                                 | $ | 10,041            |  | $ | 1,028 |   |  | $ | 54,265
|Depreciation and amortization                             |  |                                   | 4,293  |                                 |   | 998               |  |   |      |   |  |   | 5,291 
|Other operating expenses                                  |  |                                   | 29,317 |                                 |   | 6,815             |  |   | 1,770 |   |  |   | 37,902
|                                                          |  |                                   |        |                                 |   |                   |  |   |       |   |  |   |       
|Income (loss) before provision (benefit) for income taxes |  |                                   | 9,586  |                                 |   | 2,228             |  |   | (742  | ) |  |   | 11,072
|Provision (benefit) for income taxes                      |  |                                   | 4,181  |                                 |   | 973               |  |   | (324  | ) |  |   | 4,830 
|                                                          |  |                                   |        |                                 |   |                   |  |   |       |   |  |   |       
|Net income (loss)                                         |  | $                                 | 5,405  |                                 | $ | 1,255             |  | $ | (418  | ) |  | $ | 6,242 
|                                                          |  |                                   |        |                                 |   |                   |  |   |       |   |  |   |       



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.



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NYMEX HOLDINGS, INC. AND SUBSIDIARIES



NOTES TO THE UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS(Continued)



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. 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 March 31, 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 March 31, |    
|                                             |  | 2005                         |     |   | 2004 |  
|Service costs                                |  | $                            | 88  |   |      | $ | 65  |  
|Interest costs                               |  |                              | 88  |   |      |   | 63  |  
|Amortization of prior service costs          |  |                              | (14 | ) |      |   | (14 | )
|Amortization of net (gain) loss              |  |                              | 6   |   |      |   | (1  | )
|                                             |  |                              |     |   |      |   |     |  
|Total net period postretirement benefit cost |  | $                            | 168 |   |      | $ | 113 |  
|                                             |  |                              |     |   |      |   |     |  



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NYMEX HOLDINGS, INC. AND SUBSIDIARIES



NOTES TO THE UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS(Continued)



13. Subsequent Events



On April 8, 2005, the Company announced that its newly established subsidiary, NYMEX Europe Limited, filed an application with the Financial Services
Authority to become a U.K. recognized investment exchange based in London. The Company began open outcry trading of Brent crude oil futures in Dublin in November 2004 and plans to commence open outcry trading in London as soon as regulatory approval
is received.



On April 19, 2005, the Company announced the
re-opening of its Washington, D.C. office. The Companys physical presence in Washington D.C. will be important in addressing the many regulatory issues impacting the industry.



On April 21, 2005, the Company announced that it has received a preliminary indication of interest from two private equity
firms, acting as a group, to acquire a minority stake in the Company. This preliminary indication is subject to due diligence and other conditions and is being reviewed by the Company and its advisers.



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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.



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 ClearPortSMClearing is the mechanism by which individually negotiated off-exchange trades are submitted to the Exchange for clearing of specified products. The NYMEX ClearPortSMClearing system enables market participants to take advantage of the financial depth and security of the NYMEX Exchange clearinghouse along with access to more than 60 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 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 trading and clearing 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 March 31, 2005, the volume of total futures and
options contracts traded and cleared was 47.4 million contracts, an increase of 8.7 million contracts or 22.5% from 38.7 million contracts for the same period last year.



15



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##### Table of Contents

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 ClearPortSMClearing. NYMEX Division and COMEX
Division information presented in the following discussion excludes contracts cleared through NYMEX ClearPortSMClearing.



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. Prior to the filing of the second quarter 2004 Form 10-Q, the Company did not include settlement and exercise volumes in its volume disclosures. Accordingly, prior period volume information has been adjusted to include such
transactions for comparative purposes. Open interest represents the number of contracts at March 31, 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 March 31, 2005, the volume of futures and options
contracts traded and cleared on the NYMEX Division was 33.8 million contracts, an increase of 5.3 million contracts or 18.6% from 28.5 million contracts for the same period last year. Futures contracts volume was 27.2 million contracts, an increase
of 3.8 million contracts or 16.2% from 23.4 million contracts for the same period last year. Options contracts volume was 6.6 million contracts, an increase of 1.5 million contracts or 29.4% from 5.1 million contracts for the same period last year.



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 March 31,
|                              |  | 2005                                 |  | 2004   
|                              |  | Futures                              |  | Options |  | Total  |  | Futures |  | Options |  | Total 
|Light sweet crude oil         |  | 14,459                               |  | 3,506   |  | 17,965 |  | 12,730  |  | 2,584   |  | 15,314
|Henry Hub natural gas         |  | 4,792                                |  | 2,162   |  | 6,954  |  | 3,851   |  | 1,985   |  | 5,836 
|N.Y. heating oil              |  | 3,403                                |  | 285     |  | 3,688  |  | 3,389   |  | 143     |  | 3,532 
|N.Y. harbor unleaded gasoline |  | 3,200                                |  | 291     |  | 3,491  |  | 3,142   |  | 239     |  | 3,381 
|Other                         |  | 1,357                                |  | 312     |  | 1,669  |  | 251     |  | 143     |  | 394   
|                              |  |                                      |  |         |  |        |  |         |  |         |  |       
|Total                         |  | 27,211                               |  | 6,556   |  | 33,767 |  | 23,363  |  | 5,094   |  | 28,457
|                              |  |                                      |  |         |  |        |  |         |  |         |  |       



NYMEX Division
Contracts Open Interest

(in thousands)



|                              |  |              |  |         |  |       |  |         |  |         |  |      
|----------------------------- |  | ------------ |  | ------- |  | ----- |  | ------- |  | ------- |  | -----
|                              |  | At March 31,
|                              |  | 2005         |  | 2004   
|                              |  | Futures      |  | Options |  | Total |  | Futures |  | Options |  | Total
|Light sweet crude oil         |  | 838          |  | 1,497   |  | 2,335 |  | 673     |  | 778     |  | 1,451
|Henry Hub natural gas         |  | 465          |  | 837     |  | 1,302 |  | 304     |  | 588     |  | 892  
|N.Y. heating oil              |  | 182          |  | 72      |  | 254   |  | 155     |  | 29      |  | 184  
|N.Y. harbor unleaded gasoline |  | 176          |  | 108     |  | 284   |  | 142     |  | 59      |  | 201  
|Other                         |  | 45           |  | 56      |  | 101   |  | 50      |  | 5       |  | 55   
|                              |  |              |  |         |  |       |  |         |  |         |  |      
|Total                         |  | 1,706        |  | 2,570   |  | 4,276 |  | 1,324   |  | 1,459   |  | 2,783
|                              |  |              |  |         |  |       |  |         |  |         |  |      



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##### Table of Contents

Light Sweet Crude Oil



For the three months ended March 31, 2005, futures contract volume was 14.5 million contracts, an increase of 1.8 million
contracts or 14.2% from 12.7 million contracts for the same period last year. Options contract volume was 3.5 million contracts, an increase of 0.9 million contracts or 34.6% from 2.6 million contracts for the same period last year. Total futures
and options contract volume was 18.0 million contracts, an increase of 2.7 million contracts or 17.6% from 15.3 million contracts for the same period last year.



The Company believes that increases in futures and options contract volume for the three months ended March 31, 2005 were due, in part, to the price
volatility of crude oil. The price volatility was caused by seasonal factors, in particular, the late winter cold spell in the Northern Hemisphere. Additionally, continued strong global demand for crude oil, particularly in China and the U.S., as
well as supply concerns, contributed to the price volatility.



Henry Hub
Natural Gas



For the three months ended March 31,
2005, futures contract volume was 4.8 million contracts, an increase of 1.0 million contracts or 26.3% from 3.8 million contracts for the same period last year. Options contract volume was 2.2 million contracts, an increase of 0.2 million contracts
or 10.0% from 2.0 million contracts for the same period last year. Total futures and options contracts volume was 7.0 million contracts, an increase of 1.2 million contracts or 20.7% from 5.8 million contracts for the same period last year.



The Company believes that increases in futures and options
contract volume for the three months ended March 31, 2005 were due, in part, to concerns about the North American natural gas supply, which contributed to significantly higher prices during the three months ended March 31, 2005 compared to the same
period last year, resulting in higher trading activity.



New York Heating
Oil



For the three months ended March 31, 2005,
futures contract volume was 3.4 million contracts, a slight increase compared to the same period last year. Options contract volume was 0.3 million contracts, an increase of 0.2 million contracts or 200.0% from 0.1 million contracts for the same
period last year. Total futures and options contracts volume was 3.7 million contracts, an increase of 0.2 million contracts or 5.7% from 3.5 million contracts for the same period last year.



The Company believes that increases in futures and options contract volume
for the three months ended March 31, 2005 were due, in part, to the continuing strong global demand for petroleum products, including heating oil. In addition, seasonal factors caused higher volatility in the heating oil market, resulting in
increased trading activity, particularly in options contracts. Finally, high price differentials between heating oil and crude oil have resulted in increased trading activity.



New York Harbor Unleaded Gasoline



For the three months ended March 31, 2005, futures contract volume was 3.2 million contracts, an increase of 0.1 million contracts or 3.2% from 3.1
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 3.5 million contracts, an increase of 0.2 million contracts or 6.1% from 3.3 million contracts for the same period last year.



The Company believes that increases in futures and options contract volume for the three months ended March 31, 2005 were due, in part, to the continuing
strong consumer demand for gasoline. In addition, higher crude oil prices contributed to higher gasoline prices, causing volatility in the gasoline market that resulted in increased trading activity. Finally, high price differentials between
gasoline and crude oil have resulted in increased trading activity.



17



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##### Table of Contents

Metals MarketCOMEX Division



For the three months ended March 31, 2005, the volume of futures and options contracts traded and cleared for the COMEX
Division was 7.3 million contracts, a decrease of 0.9 million contracts or 11.0% from 8.2 million contracts for the same period last year. Futures contract volume was 6.3 million contracts, a decrease of 1.0 million contracts or 13.7% from 7.3
million contracts for the same period last year. Options contract volume was 1.0 million contracts, an increase of 0.1 million contracts or 11.1% from 0.9 million contracts for the same period last year.



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 March 31,
|                  |  | 2005                                 |  | 2004   
|                  |  | Futures                              |  | Options |  | Total |  | Futures |  | Options |  | Total
|Gold              |  | 4,195                                |  | 701     |  | 4,896 |  | 4,771   |  | 684     |  | 5,455
|Silver            |  | 1,202                                |  | 262     |  | 1,464 |  | 1,506   |  | 195     |  | 1,701
|High grade copper |  | 917                                  |  | 36      |  | 953   |  | 973     |  | 51      |  | 1,024
|Aluminum          |  | 13                                   |  |        |  | 13    |  | 34      |  |        |  | 34   
|                  |  |                                      |  |         |  |       |  |         |  |         |  |      
|Total             |  | 6,327                                |  | 999     |  | 7,326 |  | 7,284   |  | 930     |  | 8,214
|                  |  |                                      |  |         |  |       |  |         |  |         |  |      



COMEX Division
Contracts Open Interest

(in thousands)



|                  |  |              |  |         |  |       |  |         |  |         |  |      
|----------------- |  | ------------ |  | ------- |  | ----- |  | ------- |  | ------- |  | -----
|                  |  | At March 31,
|                  |  | 2005         |  | 2004   
|                  |  | Futures      |  | Options |  | Total |  | Futures |  | Options |  | Total
|Gold              |  | 273          |  | 350     |  | 623   |  | 234     |  | 571     |  | 805  
|Silver            |  | 99           |  | 79      |  | 178   |  | 111     |  | 71      |  | 182  
|High grade copper |  | 119          |  | 14      |  | 133   |  | 83      |  | 22      |  | 105  
|Aluminum          |  | 7            |  |        |  | 7     |  | 9       |  |        |  | 9    
|                  |  |              |  |         |  |       |  |         |  |         |  |      
|Total             |  | 498          |  | 443     |  | 941   |  | 437     |  | 664     |  | 1,101
|                  |  |              |  |         |  |       |  |         |  |         |  |      



Gold



For the three months ended March 31, 2005, futures contract volume was 4.2
million contracts, a decrease of 0.6 million contracts or 12.5% from 4.8 million contracts for the same period last year. Options contract volume was 0.7 million contracts, essentially flat compared to the same period last year. Total futures and
options contract volume was 4.9 million contracts, a decrease of 0.6 million contracts or 10.9% from 5.5 million contracts for the same period last year.



The Company believes that the decrease in futures contract volume for the three months ended March 31, 2005 was due, in part, to lower volatility levels
in the gold market, which led to decreased hedging and speculative demand for gold futures.



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##### Table of Contents

Silver



For the three months ended March 31, 2005, futures contract volume was 1.2 million contracts, a decrease of 0.3 million contracts or 20.0% from 1.5
million contracts for the same period last year. Options contract volume was 262,000 contracts, an increase of 67,000 contracts or 34.4% from 195,000 contracts for the same period last year. Total futures and options contract volume was 1.5 million
contracts, a decrease of 0.2 million contracts or 11.8% from 1.7 million contracts for the same period last year.



The Company believes that the decrease in futures contract volume for the three months ended March 31, 2005 was due, in part, to the fear of increased
inflation as well as the stabilization of the U.S. currency versus other international currencies, which led to decreased hedging and speculative demand for silver futures.



High Grade Copper



For the three months ended March 31, 2005, futures contract volume was 917,000 contracts, a decrease of 56,000 contracts or 5.8% from 973,000 contracts
for the same period last year. Options contract volume decreased to 36,000 contracts from 51,000 contracts for the same period last year. Total futures and options contract volume was 953,000 contracts, a decrease of 71,000 contracts or 6.9%
compared to the same period last year.



The Company believes
that decreases in futures and options contract volume for the three months ended March 31, 2005 were due, in part, to declines in automobile sales and housing starts as a result of higher interest rates.



NYMEX ClearPort SMClearing



For the three months ended March 31, 2005, futures and options contract clearing volume was 6.3 million contracts, an increase of 4.3 million contracts or
over 200% from 2.0 million contracts from the same period last year.



For the three months ended March 31, 2005, there was significant growth in natural gas clearing volume through NYMEX ClearPortSMClearing. 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 during the current period and the launch of new products for petroleum, electricity and coal on NYMEX ClearPortSMClearing contributed to this increase.



NYMEX ClearPortSMClearing
Contracts

(in thousands)



|                   |  |                                      |  |         |  |       |  |         |  |         |  |      
|------------------ |  | ------------------------------------ |  | ------- |  | ----- |  | ------- |  | ------- |  | -----
|                   |  | For the Three Months Ended March 31,
|                   |  | 2005                                 |  | 2004   
|                   |  | Futures                              |  | Options |  | Total |  | Futures |  | Options |  | Total
|Natural gas        |  | 4,635                                |  | 1,305   |  | 5,940 |  | 1,762   |  | 2       |  | 1,764
|Electricity        |  | 268                                  |  | 1       |  | 269   |  | 111     |  |        |  | 111  
|Petroleum products |  | 83                                   |  | 54      |  | 137   |  | 112     |  |        |  | 112  
|Coal               |  | 3                                    |  |        |  | 3     |  | 2       |  |        |  | 2    
|                   |  |                                      |  |         |  |       |  |         |  |         |  |      
|Total              |  | 4,989                                |  | 1,360   |  | 6,349 |  | 1,987   |  | 2       |  | 1,989
|                   |  |                                      |  |         |  |       |  |         |  |         |  |      



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##### Table of Contents

NYMEX ClearPortSMClearing Open Interest

(in thousands)



|                   |  |              |  |         |  |       |  |         |  |         |  |      
|------------------ |  | ------------ |  | ------- |  | ----- |  | ------- |  | ------- |  | -----
|                   |  | At March 31,
|                   |  | 2005         |  | 2004   
|                   |  | Futures      |  | Options |  | Total |  | Futures |  | Options |  | Total
|Natural gas        |  | 2,454        |  | 960     |  | 3,414 |  | 1,079   |  |        |  | 1,079
|Electricity        |  | 115          |  | 7       |  | 122   |  | 27      |  |        |  | 27   
|Petroleum products |  | 93           |  | 12      |  | 105   |  | 59      |  |        |  | 59   
|Coal               |  | 1            |  |        |  | 1     |  | 1       |  |        |  | 1    
|                   |  |              |  |         |  |       |  |         |  |         |  |      
|Total              |  | 2,663        |  | 979     |  | 3,642 |  | 1,166   |  |        |  | 1,166
|                   |  |              |  |         |  |       |  |         |  |         |  |      



Results of Operations for the Three
Months Ended March 31, 2005 and 2004



Overview



Net income for the three months ended March 31, 2005
was $12.4 million, an increase of $6.2 million from $6.2 million for the same period last year. This increase was the result of revenues increasing by $18.4 million, which was partially offset by increases in operating expenses and income taxes of
$6.9 million and $5.3 million, respectively. The increase in revenues was due to an increase in clearing and transaction fees from higher trading and clearing volumes, as well as an increase in market data fees from the implementation of a new price
structure which went into effect on January 1, 2005. The increase in operating expenses was due primarily to increases in general and administrative expenses, professional fees and salaries and employee benefits.



The following table summarizes the components of net income for the three
months ended March 31, 2005 and 2004 (in thousands, except for share data):



|                                         |  |                              |        |      |   |       
|---------------------------------------- |  | ---------------------------- | ------ | ---- | - | ------
|                                         |  | Three Months Ended March 31,
|                                         |  | 2005                         |        | 2004
|Total revenues                           |  | $                            | 72,680 |      | $ | 54,265
|Total expenses                           |  |                              | 50,106 |      |   | 43,193
|                                         |  |                              |        |      |   |       
|Income before provision for income taxes |  |                              | 22,574 |      |   | 11,072
|Provision for income taxes               |  |                              | 10,152 |      |   | 4,830 
|                                         |  |                              |        |      |   |       
|Net income                               |  | $                            | 12,422 |      | $ | 6,242 
|                                         |  |                              |        |      |   |       
|Basic and diluted earnings per share     |  | $                            | 15,223 |      | $ | 7,650 
|                                         |  |                              |        |      |   |       



Revenue



Clearing and Transaction Fees, Net



For the three months ended March 31, 2005, clearing and transaction fees
were $58.4 million, an increase of $15.5 million or 36.1% from $42.9 million for the same period last year. This increase was due to higher floor trading and NYMEX ACCESS® volumes on the NYMEX Division, higher NYMEX ClearPortSMClearing volumes and a higher average revenue per contract.



For the three months ended March 31, 2005, revenue per contract was $1.23, an increase of $0.12 per contract compared to $1.11 per contract in the prior
year period. This increase was due to the customer trading mix and an increase in the trading of certain products on NYMEX ClearPortSMClearing and NYMEX ACCESS®, which charge higher rates per trade.



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##### Table of Contents

Market Data Fees, Net



For the three months ended March 31, 2005, market data fees were $11.0 million, an increase of $3.3 million or 42.9% from
$7.7 million for the same period last year. This increase was due primarily to the implementation of a new price structure that went into effect on January 1, 2005. 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 Revenues, Net



For the three months ended March 31, 2005, other revenues were $2.7 million, essentially flat compared to the same period last year. Additional rental
income recorded from the Board of Trade of the City of New York, Inc. (NYBOT) was offset by an increase in the Companys consolidated cost reduction program. This program provides members, who remain current with their
balances due to the Company, with credits on telephone and equipment fees that are provided to them by the Company.



Investment Income, Net



For the three months ended March 31, 2005, investment income was $0.1 million, a decrease of $0.9 million from $1.0 million for the same period last year.
This decrease was due primarily to unrealized losses on fixed income securities in the current year period compared to the same period last year which reported unrealized gains.



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. For the three months ended March 31, 2005, interest income from securities lending, net was $0.4 million, composed of $6.9 million of interest income and $6.5 million of interest expense (see Note 2 to the unaudited
consolidated financial statements).



Operating Expenses



Salaries and Employee Benefits



For the three months ended March 31, 2005, salaries and employee benefit
expenses were $15.1 million, an increase of $1.5 million or 11.0% from $13.6 million for the same period last year. This increase was 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 period to assist in the start-up of its trading floor in Dublin, Ireland. These increases
were partially offset by a decline in severance costs during the current year period.



Occupancy and Equipment



For the three months ended March 31, 2005, occupancy and equipment expenses were $7.0 million, an increase of $1.0 million or 16.7% from $6.0 million for the same period last year. This increase was due primarily to equipment maintenance
costs, as well as repair and maintenance costs to the Companys headquarters building. In addition, the current year period includes rent and associated expenses incurred by the Company on its trading floor in Dublin, Ireland, which was not in
existence during the prior year period.



Depreciation and Amortization



For the three months ended March 31, 2005,
depreciation and amortization expenses were $4.1 million, a decrease of $1.2 million or 22.6% from $5.3 million for the same period last year. This decrease was due



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##### Table of Contents

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-month period ended March 31, 2005 which, in turn,
yielded lower depreciation compared to the same period 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 March 31, 2005, general and administrative
expenses were $9.1 million, an increase of $2.6 million or 40.0% from $6.5 million for the same period last year. This increase was due primarily to travel related costs associated with the establishment and operation of the Companys trading
floor in Dublin, Ireland. In addition, on February 14, 2005, the Company announced its plans to launch an open outcry futures exchange in London, England, which resulted in additional costs not present in the prior year period. Finally, transaction
incentives, designed to provide incentives to third parties to establish business with the Company, increased in the current year period. A portion of these transaction incentives were related to the Dublin trading facility, and the Company expects
to incur increased incentive costs in the near future for this initiative. The Company believes that these incentive costs are necessary to promote trading in Dublin.



Professional Services



For the three months ended March 31, 2005, professional services expenses were $8.4 million, an increase of $2.7 million or 47.4% from $5.7 million for
the same period last year. This increase was due primarily to higher legal and tax consulting fees the Company incurred to support its business expansion initiatives. In addition, financial and technical consulting to support technology and
strategic business initiatives increased during the current year period.



Telecommunications



For the three
months ended March 31, 2005, telecommunications expenses were $1.7 million, an increase of $0.2 million or 13.3% from $1.5 million for the same period last year. This increase was due primarily to higher data communication expenses in the current
year period needed to support the growth in market data fees.



Marketing



For the three months ended
March 31, 2005, marketing expenses were $0.8 million, essentially flat compared to the same period last year. Increases in advertising and other marketing expenses were offset by a decrease in conference and special event expenses during the current
year period.



Other Expenses



For the three months ended March 31, 2005, other expenses were $2.2 million,
an increase of $0.2 million or 10.0% from $2.0 million for the same period last year. This increase was due primarily to higher charitable contributions in the current year period.



Interest Expense



For the three months ended March 31, 2005, interest expense was $1.7 million, slightly down from the same period last year. The decrease was due to
principal payments on the Companys long-term debt.



22



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##### Table of Contents

Asset Impairment and Disposition Losses



The loss on impairment and disposition of property and equipment for the three-month period ended March 31, 2005 was
$8,000 compared to $64,000 for the same period last year. 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 45.0% for the three months ended
March 31, 2005, compared to 43.6% for the same period last year. The difference between the effective tax rates was due primarily to an increase in the federal statutory rate, as well as a lower proportion of tax-exempt income, both results of
higher pre-tax income in the current year period.



Financial Condition and
Cash Flows



Liquidity and Capital Resources



At March 31, 2005, the Company had $179.5 million in cash and cash
equivalents, securities purchased under agreements to resell and marketable securities. Working capital at March 31, 2005 was $147.0 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 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 three months ended March 31, 2005 and 2004:



|                                                     |  |                              |            |   |      |   |         |  
|---------------------------------------------------- |  | ---------------------------- | ---------- | - | ---- | - | ------- | -
|                                                     |  | Three Months Ended March 31, |           
|                                                     |  | 2005                         |            |   | 2004 |  
|                                                     |  | (in thousands)               |           
|Net cash flow provided by (used in):                 |  |                              |            |   |      |   |         |  
|Operating activities                                 |  | $                            | 17,877     |   |      | $ | 12,780  |  
|Investing activities                                 |  |                              | (1,467,555 | ) |      |   | (11,459 | )
|Financing activities                                 |  |                              | 1,451,418  |   |      |   | (2,500  | )
|                                                     |  |                              |            |   |      |   |         |  
|Net increase (decrease) in cash and cash equivalents |  | $                            | 1,740      |   |      | $ | (1,179  | )
|                                                     |  |                              |            |   |      |   |         |  



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 three months ended March
31, 2005 was $17.9 million, an increase of $5.1 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 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.



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Net cash used in investing activities for the three months ended March 31, 2005, exclusive of securities
purchased under the securities lending program, was $12.6 million, an increase of $1.1 million compared to the same period last year. This increase was due primarily to higher capital expenditures, as well as an investment of higher operating cash
flows into securities purchased under agreements to resell during the current year period.



Net cash used in financing activities for the three months ended March 31, 2005, exclusive of cash received under the securities lending program, was $3.5 million, an increase of $1.0 million compared to the same
period last year. This represents payment of a cash dividend to the Companys common stockholders of $4,289 per share compared to $3,064 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, 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 March 31, 2005 and December 31, 2004, cash and investments were as follows:



|                                                |  |                |         |                  |   |        
|----------------------------------------------- |  | -------------- | ------- | ---------------- | - | -------
|                                                |  | March 31,2005  |         | December 31,2004
|                                                |  | (in thousands)
|Cash and cash equivalents                       |  | $              | 4,824   |                  | $ | 3,084  
|Securities purchased under agreements to resell |  |                | 29,430  |                  |   | 19,324 
|Marketable securities                           |  |                | 145,227 |                  |   | 144,950
|                                                |  |                |         |                  |   |        
|                                                |  | $              | 179,481 |                  | $ | 167,358
|                                                |  |                |         |                  |   |        



Included in marketable
securities at March 31, 2005 are investments totaling $12.0 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.



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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 ClearPortSMClearing. 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 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.



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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 March 31, 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.



A summary of the Companys future cash payments associated with its contractual cash obligations outstanding as of March 31, 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       |  |                        | 6,837  |      |   | 6,626  |  |      | 6,416  |      |   | 6,205      |  |       | 5,994  |  |   | 47,569  |  |   | 79,647 
|Operating leasesfacilities   |  |                        | 3,000  |      |   | 3,720  |  |      | 3,579  |      |   | 3,551      |  |       | 3,579  |  |   | 9,145   |  |   | 26,574 
|Operating leasesequipment    |  |                        | 874    |      |   | 615    |  |      | 52     |      |   |           |  |       |       |  |   |        |  |   | 1,541  
|Capital lease                 |  |                        | 358    |      |   | 327    |  |      |       |      |   |           |  |       |       |  |   |        |  |   | 685    
|Other long-term obligations   |  |                        | 800    |      |   | 800    |  |      | 800    |      |   | 800        |  |       | 800    |  |   | 7,438   |  |   | 11,438 
|                              |  |                        |        |      |   |        |  |      |        |      |   |            |  |       |        |  |   |         |  |   |        
|Total contractual obligations |  | $                      | 14,686 |      | $ | 14,905 |  | $    | 13,664 |      | $ | 13,373     |  | $     | 13,190 |  | $ | 138,799 |  | $ | 208,617
|                              |  |                        |        |      |   |        |  |      |        |      |   |            |  |       |        |  |   |         |  |   |        



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.



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.



Subsequent
Events



On April 8, 2005, the Company announced that its
newly established subsidiary, NYMEX Europe Limited, filed an application with the Financial Services Authority to become a U.K. recognized investment exchange based in London. The Company began open outcry trading of Brent crude oil futures in
Dublin in November 2004 and plans to commence open outcry trading in London as soon as regulatory approval is received.



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On April 19, 2005, the Company announced the re-opening of its Washington, D.C. office. The
Companys physical presence in Washington D.C. will be important in addressing the many regulatory issues impacting the industry.



On April 21, 2005, the Company announced that it has received a preliminary indication of interest from two private equity firms, acting as a group, to
acquire a minority stake in the Company. This preliminary indication is subject to due diligence and other conditions and is being reviewed by the Company and its advisers.



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.



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Item 3.Quantitative and Qualitative Disclosures about Market Risk



The table below provides information about the Companys municipal bond 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 March 31, 2005

(in thousands)



|                |  |           |         |          |   |        |  |                              |         |  |      |  
|--------------- |  | --------- | ------- | -------- | - | ------ |  | ---------------------------- | ------- |  | ---- | -
|Year            |  | Principal |         | Interest |   | Total  |  | WeightedAverageInterest Rate |        
|Assets          |  |           |         |          |   |        |  |                              |         |  |      |  
|Municipal Bonds |  |           |         |          |   |        |  |                              |         |  |      |  
|2005            |  | $         | 54      |          | $ | 3      |  | $                            | 57      |  | 4.37 | %
|2006            |  |           | 217     |          |   | 7      |  |                              | 224     |  | 3.13 | %
|2007            |  |           | 697     |          |   | 42     |  |                              | 739     |  | 5.07 | %
|2008            |  |           | 4,309   |          |   | 217    |  |                              | 4,526   |  | 4.97 | %
|2009            |  |           | 8,100   |          |   | 396    |  |                              | 8,496   |  | 5.08 | %
|Thereafter      |  |           | 44,236  |          |   | 1,895  |  |                              | 46,131  |  | 4.22 | %
|                |  |           |         |          |   |        |  |                              |         |  |      |  
|Total           |  | $         | 57,613  |          | $ | 2,560  |  | $                            | 60,173  |  |      |  
|                |  |           |         |          |   |        |  |                              |         |  |      |  
|Fair Value      |  | $         | 58,950  |          |   |        |  |                              |         |  |      |  
|                |  |           |         |          |   |        |  |                              |         |  |      |  
|Liabilities     |  |           |         |          |   |        |  |                              |         |  |      |  
|Corporate Debt  |  |           |         |          |   |        |  |                              |         |  |      |  
|2005            |  | $         | 2,817   |          | $ | 6,837  |  | $                            | 9,654   |  | 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  |          |   | 47,569 |  |                              | 122,216 |  | 7.75 | %
|                |  |           |         |          |   |        |  |                              |         |  |      |  
|Total           |  | $         | 88,732  |          | $ | 79,647 |  | $                            | 168,379 |  |      |  
|                |  |           |         |          |   |        |  |                              |         |  |      |  
|Fair Value      |  | $         | 112,262 |          |   |        |  |                              |         |  |      |  
|                |  |           |         |          |   |        |  |                              |         |  |      |  



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 March 31, 2005 was $0.1 million, compared to $1.0 million for the same period last year. The fair value of the Companys marketable securities, including equity and short-term debt securities, was $145.2 million at March
31, 2005. Based on portfolio compositions at March 31, 2005, and assuming a 10% change in market values, the Company would have recognized losses of $14.5 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.



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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.



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.



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Accordingly, in preparing its financial statements at and for the three months ended March 31, 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 during the three months ended March 31, 2005, and certain minor exceptions were noted. Such exceptions did not involve material amounts. The Company is also implementing new automated processes to replace
certain manual processes. Management believes that the exceptions noted in its testing of remediated controls during the quarter ended March 31, 2005 do not give rise to a material weakness in internal control over financial reporting. However,
because the automation of certain processes and final testing and review is not yet complete, and certain exceptions were found during testing of the remediated controls, the Company believes that it is not appropriate to deem 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) to be fully
remediated and, therefore, believes that it must continue to report that its disclosure controls and procedures were not effective.



2. In January 2005, the Company implemented a new billing system for its NYMEX Division. This new system was designed to (1) improve
customer service levels by providing the Companys clearing members with more frequent and robust information relating to the transactions they clear for their customers and (2) enhance control over revenue recognition and customer billing. The
Company earns revenues and charges its customers clearing and transaction fees based on the type of product traded, and customers who are members of the Exchange are charged lower transaction fee rates than customers who are not members
(non-members). Prior to implementation of the new billing system, transaction fees were calculated based on the manual coding of member or non-member designation for each individual transaction. This process required extensive review of
system-calculated transaction charges and high volumes of manual adjustments to correct miscoding prior to distributing customer billings and recording revenues. The Company had deemed the manually-intensive controls relating to this process to be a
significant deficiency in internal control over financial reporting at December 31, 2004. The new system implemented in January 2005 requires that all customer accounts be identified as either member or non-member, and automatically rates
transactions for billing and revenue recognition purposes based on such account designation, instead of the transaction-specific designation requirements of the prior system. The Company believes this new process has remediated the significant
deficiency by reducing the potential for incorrect designation of member/non-member transactions. The Company intends to implement this new billing system for its COMEX Division during the latter part of 2005.



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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 March 31, 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. This case is ongoing.



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



Not applicable



Item 3.Defaults upon Senior Securities



Not applicable



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##### Table of Contents

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



The Company held its annual meeting of stockholders on March 15, 2005. Votes representing 509 shares of common stock were cast in person or by proxy at
this meeting.



1. Election of Directors:



Due to its open director nomination process, the Company
takes no position, and makes no recommendation, regarding the election of directors. The process for nomination of directors allows shareholders to nominate, subject to qualification, (i) themselves or other shareholders to be candidates for the
board of directors, and (ii) non-shareholders to be Public Director candidates for the board of directors. A description of the Companys director nomination process is contained in the Annual Meeting Proxy for 2005, in the section entitled
Director Nomination Process.



At
the annual meeting, the stockholders elected eight directors to three-year terms. The following six incumbent directors ran unopposed and received the number of affirmative votes set forth next to their names: Richard Schaeffer  Vice Chairman
(351); Eric Bolling  At Large (359); Melvyn Falis  Public Director (342); Anthony George Gero  Trade (355); Steven Karvellas  Floor Broker (332); and Kevin McDonnell  Local (361).



The following two new directors were elected by defeating
opponents in their respective positions: Harvey Gralla  Equity Holder (263), defeating incumbent Joseph Cicchetti (245); and Stanley Meierfeld  FCM (256), defeating William Wallace (251) in a contest for a vacant position.



The terms of office of the following directors continued
after the annual meeting: Mitchell Steinhause; Stephen Ardizzone; Joel Faber; Stephen Forman; Kenneth Garland; David Greenberg; E. Bulkeley Griswold; Jesse Harte; Scott Hess; Harley Lippman; Michel Marks; Michael McCallion; John McNamara; Gary
Rizzi; Gordon Rutledge; and Robert Steele.



2. Proposal to
Amend the Certificate of Incorporation:



Additionally, at the annual meeting, stockholders voted on a proposal to amend the Certificate of Incorporation to eliminate term limits for Public Directors. An affirmative vote of the majority of the 816 shares outstanding (409 votes) was
required to approve this proposal. The proposal was not approved because 381 votes were cast in favor of, and 72 were cast against the amendment, with 56 abstentions.



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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##### Table of Contents

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:  May 10, 2005 |  |  |  | By:                  |  | /s/    MITCHELL
STEINHAUSE
|                    |  |  |  |                      |  | Name:                      |  | Mitchell Steinhause                   
|                    |  |  |  |                      |  | Title:                     |  | Chairman (Principal Executive
Officer)





|                    |  |  |  |                      |  |                              |  |                                                      
|------------------- |  |  |  | -------------------- |  | ---------------------------- |  | -----------------------------------------------------
|                    |  |  |  | NYMEX HOLDINGS, INC.
|                    |  |  | 
|Date:  May 10, 2005 |  |  |  | By:                  |  | /s/    LEWIS A. RAIBLEY,
III
|                    |  |  |  |                      |  | Name:                        |  | Lewis A. Raibley, III                                
|                    |  |  |  |                      |  | Title:                       |  | Chief Financial Officer (Principal
Financial Officer)



33