UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

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

For the Quarterly Period Ended June 30, ~~2007~~2008

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

For the Transition Period from to

Commission File Number 001-33149

NYMEX Holdings, Inc.

Delaware

13-4098266

(State of Incorporation)

(I.R.S. Employer

Identification Number)

One North End Avenue

World Financial Center

New York, New York 10282-1101

(212) 299-2000

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 a large accelerated filer, an accelerated filer, or a non-accelerated filer. or a smaller reporting company. See ~~definition~~the definitions of “large accelerated filer”, “accelerated filer” and ~~large~~“smaller ~~accelerated~~reporting ~~filer~~company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer ¨ x Accelerated filer ¨ Non-accelerated filer x ¨ Smaller reporting company ¨

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

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.

A total of 9294,~~870~~790,~~600~~125 shares of the registrant’s $0.01 par value common stock were outstanding at August 107, ~~2007~~2008.

TABLE OF CONTENTS

PART I: FINANCIAL INFORMATION

		Page
Item 1.	Financial Statements
	Condensed Consolidated Statements of Income for the three and six months ended June 30, 2007 and 2006 (Unaudited)	1
	Condensed Consolidated Statements of Income for the three and six months ended June 30, 2008 and 2007 (Unaudited)	1
	Condensed Consolidated Balance Sheets as of June 30, 2007 (Unaudited) and December 31, 2006	2
	Condensed Consolidated Balance Sheets as of June 30, 2008 (Unaudited) and December 31, 2007	2
	Condensed Consolidated Statements of Stockholders’ Equity for the six months ended June 30, 2007 (Unaudited) and for the year ended December 31, 2006	3
	Condensed Consolidated Statements of Stockholders’ Equity for the six months ended June 30, 2008 (Unaudited) and for the year ended December 31, 2007	3
	Condensed Consolidated Statements of Cash Flows for the six months ended June 30, 2007 and 2006 (Unaudited)	4
	Condensed Consolidated Statements of Cash Flows for the six months ended June 30, 2008 and 2007 (Unaudited)	4
	Notes to the Unaudited Condensed Consolidated Financial Statements	5
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	2230
Item 3.	Quantitative and Qualitative Disclosures about Market Risk	3748
Item 4.	Controls and Procedures	3950
PART II: OTHER INFORMATION	~~PART II: OTHER INFORMATION~~
Item 1.	Legal Proceedings	4051
Item 1A.	Risk Factors	4051
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	4053
Item 3.	Defaults upon Senior Securities	4053
Item 4.	Submission of Matters to a Vote of Security Holders	4153
Item 5.	Other Information	4154
Item 6.	Exhibits	4154
	Signatures	4255

PART I: FINANCIAL INFORMATION

Item 1.

Financial Statements

NYMEX HOLDINGS, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF INCOME (Unaudited)

(in thousands, except for share data)

Three Months Ended June 30,

Six Months Ended June 30,

Three Months EndedJune 30,

Six Months EndedJune 30,

2007

2006

2007

2006

2008

2007

2008

2007

Operating Revenues

Clearing and transaction fees

~~137~~180,~~390~~400

~~103~~137,~~346~~390

~~275~~359,~~567~~451

~~195~~275,~~766~~567

Market data fees

2326,~~363~~913

1523,~~912~~363

4653,~~500~~126

3146,~~294~~500

Other, net

2,844

3,257

5,756

7,125

Other

3,495

2,844

7,106

5,756

Total operating revenues

~~163~~210,~~597~~808

~~122~~163,~~515~~597

~~327~~419,~~823~~683

~~234~~327,~~185~~823

Operating Expenses

Direct transaction costs

2426,~~318~~886

824,~~054~~318

4854,~~420~~969

1448,~~937~~420

Salaries and employee benefits

2019,~~482~~887

1920,~~172~~482

4139,~~520~~863

3741,~~486~~520

Occupancy and equipment

5,~~604~~893

5,~~793~~604

11,~~547~~653

1411,~~038~~547

Depreciation and amortization, net of deferred credit amortization

3,~~614~~571

43,~~914~~614

7,~~145~~029

87,~~248~~145

General and administrative

4,~~945~~583

54,~~332~~945

9,~~642~~204

109,~~630~~642

Professional services

35,~~922~~079

43,~~207~~922

8,~~108~~205

78,~~533~~108

Telecommunications

1,~~417~~428

1,~~813~~417

2,~~840~~678

32,~~491~~840

Marketing

12,~~626~~013

1,~~826~~626

3,~~559~~363

23,~~739~~559

Other expenses

~~182~~2,124

~~2,200~~182

110,~~843~~487

41,~~350~~843

Total operating expenses

6671,~~110~~464

5366,~~311~~110

~~134~~147,~~624~~451

~~103~~134,~~452~~624

Operating income

97139,~~487~~344

6997,~~204~~487

~~193~~272,~~199~~232

~~130~~193,~~733~~199

Non-Operating Income and Expenses

Investment income, net

63,~~133~~222

16,~~354~~133

126,~~840~~836

212,~~814~~840

Interest income from securities lending

314,~~087~~829

3331,~~275~~087

6012,~~493~~597

60,~~517~~493

Interest expense/fees from securities lending

(304,~~136~~233

)

(3230,~~444~~136

)

(5910,~~025~~281

)

(5859,~~900~~025

)

Interest expense

(1,~~612~~587

)

(1,~~666~~612

)

(3,~~224~~173

)

(3,~~334~~224

)

Losses from unconsolidated investments

(28,944

)

(382

)

(30,587

)

(776

)

Gain (losses) from unconsolidated investments

28,616

(28,944

)

26,406

(30,587

)

Total non-operating income and expenses

~~(23~~30,~~472~~847

)

~~137~~(23,472

)

~~(19~~32,~~503~~385

)

~~321~~(19,503

)

Income before provision for income taxes

74170,~~015~~191

6974,~~341~~015

~~173~~304,~~696~~617

~~131~~173,~~054~~696

Provision for income taxes

3275,~~270~~879

3132,~~208~~270

75139,~~731~~120

5975,~~288~~731

Net income

4194,~~745~~312

3841,~~133~~745

97165,~~965~~497

7197,~~766~~965

Earnings per Share

Basic

0.4499

0.44

1.0475

1.4004

Diluted

0.4499

0.44

1.0374

1.4003

Weighted Average Number of Common Shares Outstanding

Basic

94,~~450~~791,000

8194,~~600~~450,000

94,~~450~~786,000

4994,~~141~~450,000

Diluted

94,~~798~~947,000

8194,~~600~~798,000

94,~~784~~981,000

4994,~~141~~784,000

Proforma weighted average common shares outstanding and earnings per share retroactively adjusted to reflect the 90,000-for-1 recapitalization on March 14, 2006 (Unaudited):

Earnings per Share

Basic

0.44

1.04

0.88

Diluted

0.44

1.03

0.88

Weighted Average Number of Common Shares Outstanding

Basic

94,450,000

81,600,000

94,450,000

78,354,000

Diluted

94,798,000

81,600,000

94,784,000

78,354,000

See accompanying notes to the unaudited condensed consolidated financial statements.

NYMEX HOLDINGS, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(in thousands, except for share data)

	June 30,2007			December 31,2006
	June 30,2008				December 31,2007
	(Unaudited)
Assets
Cash and cash equivalents	$	172,~~112~~411		$	~~18,631~~$	3,296
Collateral from securities lending program		2558,~~331,507~~367			~~2,547,312~~	842,444
Marketable securities, at market value		455,740			485,581
Marketable securities, at fair value		633,202				461,142
Clearing and transaction fees receivable, net of allowance for member credits		4763,~~780~~119			~~32,853~~	38,443
Prepaid expenses		78,~~234~~962			~~7,009~~	8,786
Margin deposits and guaranty funds		870,~~418~~516			~~17,052~~	170,192
Other current assets		4333,~~691~~124			~~10,238~~	34,097
Total current assets		21,~~911~~369,~~482~~701			~~3,118,676~~	1,558,400
Property and equipment, net		~~178~~173,~~532~~707			~~183,193~~	176,471
Goodwill and indefinite-lived intangible asset		307,125			~~307,125~~	307,125
Long-term investments		~~118~~117,~~422~~414			~~3,008~~	178,036
Other assets		97,~~499~~115			~~11,929~~	7,121
Total assets	$	31,~~525~~975,~~060~~062		$	~~3,623,931~~$	2,227,153
Liabilities and Stockholders’ Equity
Accounts payable and accrued liabilities	$	1618,~~670~~188		$	~~14,854~~$	15,723
Accrued salaries and related liabilities		1213,~~563~~155			~~13,688~~	17,107
Payable under securities lending program		2571,~~331,507~~009			~~2,547,312~~	847,581
Margin deposits and guaranty funds		870,~~418~~516			~~17,052~~	170,192
Income tax payable		7,~~586~~217			~~4,984~~	2,704
Other current liabilities		3238,~~852~~337			~~35,019~~	31,122
Total current liabilities		2718,~~409,596~~422			~~2,632,909~~	1,084,429
Grant for building construction deferred credit		~~105~~102,~~093~~949			~~106,166~~	104,021
Long-term debt		8077,~~281~~464			~~80,281~~	77,464
Members’ retirement obligation		11,~~966~~884			~~12,367~~	12,038
Other liabilities		2921,~~824~~636			~~17,286~~	23,646
Total liabilities		2932,~~636,760~~355			~~2,849,009~~	1,301,598
Commitments and contingencies
Stockholders’ equity
Common stock, $0.01 par value; 181,909,600 shares authorized as of June 30, 2007 and December 31, 2006; 94,449,800 shares issued and 92,870,600 and 89,678,600 shares outstanding as of June 30, 2007 and December 31, 2006, respectively		944			944
Common stock, $0.01 par value; 181,909,600 shares authorized, 94,799,009 and 94,769,342 shares issued as of June 30, 2008 and December 31, 2007, respectively; and 94,788,250 and 93,972,289 shares outstanding as of June 30, 2008 and December 31, 2007, respectively		948				948
Additional paid-in capital		~~801~~837,~~168~~537			~~796,585~~	828,227
Retained earnings (deficit)		66,697			(21,823	)
Retained earnings		220,390				73,851
Accumulated other comprehensive income (loss), net of tax		19,491			(784	)
Accumulated other comprehensive (loss) income, net of tax		(16,168	)			22,529
Total stockholders’ equity		~~888~~1,~~300~~042,707			~~774,922~~	925,555
Total liabilities and stockholders’ equity	$	31,~~525~~975,~~060~~062		$	~~3,623,931~~$	2,227,153

See accompanying notes to the unaudited condensed consolidated financial statements.

NYMEX HOLDINGS, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

(in thousands, except for share data)

	Common Stock					AdditionalPaid-inCapital	~~AdditionalPaid-in Capital~~			RetainedEarnings(Deficit)	~~RetainedEarnings(Deficit)~~			AccumulatedOtherComprehensiveIncome (Loss)	~~AccumulatedOtherComprehensive Income (Loss)~~			TotalStockholders’Equity	~~TotalStockholders’ Equity~~
	Shares		Amount	~~Amount~~
Balances at January 1, 2006	816			$	—		$	69,631			$	39,479			$	672			$	109,782
Balances at January 1, 2007	94,449,800		$	944		$	796,585			$	(21,823	)		$	(784	)		$	774,922
Comprehensive income:
Net income	—			—	—		—	—			224,039	~~154,801~~			—	—			224,039	~~154,801~~
Realization of gain on available-for-sale securities, net of deferred income taxes of $570	—				—			—				—				(672	)			(672	)
Foreign currencies translations	—			—			—				—				385				385
Total comprehensive income																				154,129
Postretirement benefits, net of deferred income tax of $548															773				773
SFAS No. 158 adjustment to record unrealized post-retirement obligation, net of deferred income taxes of $628	—				—			—				—				(784	)			(784	)
Unrealized gain on available-for-sale securities, net of deferred income taxes of $12,188	—			—			—				—				22,155				22,155
Dividends declared:
Total comprehensive income																			247,352
Common stock, $36,765/share on January 11, 2006	—				—			—				(30,000	)			—				(30,000	)
Dividends declared:
Common stock, $196,078/share on March 6, 2006	—				—			(68,897	)			(91,103	)			—				(160,000	)
Common stock, $0.10/share on April 30, 2007	—			—			—				(9,445	)			—				(9,445	)
Common stock, $0.06/share on July 6, 2006	—				—			—				(5,000	)			—				(5,000	)
Common stock, $0.10/share on August 1, 2007	—			—			—				(9,445	)			—				(9,445	)
Common stock, $0.14/share on November 10, 2006	—				—			—				(10,000	)			—				(10,000	)
Common stock, $0.10/share on September 30, 2007	—			—			—				(9,475	)			—				(9,475	)
Common stock, $0.98/share on November 10, 2006	—				—			—				(80,000	)			—				(80,000	)
Common stock, $1.06/share on September 30, 2007	—			—			—				(100,000	)			—				(100,000	)
Retirement of common stock	(816	)			—			—				—				—				—
Share-based compensation amortization	—			—			10,109				—				—				10,109
Issuance of common stock	73,440,000				734			(734	)			—				—				—
Direct costs of initial public offering	—			—			(346	)			—				—				(346	)
Issuance of common stock in initial public offering, net of underwriting discounts	6,365,000				64			347,907				—				—				347,971
Exercise of employee stock options	265,150			3			15,641				—				—				15,644
Direct costs of initial public offering	—				—			(3,749	)			—				—				(3,749	)
Issuance of restricted stock and stock units	54,392			1			—				—				—				1
Conversion of cumulative redeemable convertible preferred stock to common stock	8,160,000				82			153,016				—				—				153,098
Excess net tax benefit related to share-based compensation	—			—			6,238				—				—				6,238
Additional proceeds from private equity offering	—				—			10,000				—				—				10,000
Balances at December 31, 2007	94,769,342		$	948		$	828,227			$	73,851			$	22,529			$	925,555
Issuance of common stock for purchase of COMEX electronic trading rights	6,484,800				64			279,538				—				—				279,602
Comprehensive income:
Tax benefit related to NYMEX MRRP	—				—			8,591				—				—				8,591
Net income	—			—			—				165,497				—				165,497
Share-based compensation awards	—				—			1,282				—				—				1,282
Foreign currencies translations, net of deferred income taxes of $87	—			—			—				—				(283	)			(283	)
Balances at December 31, 2006	94,449,800				944			796,585				(21,823	)			(784	)			774,922
Postretirement benefits, net of deferred income taxes of $49	—			—			—				—				84				84
Comprehensive income:
Realization of net gain on available-for-sale securities, net of deferred income taxes of $15,427	—			—			—				—				(26,839	)			(26,839	)
Net income	—				—			—				97,965				—				97,965
Unrealized loss on available-for-sale securities, net of deferred income taxes of $6,155	—			—			—				—				(11,659	)			(11,659	)
Unrealized gain on available-for-sale securities, net of deferred income taxes of $15,672	—				—			—				—				20,275				20,275
Total comprehensive income																			126,800
Total comprehensive income																				118,240
Dividends declared:
Dividends declared:
Common stock, $0.10/share on February 1, 2008	—			—			—				(9,478	)			—				(9,478	)
Common stock, $0.10/share on April 30, 2007	—				—			—				(9,445	)			—				(9,445	)
Common stock, $0.10/share on May 1, 2008	—			—			—				(9,480	)			—				(9,480	)
Share-based compensation awards	—				—			4,929				—				—				4,929
Share-based compensation amortization	—			—			7,746				—				—				7,746
Direct costs of initial public offering	—				—			(346	)			—				—				(346	)
Exercise of employee stock options	23,500			—			1,387				—				—				1,387
Balances at June 30, 2007 (Unaudited)	94,449,800			$	944		$	801,168			$	66,697			$	19,491			$	888,300
Issuance of restricted stock and stock units	6,167			—			—				—				—				—
Excess net tax benefit related to share-based compensation	—			—			177				—				—				177
Balances at June 30, 2008 (Unaudited)	94,799,009		$	948		$	837,537			$	220,390			$	(16,168	)		$	1,042,707

See accompanying notes to the unaudited condensed consolidated financial statements.

NYMEX HOLDINGS, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)

(in thousands)

	Six Months Ended June 30,
	Six Months EndedJune 30,
	2007			2006
	2008			2007
Cash flows from operating activities
Net income	$	97165,~~965~~497		$	7197,~~766~~965
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization		8,~~218~~101			98,~~102~~218
Amortization of intangibles		—			219
Deferred grant credits		(1,323	)		(1,323	)
Deferred rental income		(338	)		(338	)
Deferred rent expense		(95	)		(~~114~~95	)
Deferred income taxes		~~(13~~4,~~468~~021	)		(~~332~~13,468	)
Allowance for doubtful accounts and credits		328			(202	)
Excess tax benefit associated with exercise of stock options		(177	)		—
Share-based compensation		4,929			—
Allowance for doubtful accounts and credits		158			328
Other, net		3,710			(776	)
Share-based compensation		7,746			4,929
Asset impairment and disposition losses		25,996			805
Gain on available-for-sale security		(33,869	)		—
Other, net		4,363			3,710
Asset impairment and disposition losses		3,247			25,996
Decrease (increase) in operating assets:
Clearing and transaction fees receivable		(14,927	)		(9,849	)
Marketable securities		(172,091	)		29,841
Prepaid expenses		(225	)		(987	)
Clearing and transaction fees receivable		(24,676	)		(14,927	)
Margin deposits and guaranty fund assets		8,634			59,271
Prepaid expenses		(176	)		(225	)
Other current assets		(7,176	)		(3,298	)
Margin deposits and guaranty fund assets		99,676			8,634
Other current assets		5,623			(7,176	)
Increase (decrease) in operating liabilities:
Accounts payable and accrued liabilities		12,~~816~~465			(31,~~463~~816	)
Accrued salaries and related liabilities		(13,~~125~~952	)		2(1,~~713~~125	)
Margin deposits and guaranty fund liabilities		(899,~~634~~676	)		(598,~~271~~634	)
Income tax payable		214,~~602~~089			52,~~527~~602
Other current liabilities		(28,~~325~~283	)		~~185~~(2,325	)
Other liabilities		~~437~~(455	)		~~618~~437
Members’ retirement obligation		(~~401~~154	)		(~~413~~401	)
Net cash provided by operating activities		104,598			69,840
Net cash (used in) provided by operating activities		(13,713	)		134,439
Cash flows from investing activities
Decrease (increase) in collateral from securities lending program		215,805			(303,288	)
Maturities and sales of securities lending program investments		2,129,607			54,514,793
Decrease in securities purchased under agreements to resell		—			2,100
Purchases of securities lending program investments		(1,853,035	)		(54,298,988	)
Purchase of long-term investments		(~~109~~12,~~139~~659	)		(2109,~~775~~139	)
Loan to unconsolidated entity		(13,700	)		—
Proceeds of available-for-sale security		49,299			—
Decrease (increase) in marketable securities		29,841			(44,672	)
Loan to unconsolidated entity		—			(13,700	)
Capital expenditures		(35,~~591~~356	)		(63,~~163~~591	)
Decrease in other assets		~~105~~6			~~1,642~~105
Net cash provided by (used in) investing activities		119,321			(353,156	)
Net cash provided by investing activities		307,862			89,480
Cash flows from financing activities
Direct costs of initial public offering		~~(346~~—	)		—(346	)
Proceeds from issuance of preferred stock		—			160,000
Proceeds from issuance of capital stock under employee stock plan		1,387			—
Costs related to issuance of preferred stock		—			(6,902	)
Excess tax benefit associated with exercise of stock options		177			—
(Decrease) increase in obligation to return collateral under securities lending program		(215,805	)		303,288
Decrease in obligation to return collateral under securities lending program		(276,572	)		(215,805	)
Dividends paid		(920,~~287~~026	)		(~~193~~9,~~600~~287	)
Net cash (used in) provided by financing activities		(225,438	)		262,786
Net cash used in financing activities		(295,034	)		(225,438	)
Net decrease in cash and cash equivalents		(~~1,519~~885	)		(201,~~530~~519	)
Cash and cash equivalents, beginning of period		183,~~631~~296			3518,~~664~~631
Cash and cash equivalents, end of period	$	172,~~112~~411		$	1517,~~134~~112

See accompanying notes to the unaudited condensed consolidated financial statements.

NYMEX HOLDINGS, INC. AND SUBSIDIARIES

NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

NOTE 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. On November 22, 2006, NYMEX Holdings completed an initial public offering (“IPO”) of its common stock which is listed on the New York Stock Exchange under the symbol “NMX.” 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.” NYMEX Holdings and its subsidiaries are collectively referred to as the “Company.”

The Company exists principally to provide facilities to buy, sell and clear energy, precious and base metals, and soft 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 off-exchange in the over-the-counter (“OTC”) market. These services facilitate price discovery, hedging and liquidity in the energy and metals markets. The liquidity that the Exchange and other centralized markets offer is achieved in large part because the traded contracts have standardized terms and the Company’s clearinghouse mitigates counterparty performance risk. Transactions executed on the Exchange mitigate the risk of counter-party default because the Company’s clearinghouse acts as the counter- party to every trade. To manage the risk of financial nonperformance, the Exchange requires members to post margin. Trading on the Exchange is regulated by the Commodity Futures Trading Commission.

~~Basis~~Merger ofAgreement ~~Presentation~~

The ~~accompanying~~Company, ~~unaudited~~CME ~~condensed~~Group ~~consolidated~~Inc. (“CME ~~financial~~Group”), ~~statements~~CMEG ~~include~~NY ~~the~~Inc., ~~accounts~~a wholly-owned subsidiary of ~~NYMEX~~CME ~~Holdings~~Group, and ~~its~~NYMEX ~~wholly-owned~~Exchange ~~subsidiaries~~are ~~and~~parties ~~have been~~to ~~prepared~~an inAgreement ~~accordance~~and ~~with~~Plan ~~U.S.~~of ~~generally~~Merger, ~~accepted~~dated ~~accounting~~as ~~principles~~of March 17, 2008 (the “~~GAAP~~Merger Agreement”). ~~The~~and ~~Company~~amended ~~consolidates~~as ~~any~~of ~~investment~~June 30, 2008, inJuly 18, a2008 ~~variable~~and ~~interest~~August ~~entity~~7, ~~for~~2008, pursuant to which the Company iswould merge with and into CMEG NY Inc. with CMEG NY Inc. continuing as the ~~primary~~surviving ~~beneficiary~~company and as a wholly-owned subsidiary of CME Group. ~~Investments~~If inthe ~~unconsolidated~~merger is completed, the ~~entities~~Company’s ~~representing~~stockholders ~~ownership~~will receive for each issued and outstanding share of NYMEX Holdings common stock they own, at ~~least~~the ~~20%~~election ~~but~~of ~~less~~each ~~than~~NYMEX ~~50%~~Holdings ~~are~~stockholder, ~~accounted~~consideration in the form of CME Group Class A common stock or cash, subject to proration if too few or too many stockholders elect to receive cash. The cash consideration per share of NYMEX Holdings common stock for ~~under~~which a valid cash election has been made will be equal to the ~~equity~~sum ~~method~~of (a) $36.00 ~~Investments~~plus (b) the inproduct ~~unconsolidated~~of ~~entities~~(1) 0.1323 ~~representing~~and ~~ownership~~(2) the average closing sale price of ~~less~~CME ~~than~~Group ~~20%~~Class A ~~are~~common ~~accounted~~stock ~~for~~on ~~under~~the Nasdaq Global Select Market, or the ~~cost~~“Nasdaq,” ~~method~~for ~~unless~~the itperiod isof ten consecutive trading days ending on the ~~determined~~second ~~that~~full trading day prior to the effective time of the merger, referred to as the “Average CME Group Share Price.” The stock consideration per share of the Company’s common stock for which a valid stock election has ~~significant~~been ~~influence~~made ~~over~~will be the ~~decision~~number ~~making~~of ~~process~~shares of CME Group Class A common stock equal to the ~~investee,~~cash inconsideration ~~which~~per ~~case~~share divided by the ~~investment~~Average CME Group Share Price. If the merger is ~~accounted~~consummated, ~~for~~each ~~under~~owner of a NYMEX Class A membership as of the ~~equity~~effective time ~~method.~~of ~~All~~the ~~significant~~merger ~~intercompany~~who ~~transactions~~executes and ~~balances~~delivers ~~have~~a ~~been eliminated~~waiver inand ~~consolidation.~~release ~~The~~within ~~accompanying~~60 ~~unaudited~~days ~~condensed~~after ~~consolidated~~consummation ~~financial~~of ~~statements~~the ~~reflect~~merger ~~all~~will ~~adjustments~~receive ~~which~~$750,000 ~~are~~per NYMEX Class A membership such member owns of record. Under certain circumstances, inif the ~~opinion~~Merger Agreement ofis terminated, the Company’s ~~management,~~or ~~necessary~~CME ~~for~~Group may be required to pay the other party a ~~fair~~termination ~~statement~~fee and other merger-related expenses. The merger is subject to a number of closing conditions, including, but not limited to, (i) adoption of the ~~results~~Merger ~~for~~Agreement by the ~~periods presented.~~stockholders of the Company, (ii) approval by the stockholders of CME Group of

The preparation of the accompanying condensed consolidated financial statements and related footnote disclosures in accordance with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements, the reported amounts of revenues and expenses during the reporting period, and the disclosure of contingent liabilities. While management uses its best judgment, actual results could differ from those estimates.

Certain reclassifications have been made to the condensed consolidated financial statements for the three- and six-month periods ended June 30, 2006 to conform to the current presentation. Investment income, net, interest income from securities lending, interest expense/fees from securities lending, interest expense and losses from unconsolidated investments are currently presented in the non-operating income and expenses section of the

NYMEX HOLDINGS, INC. AND SUBSIDIARIES

NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

~~condensed~~(A) the ~~consolidated~~amended ~~statements~~and ofrestated ~~income.~~CME ~~Previously,~~Group ~~investment~~certificate ~~income,~~of ~~net~~incorporation and ~~interest~~(B) the ~~income~~issuance ~~from~~of ~~securities~~shares ~~lending~~of CME Group Class A common stock in connection with the merger, (iii) approval by owners of 75% of the outstanding NYMEX Class A memberships of changes to the certificate of incorporation and bylaws of NYMEX Exchange which ~~was~~eliminate ~~reported~~substantially ~~net~~all of the NYMEX ~~related~~Class A ~~securities~~members’ ~~lending~~existing ~~interest~~rights ~~expense)~~and ~~were~~replace ~~reported~~them inwith ~~the~~certain ~~revenues~~new ~~section.~~post-closing ~~Fees~~trading ~~related~~rights and privileges, (iv) effectiveness of a Form S-4 registration statement to ~~securities~~be ~~lending~~filed ~~were~~by ~~previously~~CME ~~reported~~Group, in(v) receipt ~~general~~of certain regulatory approvals and ~~administrative~~(vi) receipt ~~expenses.~~of ~~Interest~~an ~~expense~~opinion ~~was~~that ~~reported~~the merger will be treated as a ~~separate~~tax-free ~~operating~~reorganization. ~~expense~~The terms of certain contracts, employee benefit arrangements and debt agreements have provisions which could result in changes to the terms ~~losses~~or ~~from~~settlement ~~unconsolidated~~amounts ~~investments~~upon ~~were~~a ~~reported~~change in ~~other~~control ~~expenses~~of the Company. ~~Additionally~~On June 16, ~~direct~~2008, ~~transaction~~CME ~~costs~~Group ~~are~~and ~~reported~~the ~~separately~~Company asreceived ~~part~~a notice of ~~operating~~early ~~expenses.~~termination ~~Previously,~~of ~~direct~~the ~~transaction~~HSR ~~costs~~Act ~~were~~waiting ~~reported~~period infrom ~~general~~the U.S. Department of Justice and ~~administrative~~the U.S. Federal Trade ~~expenses~~Commission, satisfying the condition to the Merger Agreement with respect to receipt of certain regulatory approvals.

Basis of Presentation

The accompanying unaudited condensed consolidated financial statements include the accounts of NYMEX Holdings and its wholly-owned subsidiaries and have been prepared in accordance with U.S. generally accepted accounting principles (“GAAP”). All significant intercompany transactions and balances are eliminated in consolidation. The Company consolidates subsidiaries in which it holds, directly or indirectly, more than 50% of the voting rights or where it exercises control. The Company follows the equity method of accounting for joint ventures and investments in associated companies in which it holds between 20% and 50% of the voting rights and/or has significant influence. The Company’s equity in the net income and losses of these investments is reported in losses from unconsolidated investments in the accompanying consolidated statements of income. The Company also evaluates its investments in all entities under Financial Accounting Standards Board (“FASB”) Interpretation No. 46R, Consolidation of Variable Interest Entities an interpretation of ARB No. 51 (“FIN No. 46R”) to determine if it has primary beneficial interests in any entities deemed to be variable interest entities (“VIEs”). As of June 30, 2008, the Company was not a beneficiary in a VIE. The accompanying unaudited condensed consolidated financial statements reflect all adjustments which are, in the opinion of the Company’s management, necessary for a fair statement of the results for the periods presented.

Certain changes have been made to the condensed consolidated financial statements for the three and six months ended June 30, 2007 to conform to the current presentation. Beginning December 31, 2007, the Company revised its classification of the net change in its marketable securities portfolio as an operating activity in the consolidated statements of cash flows, in accordance with Statement of Financial Accounting Standards (“SFAS”) No. 102, Statement of Cash Flows—Exemption of Certain Enterprises and Classification of Cash flows from Certain Securities Acquired for Resale—an amendment of FASB Statement No. 95. Previously, the net change in marketable securities was classified as an investing activity. In addition, the Company has also reclassified interest receivables from marketable securities to other current assets in the condensed consolidated balance sheets as of December 31, 2007 to conform to the current presentation.

Pursuant to the rules and regulations of the United States Securities and Exchange Commission (“SEC”), certain information and disclosures normally included in the notes to the annual financial statements have been omitted from these interim financial statements. The Company suggests that these financial statements be read in conjunction with the audited financial statements and the notes included in the Company’s most recent Annual Report on Form 10-K and any Current Reports on Form 8-K.

Significant Accounting Policies

The Company’s significant accounting policies are described in the notes to the December 31, ~~2006~~2007 audited consolidated financial statements included in its Annual Report on Form 10-K.

Recent Accounting Pronouncements

Effective January 1, 2007, the Company adopted Financial Accounting Standards Board (“FASB”) Interpretation No. 48, Accounting for Uncertainty in Income Taxes—an interpretation of FASB Statement No. 109 (“FIN No. 48”). FIN No. 48 clarifies the accounting for uncertainty in income taxes recognized in a company’s financial statements in accordance with Statement of Financial Accounting Standards (“SFAS”) No. 109, Accounting for Income Taxes. FIN No. 48 prescribes a recognition threshold and measurement attribute for the financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. The adoption of FIN No. 48 did not have an impact on the Company’s condensed consolidated financial statements.

As of the date of adoption, the Company had approximately $1.9 million of unrecognized tax benefits that, if recognized, would affect the annual effective income tax rate. As of June 30, 2007, the Company has $2.0 million of unrecognized tax benefits.

The Company recognizes interest and penalties, if applicable, related to uncertain tax positions in the provision for income taxes line of the condensed consolidated statements of income. During the three- and six-month ended June 30, 2007, the Company recognized approximately $0.1 million of accrued interest associated with uncertain tax positions. As of June 30, 2007, the Company has approximately $0.7 million of accrued interest related to uncertain tax positions, which is included in the $2.0 million noted above.

The earliest tax year open to examination by the U.S. Internal Revenue Service and the other tax jurisdictions in which the Company files a tax return is 2003. During the current quarter, the Company concluded a tax examination with the City of New York for the years 2000 through 2002. At the conclusion of this audit, a payment was made to the City of New York in the amount of $0.3 million consisting of $0.2 million of tax and $0.1 million in interest. The resolution of this examination had no impact on the Company’s effective tax rate.

Recent Accounting Pronouncements and Changes, Not Yet Adopted

In September 2006, the FASB issued SFAS No. 157, Fair Value Measurements (“SFAS No. 157”), which defines fair value, establishes a framework for measuring fair value in accordance with GAAP, and expands disclosures about fair value measurements. SFAS No. 157 will be effective for the Company’s fiscal year 2008. Adoption of this statement is not expected to have a material impact on the Company’s financial statements, although additional disclosures may be required.

NYMEX HOLDINGS, INC. AND SUBSIDIARIES

NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

InRecent ~~February 2007,~~Accounting ~~the~~Pronouncements FASB released SFAS No. 159, The Fair Value Option for Financial Assets and Financial Liabilities (“SFAS No. 159”). This Statement permits entities to choose to measure many financial instruments and certain other items at fair value. SFAS No. 159 will be effective for the Company’s fiscal year 2008 and the Company does not expect to have a material impact on the Company’s financial statements.

~~NOTE~~Effective January 1, 2008, the Company adopted SFAS No. 157, Fair Value Measurements (“SFAS No. 157”), which defines fair value, establishes a framework for measuring fair value in accordance with GAAP, and expands disclosures about fair value measurements. SFAS No. 157 establishes a fair value hierarchy that distinguishes between independent observable inputs and unobservable inputs based on the best information available. SFAS No. 157 expands disclosures about the use of fair value to measure assets and liabilities, the effect of these measurements on earnings for the period, and the inputs used to measure fair value. In February 2008, the FASB issued Staff Position (“FSP”) FAS 157-1 to exclude SFAS No. 13, Accounting for Leases, and its related interpretive accounting pronouncements that address leasing transactions, from the scope of SFAS No. 157. In February 2008, the FASB also issued FSP FAS 157-2 to allow entities to electively defer the effective date of SFAS No. ~~Securities~~ 157 for nonfinancial assets and liabilities, except ~~Lending~~for those items recognized or disclosed at fair value on an annual or more frequently recurring basis, until January 1, 2009. The Company will apply the fair value measurement provisions of SFAS No. 157 to its nonfinancial assets and liabilities effective January 1, 2009. The adoption of SFAS No. 157 had no impact on retained earnings and resulted in expanded disclosures about the Company’s financial instruments measured at fair value, as discussed in Note 3, “Fair Value Measurements.”

~~The~~Effective ~~Company~~January 1, ~~entered~~2008, ~~into~~the anCompany ~~agreement~~also ~~with~~adopted ~~JPMorgan~~SFAS ~~Chase~~No. ~~Bank~~159, ~~N.A.~~The ~~(“JPMorgan”) to participate in a securities~~Fair ~~lending~~Value ~~program.~~Option ~~Under~~for ~~this~~Financial ~~program,~~Assets ~~JPMorgan,~~and asFinancial ~~agent,~~Liabilities-Including ~~lends on~~ an ~~overnight~~Amendment ~~basis, a portion~~ of ~~the~~FASB ~~clearing~~Statement ~~members’~~No. 115 ~~securities~~(“SFAS ~~on deposit in the Company’s margin deposits and guaranty fund to third parties in return for cash collateral~~No. ~~JPMorgan~~ 159”), inwhich ~~turn,~~permits ~~invests~~entities ~~the~~to ~~cash~~choose ~~collateral~~to inmeasure ~~various~~many ~~investments~~financial oninstruments ~~behalf~~and ofcertain ~~the~~other ~~Company,~~items inat fair ~~accordance with the program’s investment guidelines~~value. ~~The~~This ~~Company~~statement ~~receives~~also ~~the~~establishes ~~benefits,~~presentation and ~~bears~~disclosure ~~the~~requirements ~~risks,~~designed ofto ~~such~~facilitate ~~investments. Interest~~comparisons ~~expense~~between iscompanies ~~then~~that ~~paid~~choose todifferent ~~the~~measurement ~~third~~attributes ~~party~~ for ~~the~~similar ~~cash~~types ~~collateral~~of ~~the~~assets ~~Company~~and ~~controlled~~liabilities. ~~during~~After the ~~transaction~~initial adoption, ~~and~~the aelection ~~fee~~ is ~~paid~~made toat ~~JPMorgan for administering~~ the ~~transaction.~~acquisition ~~Interest~~of ~~income~~a ~~and~~financial ~~interest~~asset ~~expense,~~or asfinancial ~~well~~liability ~~as the fee paid to JPMorgan, are reported in the non-operating income~~ and ~~expenses~~it ~~section~~may not onbe ~~the Company’s condensed consolidated statements of income~~revoked. AtThe ~~June 30,~~Company ~~2007,~~applied the fair value ofoption ~~the securities~~ on ~~loan~~certain ~~was~~time ~~approximately~~deposits ~~$2.3 billion. Interest income, interest expense~~ and ~~the~~securities ~~JPMorgan~~purchased ~~fees recognized~~ under ~~the~~agreements ~~securities~~to ~~lending program were $60~~resell.5 ~~million,~~The adoption ~~$58.6~~of ~~million~~SFAS ~~and $0~~No.~~4 million, respectively, for the six months ended June~~ ~~30,~~159 ~~2007~~did ~~compared~~not tohave ~~$60.5~~a ~~million,~~material ~~$58.4~~impact ~~million~~on ~~and $0.5 million, respectively, for~~ the ~~six~~Company’s ~~months~~unaudited ~~ended~~condensed ~~June 30,~~consolidated ~~2006~~financial statements.

~~NOTE~~Recent Accounting ~~3. Allowance~~Pronouncements ~~for~~and ~~Doubtful~~Changes, ~~Accounts~~Not ~~and~~Yet ~~Credits~~ Adopted

~~Clearing~~In ~~and~~May ~~transaction~~2008, ~~fees~~the ~~receivable~~FASB ~~are~~issued ~~carried~~SFAS ~~net~~No. 162, The Hierarchy of Generally ~~allowances~~Accepted ~~for~~Accounting ~~member~~Principles ~~credits,~~(“SFAS ~~which~~No. 162”). ~~are~~This ~~determined~~standard ~~based~~identifies ~~upon~~the ~~expected billing~~sources ~~adjustments.~~of ~~Allowances~~accounting ~~for~~principles ~~member~~and ~~credits~~the ~~were~~framework ~~$509,000~~for atselecting ~~June 30,~~the ~~2007~~principles ~~and~~used ~~December 31,~~in ~~2006.~~the ~~The~~preparation ~~Company~~of ~~believes~~financial ~~the~~statements ~~allowances~~of nongovernmental entities that are ~~adequate~~presented toin ~~cover~~conformity ~~member~~with ~~credits~~U.S. ~~The~~GAAP. ~~Company~~SFAS ~~also~~No. 162 ~~believes~~does not set an explicit mandatory effective date; rather, it will become effective 60 days following approval by the ~~likelihood~~SEC of ~~incurring~~amendments made by the Public ~~material~~Accounting ~~losses~~Oversight ~~due~~Board to ~~non-collectibility~~AU isSection 411, ~~remote~~“The ~~and,~~Meaning ~~therefore,~~of noPresent ~~allowance~~Fairly ~~for~~in ~~doubtful~~Conformity ~~accounts~~with Generally Accepted Accounting Principles”. This standard is ~~necessary~~not expected to have an impact on the Company’s financial statements.

AnIn ~~allowance~~April ~~for doubtful~~2008, ~~accounts~~the isFASB ~~maintained~~issued ~~for~~FSP ~~market~~SFAS ~~data~~No. 142-3, ~~accounts~~Determination ~~receivable~~of tothe ~~cover~~Useful ~~potential~~Life ~~non-collectible~~of ~~vendor~~Intangible ~~receivables~~Assets (“FSP ~~and~~SFAS ~~credit~~No. 142-3”). ~~adjustments~~FSP bySFAS No. 142-3 amends the ~~market~~factors ~~data~~that ~~vendor~~should ~~customers.~~be ~~This~~considered ~~allowance~~in ~~was~~developing ~~$311,000~~renewal ~~and~~or ~~$147,000~~extension atassumptions ~~June 30,~~used ~~2007~~to ~~and~~determine the useful life of a recognized intangible asset under ~~December~~SFAS 31No. 142, ~~2006,~~Goodwill ~~respectively,~~and ~~which~~Other ~~the~~Intangible ~~Company~~Assets. ~~believes~~The isintent ~~sufficient~~of this FSP is to ~~cover~~improve ~~potential~~the ~~bad~~consistency ~~debts~~between the useful life of a recognized intangible asset and ~~expected~~the ~~unclaimed~~period ~~credits.~~of ~~Accounts~~expected ~~receivable~~cash ~~for~~flows ~~market~~used ~~data~~to ~~revenues,~~measure ~~net~~the fair value of the ~~allowance,~~asset ~~totaled~~under ~~$10~~SFAS No.6 141 ~~million~~(revised 2007), Business Combinations, and $5other GAAP.5 ~~million~~FSP ~~at June~~SFAS ~~30,~~No. 142-3 ~~2007~~is ~~and~~effective ~~December~~for the Company on January 311, ~~2006,~~2009. ~~respectively,~~The ~~and~~Company ~~are~~is ~~included~~currently inevaluating ~~other~~the ~~current~~impact ~~assets~~that onFSP SFAS No. 142-3 ~~the~~will ~~Company’s~~have ~~condensed~~on ~~consolidated~~its ~~balance~~financial ~~sheets~~statements.

~~The~~On ~~Company maintains a reserve for non-collectible receivables of other revenues in the amount of $633,000 and $552,000 at June~~December 304, 2007 ~~and December 31~~, ~~2006,~~the ~~respectively,~~FASB toissued ~~cover~~SFAS ~~potential bad debts and expected unclaimed credits~~No. 141 ~~Accounts receivable for other revenues~~(Revised 2007), ~~net~~Business ofCombinations ~~the~~(“SFAS ~~allowance, totaled $304,000 and $197,000 at June~~No. ~~30,~~141(R)”). ~~2007~~SFAS ~~and December~~No. ~~31,~~141(R) ~~2006,~~will ~~respectively,~~significantly ~~and~~change ~~are included in other current assets on~~ the ~~Company’s condensed~~accounting ~~consolidated~~for ~~balance~~business ~~sheets~~combinations. Under

NOTE 4. Margin Deposits and Guaranty Funds

NYMEX HOLDINGS, INC. AND SUBSIDIARIES

NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

~~customer~~SFAS ~~accounts~~No. 141(R), ~~These~~an ~~margin~~acquiring ~~deposits~~entity ~~are~~will ~~used~~be byrequired ~~members~~ to ~~meet~~recognize ~~their~~all ~~obligations~~the toassets acquired and liabilities assumed in a transaction at the ~~Company~~acquisition date ~~for~~fair ~~margin~~value with limited exceptions. SFAS No. 141(R) also includes a substantial number of new disclosure requirements. onSFAS ~~open~~No. 141(R) ~~futures~~applies ~~and~~prospectively ~~options~~to business combinations for which the acquisition date is on or after the ~~positions,~~beginning asof ~~well~~the asfirst ~~delivery~~annual ~~obligations~~reporting period beginning on or after December 15, 2008. SFAS No. 141(R) will only have an impact on the Company’s financial statements if it is involved in a business combination subsequent to 2008.

~~Each~~On ~~clearing~~December 4, ~~member~~2007, ~~firm~~the isFASB ~~required~~issued toSFAS ~~maintain~~No. 160, aNon-controlling ~~security~~Interests ~~deposit,~~ in ~~the~~Consolidated ~~form~~Financial Statements-an Amendment of ~~cash~~ARB ~~or U~~No.S 51 (“SFAS No. 160”). ~~Treasury~~SFAS ~~securities~~No. 160 ~~with~~establishes anew ~~maturity~~accounting ofand ~~ten~~reporting ~~years~~standards orfor ~~less~~a ornon-controlling ~~shares~~interest ofin ~~approved~~a ~~money~~subsidiary ~~market~~and ~~mutual~~for ~~funds,~~the deconsolidation of a ~~minimum~~subsidiary. ofSpecifically, ~~$2.0~~this statement ~~million~~requires inthe recognition of a ~~fund~~non-controlling ~~known~~interest (minority interest) as aequity ~~guaranty~~in ~~fund~~the (consolidated financial statements separate from the ~~“Guaranty~~parent’s ~~Fund”)~~equity. The ~~Guaranty~~amount ~~Fund~~of ~~may~~net beincome ~~used~~attributable ~~for~~to ~~any~~the non-controlling interest ~~loss~~will ~~sustained~~be byincluded ~~the~~in ~~Company~~consolidated asnet aincome ~~result~~on the face of the ~~failure~~income ofstatement. SFAS No. 160 clarifies that changes in a ~~clearing~~parent’s ~~member~~ownership tointerest ~~discharge~~in ~~its~~a ~~obligations~~subsidiary onthat do not result in deconsolidation are equity transactions if the parent ~~NYMEX~~retains ~~Division~~its orcontrolling ~~COMEX~~financial ~~Division~~interest. ~~Although~~In ~~there~~addition, isthis ~~one~~statement ~~Guaranty~~requires ~~Fund~~that ~~for~~a ~~both~~parent ~~divisions,~~recognize ~~separate~~a ~~contribution~~gain ~~amounts~~or ~~are~~loss ~~calculated for~~in ~~each~~net ~~division~~income when a subsidiary is deconsolidated. OnSuch ~~June~~gain ~~30,~~or ~~2007,~~loss will be measured using the ~~board~~fair value of ~~directors~~the non-controlling ofequity investment on the ~~Company~~deconsolidation ~~determined~~date. toSFAS ~~increase~~No. 160 ~~the~~also ~~minimum~~includes ~~security~~expanded ~~deposit~~disclosure ~~required~~requirements byregarding ~~each~~the ~~clearing~~interests ~~member~~of ~~firm~~the toparent ~~$2.5~~and ~~million~~its non-controlling interest. ~~This~~SFAS ~~increase~~No. 160 is ~~anticipated~~effective tofor befiscal ~~implemented~~years, and ininterim periods within those fiscal years, beginning on or after December 15, 2008. The Company is currently evaluating the ~~third~~impact ~~quarter of~~that ~~2007~~SFAS No. 160 will have on its financial statements.

~~Every~~NOTE ~~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~~2. Securities ~~This~~Lending requirement also applies to transactions conducted outside of the Exchange which clear through NYMEX ClearPort® Clearing as well as NYMEX Division and COMEX Division products traded on CME Globex® electronic trading platform. 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 $115 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 $200 million occurs.

The Company isentered ~~entitled~~into an agreement with JPMorgan Chase Bank, N.A. (“JPMorgan”) to ~~earn~~participate ~~interest~~in a securities lending program. Under this program, JPMorgan, as agent, lends on ~~cash~~an ~~balances~~overnight basis a portion of the clearing ~~posted~~members’ assecurities on deposit in the Company’s margin deposits and ~~Guaranty~~guaranty ~~Funds~~fund (see Note 5) to third parties in return for cash collateral. ~~Such~~JPMorgan, ~~balances~~in ~~are~~turn, ~~included~~invests the cash collateral in various investments on behalf of the Company in accordance with the program’s ~~condensed~~investment ~~consolidated~~guidelines. ~~balance~~The ~~sheets~~Company receives the benefits, and ~~are~~bears ~~generally~~the ~~invested~~risks, ~~overnight~~of insuch ~~securities~~investments. ~~purchased~~Interest ~~under~~expense ~~agreements~~is paid to ~~resell.~~the ~~Margin~~third ~~deposits~~party ~~and~~for the cash collateral the Company controlled during the ~~Guaranty~~transaction, ~~Fund~~and ~~balances~~a ~~earning~~fee ~~interest~~is paid to JPMorgan for ~~clearing~~administrating ~~member~~the ~~firms~~transaction. ~~are~~Interest ~~reported~~income ~~below~~and interest expense, ~~however~~as well as the fee paid to JPMorgan, are ~~not~~reported ~~included~~ in the non-operating income and expenses section on the Company’s condensed consolidated ~~balance~~statements ~~sheets~~of income. Interest income, interest expense and the JPMorgan fees recognized under the securities lending program were $4.8 million, $4.0 million and $0.2 million, respectively, for the three months ended June 30, 2008 compared to $31.1 million, $29.8 million and $0.3 million, respectively, for the second quarter of 2007. Interest income, interest expense and the JPMorgan fees recognized under the securities lending program were $12.6 million, $9.7 million and $0.6 million, respectively, for the six months ended June 30, 2008 compared to $60.5 million, $58.6 million and $0.4 million, respectively, for the six months ended June 30, 2007.

~~The~~At ~~following~~June 30, ~~table~~2008, ~~sets~~the ~~forth~~fair ~~margin~~value ~~deposits~~of the invested collateral was $558.4 million, comprised of $499.7 million in corporate debt securities and ~~Guaranty~~$58.7 million ~~Fund~~in ~~balances~~other ~~held~~debt bysecurities. The cost of the ~~Company~~corporate ondebt ~~behalf~~securities was $512.4 million, resulting in a gross unrealized loss of ~~clearing~~$12.6 ~~members~~million at June 30, ~~2007~~2008. ~~and December~~The fair value of the other debt securities at June 3130, ~~2006~~2008 approximated (its cost. The unrealized losses on the corporate debt securities were due to continued deterioration in ~~thousands):~~the credit markets. The Company does not believe that these unrealized losses are other-than-temporary and, as such, are recorded in accumulated other comprehensive income, net of taxes on the condensed consolidated balance sheet.

	June 30, 2007						December 31, 2006
	MarginDeposits		GuarantyFunds		Total Funds		MarginDeposits		GuarantyFunds		Total Funds
Cash and securities earning interest for NYMEX Holdings
Cash	$	8,378	$	40	$	8,418	$	10,010	$	42	$	10,052
Securities held for resale		—		—		—		7,000		—		7,000
Total cash and securities		8,378		40		8,418		17,010		42		17,052
Cash and securities earning interest for members
Money market funds		5,350,447		85,604		5,436,051		5,788,910		71,036		5,859,946
U.S. Treasuries		10,498,084		167,778		10,665,862		9,692,639		171,061		9,863,700
Letters of credit		2,061,706		—		2,061,706		2,571,918		—		2,571,918
Total cash and securities		17,910,237		253,382		18,163,619		18,053,467		242,097		18,295,564
Total funds	$	17,918,615	$	253,422	$	18,172,037	$	18,070,477	$	242,139	$	18,312,616

NYMEX HOLDINGS, INC. AND SUBSIDIARIES

NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

~~NOTE~~At 5December 31, 2007, the fair value of the invested collateral was $842. ~~Goodwill~~4 million, comprised of $841.8 million in corporate debt securities and ~~Indefinite-Lived~~$0.6 ~~Intangible~~million ~~Asset~~in other debt securities. The cost of the corporate debt securities was $846.9 million, resulting in a gross unrealized loss of $5.1 million at December 31, 2007. The fair value of the other debt securities at December 31, 2007 approximated its cost. The unrealized losses on the corporate debt securities were due to significant deterioration in the credit markets.

InAt ~~1994~~June 30, ~~NYMEX Division acquired the equity interests~~2008, ~~but not~~ the ~~trading~~fair ~~rights~~value and ~~protections,~~cost of ~~the~~corporate ~~owners~~debt ofsecurities ~~COMEX~~with ~~Division~~contractual ~~memberships.~~maturities ~~As part~~ of ~~the~~ ~~agreement~~one ~~for~~year ~~this~~or ~~acquisition,~~less awas $10480.3 million ~~payment~~and ~~would~~$492.9 million, berespectively. ~~made~~The tofair ~~the~~value ~~owners~~and cost of ~~COMEX~~corporate ~~Division~~debt ~~memberships~~securities inwith ~~the~~contractual ~~event~~maturities ~~the~~of ~~Company~~more ~~consummated~~than anone ~~initial~~year ~~public~~was ~~offering~~$19.4 ~~(“Special~~million ~~IPO~~and ~~Payment”)~~$19.5 ~~Upon~~million, ~~the~~respectively. ~~Company’s~~At ~~successful completion of its initial public offering on November~~June 2230, ~~2006~~2008, ~~the~~corporate ~~Special~~debt ~~IPO~~securities ~~Payment~~in ~~was~~an ~~made~~unrealized toloss position ~~owners~~for ofone ~~COMEX~~year ~~Division~~or ~~memberships~~less ofhad ~~record~~a asfair value of ~~November 16, 2006~~$304.6 ~~This~~million ~~payment~~and ~~was~~an ~~considered~~unrealized ~~additional~~loss ~~consideration to the original purchase price~~ of ~~the~~$10.0 ~~COMEX~~million. ~~equity~~Corporate ~~interests~~debt ~~and,~~securities ~~therefore,~~in ~~was~~an ~~recorded~~unrealized asloss ~~additional~~position ~~goodwill~~for onmore ~~the~~than ~~Company’s~~one ~~condensed~~year ~~consolidated~~had ~~balance~~a ~~sheets.~~fair ~~Goodwill~~value ~~amounted~~of to $26195.31 million atand ~~June 30,~~an ~~2007~~unrealized ~~and~~loss ~~December 31,~~of ~~2006~~$2.6 million.

OnAt ~~November~~December 2031, ~~2006~~2007, the ~~owners~~fair ofvalue ~~COMEX~~and ~~Division~~cost ~~memberships~~of ~~voted~~corporate ondebt ~~and~~securities ~~approved~~with ancontractual ~~agreement~~maturities ~~with~~of ~~the~~one ~~Company~~year ~~in which~~or ~~their~~less ~~trading~~was ~~rights~~$287.6 million and ~~protections~~$288.2 ~~were~~million, ~~terminated in exchange for certain new trading rights and protections~~respectively. The fair value ~~assigned~~and toamortized ~~the~~cost ~~acquired~~of ~~trading~~corporate ~~rights~~debt ~~was~~securities ~~based~~with oncontractual amaturities ~~measurement date~~ of ~~September 20,~~more ~~2006,~~than ~~the~~one ~~date~~year ~~the agreement~~ was ~~entered~~ ~~into~~$554.2 ~~The~~million ~~average~~and ~~price~~$558.7 ofmillion, ~~the~~respectively. ~~Company’s~~At ~~common~~December 31, 2007, ~~stock~~corporate ~~for~~debt ~~the~~securities ~~two~~in ~~days~~an ~~before~~unrealized ~~and~~loss ~~after~~position ~~the~~for ~~measurement~~one ~~date~~year ~~was~~or ~~used~~less tohad ~~value~~a ~~the~~fair ~~trading~~value ~~rights~~of ~~at approximately~~ $~~280~~791.81 million. ~~Included~~and inan ~~the~~unrealized ~~value~~loss ~~are~~of ~~direct~~$5.0 ~~costs~~million. ~~the~~Corporate ~~Company incurred~~debt securities in ~~preparing~~an ~~and~~unrealized ~~negotiating~~loss ~~such~~position ~~agreement.~~for ~~The~~more ~~Company~~than ~~considered~~one ~~the~~year ~~guidance~~had ~~set~~a ~~forth~~fair value inof ~~SFAS No~~$50. ~~142,~~7 ~~Goodwill~~million and ~~Other~~an ~~Intangible~~unrealized ~~Assets,~~loss inof ~~determining~~$0.1 ~~that the acquired trading rights have an indefinite useful life~~million.

~~Intangible~~Proceeds ~~assets~~from ~~that~~maturities ~~have~~and ~~finite~~sales ~~useful~~of ~~lives~~corporate ~~are~~debt ~~amortized~~securities, ~~over~~not reinvested ~~their~~in ~~estimated~~the ~~useful~~securities ~~lives~~lending program, were $294.4 ~~Goodwill~~million and ~~indefinite~~$334.6 ~~lived~~million ~~intangible assets~~for ~~are~~the ~~assessed~~three ~~annually~~and ~~for~~six ~~impairment~~months ended June 30, 2008, respectively. The ~~latest~~cost ~~impairment~~of ~~assessment~~all ofsecurities ~~goodwill~~sold ~~and~~is based on the ~~indefinite~~specific ~~lived~~identification ~~intangible~~method. ~~asset~~Realized ~~was~~losses from ~~completed~~sales inamounted to $0.4 million for the ~~fourth~~three ~~quarter~~and ofsix ~~2006~~months ended June 30, 2008. For the three and nosix ~~impairment~~months ~~was~~ended ~~determined~~June 30, 2007, proceeds from sales of corporate debt securities were $8.8 ~~Future~~million ~~impairment~~and ~~tests~~$439.5 ~~will~~million, berespectively. The ~~performed~~realized ~~annually~~gains infor the ~~fourth~~three ~~quarter~~and six months ended June 30, 2007 were nominal. The change in the net unrealized gain or ~~sooner~~loss ifon ~~warranted~~these byavailable-for-sale ~~economic~~securities ~~conditions~~was not significant for any of the periods presented.

NOTE 63. ~~Long-Term~~Fair ~~Investments~~ Value Measurements

~~Long-term~~Effective ~~investments~~January 1, ~~are~~2008, ~~comprised~~the ~~principally~~Company ofadopted ~~the~~SFAS ~~Company’s~~No. 157, ~~investments~~which inestablishes ~~Montréal~~a ~~Exchange~~consistent framework for measuring fair value and expands related disclosures, ~~DME~~for ~~Holdings~~all financial instruments accounted for at fair value. SFAS No. 157 requires, among other things, the use of valuation techniques that maximizes the use of observable inputs and minimizes the use of unobservable inputs by requiring that the most observable inputs be used when available. Observable ~~Optionable~~inputs reflect market data obtained from sources independent of the Company, ~~Inc~~while unobservable inputs reflect the Company’s own market assumptions. asThese ~~described~~two ~~below~~types of inputs create the following fair value hierarchy:

On• ~~April 10,~~Level ~~2007,~~1—Valuations ~~the~~based Company entered into a Stock and Warrant Purchase Agreement with Optionable, Inc. (“Optionable”), an energy derivatives broker, whereby the Company purchased 19% of Optionable’s outstanding common shares on aquoted ~~fully~~prices ~~diluted~~in ~~basis~~active markets for ~~approximately~~identical ~~$28.9~~assets ~~million~~or ~~in cash~~liabilities. The ~~warrant entitles the~~ Company ~~to purchase from Optionable common shares so as to increase the Company~~’s ~~ownership~~Level to1 anassets ~~amount~~include ~~not~~short-term toinvestments ~~exceed 40% of Optionable’s outstanding common shares on a fully diluted basis. Following a precipitous fall~~ in ~~Optionable’s~~ ~~stock~~money ~~price~~market ~~during May 2007 due to the loss of a major customer and resignation of its chief executive officer~~accounts, ~~among~~common ~~other~~equity matters, the Company evaluated its investment in Optionable for other-than-temporary impairment. In evaluating this investment, the Company took into consideration the severity of the stock price decline, the expected period of time necessary for a recovery to occur and ~~the Company’s ability to retain its investment during the period anticipated for recovery in fair value, if any~~U. ~~In analyzing Optionable’s financial condition and following the guidance in FASB Statement No~~S. ~~115,~~ ~~Accounting~~Government ~~for Certain Investments in Debt~~ and ~~Equity~~agency ~~Securities~~securities ~~(“SFAS No. 115”),~~that and EITF 03-1, The Meaning of Other-Than-Temporary Impairment and Its Application to Certain Investments, the Company determined the impairment in its Optionable investment as other-than-temporary and recorded a pre-tax charge of approximately $26 million in the current quarter. This charge is recorded in losses from unconsolidated investments on the Company’s condensed consolidated statements of income. The shares of Optionable are ~~considered available-for-sale~~traded ~~securities~~ in ~~accordance~~an ~~with~~active ~~SFAS No~~market. 115. Available-for-sale securities are stated at fair value, and unrealized holding gains and losses, net of the related deferred tax effect, are reported as a separate component of stockholders’ equity. At June 30, 2007, the fair value of the securities was approximately $4.5 million.

•

Level 2—Valuations based on quoted prices in markets that are not active, similar instruments in active markets or based on pricing models for which all significant inputs are observable. The Company’s Level 2 assets include municipal and certain debt securities that trade less frequently than exchange-traded instruments.

NYMEX HOLDINGS, INC. AND SUBSIDIARIES

NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

On• ~~March 13,~~Level 2007, the Company entered into a Private Placement Subscription Agreement (the “Agreement”) with Bourse De Montréal, Inc., a Canadian corporation (“Montréal Exchange”) whereby the Company purchased approximately 3~~.1 million~~—Valuations ~~common~~based ~~shares~~on ofpricing ~~Montréal~~models ~~Exchange~~ for ~~approximately $78 million in cash. The shares purchased represent approximately 10% of the total outstanding shares of Montréal Exchange immediately after the execution of the Agreement,~~ which ~~was~~significant ~~consummated~~inputs onare ~~March 23, 2007~~unobservable. The Company ~~accounted~~’s ~~for~~Level ~~this~~3 ~~investment~~assets ~~under~~primarily ~~the~~include ~~cost~~certain ~~method~~corporate asdebt itsecurities cannot exercise significant influence over the operating and financial policies of Montréal Exchange. Subsequently, on March 27, 2007, Montréal Exchange commenced trading on the Toronto Stock Exchange under the symbol “MXX.” Following the public offering of the Montréal Exchange, the Company evaluated and concluded that its investment in Montréal Exchange should be reported as an “available-for-sale” security in accordance with ~~SFAS~~limited ~~No.~~market ~~115~~activity. ~~At June 30, 2007, the fair value of the securities was approximately $113.5 million.~~

InIf ~~June 2005,~~ the ~~Company~~inputs ~~and~~used ~~Tatweer Dubai LLC (“Tatweer”), a subsidiary of Dubai Holding LLC, entered into a joint venture~~ to ~~develop~~measure the ~~Middle~~financial ~~East’s~~assets ~~first~~fall ~~energy~~within ~~futures exchange. As part of this~~the ~~venture,~~different ~~DME~~levels ~~Holdings~~described ~~Limited (“DME Holdings”)~~above, ~~which is jointly owned by~~ the ~~Company~~categorization ~~and~~is ~~Tatweer~~based ~~Dubai~~on ~~LLC, was incorporated as a limited company under~~ the ~~laws~~lowest oflevel ~~Bermuda.~~input ~~DME~~that ~~Holdings~~ is ~~the~~significant ~~indirect~~to ~~owner of Dubai Mercantile Exchange Limited (~~the ~~“DME”),~~fair avalue ~~limited~~measurement ~~liability company formed under the laws~~ of the ~~Dubai International Financial Centre (“DIFC”), a financial free zone designed to promote financial services within the United Arab Emirates~~instrument. ~~On June 1, 2007, DME commenced offering sour crude and fuel oil products for trading. DME is regulated by the Dubai Financial Services Authority, a regulatory body established within the DIFC.~~

OnAssets ~~May 24,~~valued ~~2007,~~based ~~DME~~on ~~Holdings~~Level ~~entered~~1 ~~into~~inputs autilize ~~Shareholders~~quoted ~~Agreement~~market ~~with~~prices ~~Oman~~(unadjusted) ~~Investment~~in ~~Fund~~active tomarkets. ~~ultimately~~Assets ~~sell~~whose afair ~~31.58%~~values ~~equity~~are ~~interest~~determined inby ~~DME Holdings.~~Level In2 ~~conjunction~~inputs ~~with~~are ~~this~~based ~~agreement,~~on ~~the~~pricing ~~Company~~models ~~and~~using ~~Tatweer~~observable ~~loaned~~inputs ~~$13.7~~such ~~million~~as similar ~~each~~assets toin ~~DME~~active ~~Holdings~~markets inor ~~order~~other toobservable ~~meet~~inputs ~~the~~such ~~financial~~as ~~resource~~interest ~~requirements~~rate ofcurves, ~~the~~reference ~~regulatory~~credit ~~authorities~~spreads and estimated pre-payment or default rates where applicable. ~~Upon~~Assets ~~the~~whose ~~consummation~~values ofare ~~the~~determined ~~restructuring~~by ofLevel ~~the~~3 inputs are based on ~~investment~~unobservable ~~pursuant~~inputs tofor the ~~Shareholders~~assets ~~Agreement,~~and ~~the~~include ~~Company~~situations ~~will~~where ~~ultimately~~there ~~own~~is ~~34.21%~~little, ~~economic~~if ~~and~~any, ~~voting~~market ~~interest~~activity infor ~~DME~~the ~~Holdings~~asset.

The ~~Company~~following tables ispresent ~~required to contribute capital to~~ the ~~joint venture in an aggregate amount of $9.8 million over a five-year period, contingent upon the DME~~Company’s ~~achievement~~assets ofthat ~~certain~~are ~~agreed~~measured ~~upon~~at ~~performance~~fair ~~targets.~~value ~~For~~on ~~the~~a ~~three-~~recurring ~~and six-month~~basis ~~periods~~(in ~~ended~~thousands) ~~June 30, 2007, the Company incurred losses, attributable to its investment, of approximately $3.0 million~~ and ~~$4.6 million, respectively, as compared to $0.3 million and $0.7 million, respectively, for the three- and six-month periods ended June 30, 2006. These losses~~ are ~~recorded~~categorized inusing ~~losses from unconsolidated investments on~~ the ~~condensed~~fair ~~consolidated~~value ~~statements~~hierarchy: ~~of income.~~

FASB Interpretation No. 46, Consolidation of Variable Interest Entities, an Interpretation of Accounting Research Bulletin No. 51 (“FIN 46”) and its amendment FIN 46(R) (revised December 2003) provides guidance for determining when an entity should consolidate another entity that meets the definition of a variable interest entity. Special purpose entities and other types of entities are assessed for consolidation under this guidance. A variable interest entity is required to be consolidated if the Company will absorb a majority of the expected losses, will receive a majority of the expected residual returns, or both. An entity that consolidates a variable interest entity is called the primary beneficiary. Although the Company determined that DME Holdings is a variable interest entity, it is not the primary beneficiary and therefore did not consolidate DME Holdings in its results of operations.


	Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Balance as of June 30, 2008
	(in thousands)
Money market and time deposits	$	110,937	$	—	$	—	$	110,937
U.S. government, agency and municipal securities		432,004		90,261		—		522,265

Marketable securities	$	542,941	$	90,261	$	—	$	633,202

Equity securities¹	$	115,726	$	—	$	—	$	115,726

Corporate debt securities	$	—	$	464,186	$	35,576	$	499,762
Other debt securities		58,605		—		—		58,605

Collateral from securities lending program	$	58,605	$	464,186	$	35,576	$	558,367

¹	These equity securities represent a portion of the long term investments discussed in Note 7.

The following table presents additional information about Level 3 assets measured at fair value on a recurring basis.


	Balance as of December 31, 2007		Transfers out of Level 3			Unrealized Losses in Comprehensive Income			Balance as of June 30, 2008		Changes in Unrealized Gains (Losses) in Earnings for Level 3 Assets Still Held at June 30, 2008
	(in thousands)
Corporate debt securities	$	159,327	$	(123,069	)	$	(682	)	$	35,576	$	—

Transfers out represents existing assets that were previously categorized as a lower level and the inputs to the model became observable or securities that fully matured at par.

NYMEX HOLDINGS, INC. AND SUBSIDIARIES

NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

NOTE 74. ~~Long-Term~~Allowance ~~Debt~~for Doubtful Accounts and Credits

~~The~~Clearing ~~Company~~and ~~issued~~transaction ~~long-term~~fees ~~debt~~receivable ~~totaling~~are ~~$100~~carried ~~million~~net ~~during~~of ~~1996~~allowances ~~and 1997 to provide completion financing~~ for ~~the~~member ~~Company’s trading facility and headquarters. This issuance contained three series~~credits, ~~each~~which ~~with~~are ~~different~~determined ~~maturities,~~based ~~interest~~upon ~~rates~~expected ~~and~~billing ~~repayment schedules~~adjustments. ~~Series A notes require annual principal repayments from 2001 to 2010, and a final payment of principal in 2011. Series B~~ ~~notes~~Allowances ~~require~~for ~~annual~~member ~~principal~~credits ~~repayments~~were ~~from 2011 to 2020, and a final payment of principal in 2021~~$1.0 ~~Series~~million Cat ~~notes require annual principal repayments from 2022 to 2025~~June 30, ~~and~~2008 ~~a final payment of principal in 2026. The notes represent senior unsecured obligations of the Company~~ and ~~are not secured by the company’s headquarters~~December 31, ~~the Company’s interest therein, or any other collateral~~2007. The ~~notes~~Company ~~are~~believes ~~subject~~that ~~to a prepayment penalty in~~ the ~~event~~allowances ~~they~~ are ~~paid~~adequate ~~off prior~~ to ~~their scheduled~~cover ~~maturities~~member credits. The Company also believes that ~~any~~the ~~economic~~likelihood ~~benefit derived from early redemption~~ of ~~these~~incurring ~~notes~~material losses ~~would~~due ~~be offset by the redemption penalty. These notes place certain limitations on the Company’s ability~~ to ~~incur~~non-collectability ~~additional indebtedness.~~is Atremote ~~June 30, 2007~~ and ~~December 31~~, ~~2006~~therefore, ~~the~~no ~~notes~~allowance ~~payable~~for ~~balance,~~doubtful ~~including~~accounts ~~the~~is ~~current portion, was $83~~necessary.1 ~~million. At June 30, 2007, the fair value of the notes was approximately $98.1 million.~~

~~NOTE~~An 8allowance for doubtful accounts is maintained for market data accounts receivable to cover potential non-collectible vendor receivables and credit adjustments by the market data vendor customers. ~~Earnings~~ ~~per~~This ~~Share~~allowance was $533,000 and $404,000 at June 30, 2008 and December 31, 2007, respectively, which the Company believes is sufficient to cover potential bad debts and subsequent credits. Accounts receivable for market data revenues, net of the allowance, totaled $7.2 million and $10.1 million at June 30, 2008 and December 31, 2007, respectively, and are included in other current assets on the Company’s condensed consolidated balance sheets.

The Company ~~calculates~~maintains ~~earnings~~a ~~per~~reserve ~~share~~for ~~using~~non-collectible ~~common~~receivables ~~stock~~of ~~issued,~~other ~~which~~revenues ~~differs~~in ~~from common stock outstanding due to~~ the ~~issuance~~amount of ~~common~~$586,000 ~~stock~~and as$624,000 ~~consideration~~at ~~for~~June 30, ~~the~~2008 ~~trading~~and ~~rights~~December 31, ~~the~~2007, ~~Company~~respectively, ~~acquired~~to ~~from~~cover ~~the~~potential ~~owners~~bad ofdebts ~~COMEX~~and ~~Division~~expected ~~memberships~~credits. ~~(see~~Accounts ~~Notes~~receivable 5for ~~and~~other ~~13).~~revenues, ~~The~~net ~~calculation~~ of ~~earnings~~the ~~per~~allowance, ~~common~~totaled ~~share~~$181,000 ~~for~~and ~~the~~$226,000 ~~period~~at ~~ended~~ June 30, ~~2007~~2008 and ~~2006~~December 31, is2007, asrespectively, ~~follows~~and (are included in ~~thousands,~~other ~~except~~current ~~for~~assets ~~share~~on ~~data):~~the Company’s condensed consolidated balance sheets.

	Three Months EndedJune 30,				Six Months Ended June 30,
	2007		2006		2007		2006
Net income	$	41,745	$	38,133	$	97,965	$	71,766
Less: Accrued preferred stock dividends		—		2,206		—		2,622
Accretion of preferred stock issuance costs		—		345		—		410
Earnings available to common stockholders	$	41,745	$	35,582	$	97,965	$	68,734
Weighted average common shares outstanding		94,450,000		73,440,000		94,450,000		44,227,000
Participating securities—convertible preferred stock		—		8,160,000		—		4,914,000
Weighted average common shares outstanding—basic		94,450,000		81,600,000		94,450,000		49,141,000
Effect of stock options		277,000		—		266,000		—
Effect of restricted stock units		71,000		—		68,000		—
Weighted average common shares outstanding—dilutive		94,798,000		81,600,000		94,784,000		49,141,000
Earnings per Share:
Basic	$	0.44	$	0.44	$	1.04	$	1.40
Diluted	$	0.44	$	0.44	$	1.03	$	1.40
Proforma weighted average common shares outstanding and earnings per share retroactively adjusted to reflect the 90,000-for-1 recapitalization on March 14, 2006 (Unaudited):
Earnings available to common stockholders	$	41,745	$	35,582	$	97,965	$	68,734
Weighted average common shares outstanding:
Basic		94,450,000		81,600,000		94,450,000		78,354,000
Effect of stock options		277,000		—		266,000		—
Effect of restricted stock units		71,000		—		68,000		—
Diluted		94,798,000		81,600,000		94,784,000		78,354,000
Earnings per Share:
Basic	$	0.44	$	0.44	$	1.04	$	0.88
Diluted	$	0.44	$	0.44	$	1.03	$	0.88

NOTE 5. Margin Deposits and Guaranty Funds

Each clearing member firm is required to maintain a security deposit, in the form of cash or U.S. Treasury securities with a maturity of ten years or less or shares of certain approved money market mutual funds, of a minimum of $2.5 million in a fund known as a guaranty fund (the “Guaranty Fund”). The Guaranty Fund 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 the NYMEX Division or COMEX Division. Although there is one Guaranty Fund for both divisions, separate contribution amounts are calculated for each division.

Every member and non-member executing transactions on the Company’s divisions must be guaranteed by a clearing member and clear their transactions through the Company’s clearinghouse. This requirement also applies to transactions conducted outside of the Exchange which clear through NYMEX ClearPort^® Clearing. Clearing members of the NYMEX Division and COMEX Division require their customers to maintain deposits in accordance with Company margin requirements. Margin deposits and guaranty funds are posted by clearing members with the Company’s clearinghouse. In the event of a clearing member default, the Company satisfies the clearing member’s obligations on the underlying contract by drawing on the defaulting clearing member’s guaranty funds. If those resources are insufficient, the Company may fund the obligations from its own financial resources or draw on guaranty funds posted by non-defaulting clearing members. The Company also maintains a $115 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 $250 million occurs.

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

NYMEX HOLDINGS, INC. AND SUBSIDIARIES

NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

~~NOTE~~The ~~9. Members~~Company is also entitled to lend a portion of the clearing members’ ~~Retirement~~securities ~~Plan~~on deposit held by the Company for margin deposits and ~~Benefits~~guaranty funds to third parties (see Note 2).

The ~~Company~~following ~~maintains~~table asets ~~retirement~~forth ~~and~~margin ~~benefit plan under the COMEX Members’ Recognition and Retention Plan (“MRRP”). This plan provides~~deposits ~~benefits to certain members of the COMEX Division based on long-term membership,~~ and ~~participation~~guaranty isfund ~~limited~~balances toheld ~~individuals~~by ~~who were COMEX Division members prior to~~ the Company’s ~~acquisition~~on ofbehalf ~~COMEX in 1994. No new participants were permitted into the plan after the date~~ of ~~the~~clearing ~~acquisition. The annual benefit payments are $12,500 ($2,000 for options~~ members) ~~for~~at ~~ten years for vested participants. Under the terms of the MRRP~~June 30, ~~the~~2008 ~~Company~~and ~~is required to fund the plan with a minimum annual contribution of $400~~December 31,~~000~~ ~~until it is fully funded. The Company funded the plan with a contribution of $800,000 in 2006 and expects to do so again in~~ 2007. ~~Based on actuarial estimates and continued funding of $800,000 per year, the Company expects the plan to be fully funded by 2019. The annual contribution may be reduced if changes~~ (in ~~actuarial~~thousands): estimates indicate that full funding can be achieved without making the entire funding contributions indicated above. Based on actuarial estimates, the Company’s contributions are charged against current operations. All benefits to be paid under the 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 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 MRRP upon an affirmative vote of 60% of the eligible COMEX Division plan participants.

NOTE 10. Technology Services Agreement


	June 30, 2008						December 31, 2007
	Margin Deposits		Guaranty Funds		Total Funds		Margin Deposits		Guaranty Funds		Total Funds
Cash and securities earning interest for NYMEX Holdings
Cash	$	32,286	$	230	$	32,516	$	616	$	14,042	$	14,658
Securities purchased under agreements to resell		38,000		—		38,000		155,534		—		155,534

Total cash and securities		70,286		230		70,516		156,150		14,042		170,192

Cash and securities earning interest for members
Money market funds		14,190,147		109,198		14,299,345		6,896,885		110,275		7,007,160
U.S. Treasuries		23,069,698		196,147		23,265,845		12,193,040		174,988		12,368,028
Letters of credit		4,184,461		—		4,184,461		2,892,326		—		2,892,326

Total cash and securities		41,444,306		305,345		41,749,651		21,982,251		285,263		22,267,514

Total funds	$	41,514,592	$	305,575	$	41,820,167	$	22,138,401	$	299,305	$	22,437,706

OnNOTE ~~April~~ 6~~, 2006, NYMEX Exchange entered into a definitive technology services agreement (the “CME Agreement”) with Chicago Mercantile Exchange Inc~~. Goodwill ~~(“CME”),~~and ~~a wholly~~Indefinite-~~owned~~Lived ~~subsidiary~~Intangible ofAsset Chicago Mercantile Exchange Holdings Inc. CME is the primary electronic trading service provider for NYMEX Exchange’s energy futures and options contracts and, also, for the COMEX Division metals products.

~~The~~In ~~CME~~1994, ~~Agreement~~NYMEX ~~has~~Division aacquired ~~ten-year term from~~ the ~~launch~~equity ~~date~~interests, ~~with~~but ~~rolling~~not ~~three-year~~the ~~extensions~~trading ~~unless,~~rights ~~among~~and ~~other reasons~~protections, ~~(i) either~~of ~~party elects not to renew~~ the ~~CME~~owners ~~Agreement~~of ~~upon~~COMEX ~~written~~Division ~~notice~~memberships. ~~prior~~As topart ~~the beginning~~ of the ~~applicable~~agreement ~~renewal~~for ~~term~~this acquisition, ora ~~(ii) either party~~$10 ~~elects~~million topayment ~~terminate~~would ~~the~~be ~~CME~~made ~~Agreement~~to ~~between~~ the ~~fifth~~owners ~~and~~of ~~the~~COMEX ~~sixth~~Division ~~year~~memberships ~~anniversary~~in of the ~~first~~event ~~launch~~the ~~date~~Company ~~upon~~consummated ~~written~~an ~~notice~~initial ~~and~~public ~~payment~~offering of(“Special aIPO ~~termination fee~~Payment”). ~~Pursuant~~Upon to the ~~CME~~Company’s ~~Agreement, NYMEX Exchange will pay to CME a minimum~~successful ~~annual~~completion ~~payment~~of orits ~~per~~initial ~~trade~~public ~~fees~~offering ~~based~~ on ~~average daily volume~~November 22, ~~whichever is greater. In addition~~2006, ~~pursuant to~~ the ~~CME~~Special ~~Agreement,~~IPO ifPayment ~~the~~was ~~Company~~made ~~acquires~~to orowners ~~merges~~of ~~with~~COMEX anDivision ~~entity,~~memberships ~~that~~of atrecord ~~the~~as ~~time~~ of ~~such acquisition or merger~~November 16, ~~operates~~2006. aThis ~~trading execution~~payment ~~system~~was ~~for~~considered ~~futures~~additional orconsideration ~~futures~~to ~~options~~the original ~~products~~purchase ~~(or~~price ~~off-exchange~~of ~~look-alike~~the ~~versions~~COMEX ofequity ~~such~~interests ~~products)~~and, ~~electronic~~therefore, ~~trading~~was ofrecorded ~~such~~as ~~products~~additional ~~shall~~goodwill beon ~~transitioned~~the toCompany’s ~~CME~~condensed ~~Globex~~consolidated ~~electronic~~balance ~~trading~~sheets. ~~platform~~Goodwill ~~within~~amounted ~~two~~to ~~years~~$26.3 ~~For~~million ~~the~~at ~~three- and six-month periods ended~~ June 30, ~~2007,~~2008 ~~the Company incurred fees of $13.5 million~~ and ~~$25.9 million~~December 31, ~~respectively, under the terms of the CME Agreement which are included in direct transaction costs on the condensed consolidated statements of~~ ~~income~~2007.

~~NOTE~~On 11November 20, 2006, the owners of COMEX Division memberships voted on and approved an agreement with the Company in which their trading rights and protections were terminated in exchange for certain new trading rights and protections. ~~Pension~~ In addition, each of the 772 owners of COMEX Division memberships received 8,400 shares of the Company’s common stock for a total consideration of 6,484,800 shares. The value assigned to the acquired trading rights was based on a measurement date of September 20, 2006, the date the agreement was entered into. The average price of the Company’s common stock for the two days before and after the measurement date was used to value the trading rights at approximately $280.8 million. Included in the value are direct costs the Company incurred in preparing and negotiating such agreement. The Company considered the guidance set forth in SFAS No. 142, Goodwill and Other ~~Benefit~~Intangible ~~Plans~~Assets, (“SFAS No. 142”) in determining that the acquired trading rights have an indefinite useful life.

The Company sponsors various defined contribution and postretirement plans to qualifying employees. The Company also provides postemployment benefits to eligible employees after employment but before retirement.

Savings Plan

The Company sponsors a defined contribution plan (the “Savings Plan”) that incorporates a deferred salary arrangement under Section 401(k) of the Internal Revenue Code to all eligible domestic employees. The

NYMEX HOLDINGS, INC. AND SUBSIDIARIES

NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

~~Company~~NOTE ~~matches employee contributions up to a maximum of 3% of salary. In addition, the Company makes annual contributions ranging from 2% to~~ 7~~% based upon tenure for each eligible Savings Plan member upon achievement by the Company of certain performance targets~~. Long-Term Investments

~~Deferred~~Long-term ~~Compensation~~investments ~~Plan~~are comprised principally of the Company’s investments in DME Holdings, Montréal Exchange, Optionable Inc. and IMAREX as described below:

~~The~~In ~~Company~~June ~~has~~2005, athe ~~nonqualified~~Company ~~deferred~~and ~~compensation~~Tatweer ~~plan~~Dubai ~~(the~~LLC (“~~Deferred Plan~~Tatweer”), ~~for~~a ~~key~~subsidiary ~~employees~~of toDubai ~~permit~~Holding ~~them~~LLC, toentered ~~defer~~into ~~receipt~~a ofjoint ~~current~~venture ~~compensation.~~to ~~The~~develop ~~Company~~the ~~may~~Middle ~~provide~~East’s afirst ~~matching~~energy ~~and~~futures aexchange. ~~regular~~As ~~year-end~~part ~~contribution~~of tothis ~~the~~venture, ~~Deferred~~DME ~~Plan.~~Holdings ~~Matching~~Limited ~~and~~(“DME ~~year-end~~Holdings”) ~~contribution~~was ~~percentages~~incorporated ~~follow~~as ~~the~~a ~~same~~limited ~~guidelines~~company asunder the ~~Company’s~~laws ~~defined~~of ~~contribution plan~~Bermuda. ~~The Deferred~~DME ~~Plan~~Holdings is ~~not~~the ~~intended~~indirect owner toof beDubai Mercantile Exchange Limited (the “DME”), a ~~qualified~~limited ~~plan~~liability company formed under the ~~provisions~~laws of the ~~Internal~~Dubai ~~Revenue~~International ~~Code.~~Financial ItCentre is(“DIFC”), ~~intended~~a tofinancial befree ~~unfunded~~zone ~~and,~~designed ~~therefore,~~to ~~all~~promote ~~compensation~~financial ~~deferred~~services ~~under~~ within the ~~Deferred~~United ~~Plan~~Arab isEmirates. ~~held~~On byJune 1, ~~the~~2007, ~~Company~~DME commenced offering sour crude and ~~commingled~~fuel ~~with~~oil ~~its general~~products ~~assets~~for trading. ~~The~~DME ~~participating~~is ~~employees~~regulated ~~are~~by ~~general~~the ~~creditors~~Dubai ofFinancial ~~the~~Services ~~Company~~Authority, ~~with~~a ~~respect~~regulatory tobody ~~these~~established ~~benefits~~within the DIFC. The Company ~~has~~is ~~the~~required to ~~right~~contribute capital to ~~amend,~~the ~~modify,~~joint orventure ~~terminate~~in ~~the~~an ~~Deferred~~aggregate ~~Plan~~amount atof ~~any time~~$9.8 Atmillion ~~June 30,~~over ~~2007~~a ~~and~~five-year ~~December 31~~period, ~~2006,~~ ~~deferred~~contingent ~~compensation~~upon ~~amounted~~the toDME’s ~~$2.7~~achievement ~~million~~of ~~and~~certain ~~$2.4~~agreed ~~million,~~upon ~~respectively,~~performance ~~and~~targets. isAt ~~included~~June 30, in2008, ~~accrued~~the ~~salaries~~Company’s ~~and~~capital contributions ~~related~~made ~~liabilities~~to on the ~~condensed~~joint ~~consolidated~~venture ~~balance~~totaled ~~sheets~~$8.0 million.

~~Postemployment~~In ~~Plan~~May 2007, DME Holdings entered into a shareholders agreement with the Oman Investment Fund (the “Shareholders Agreement”) to ultimately sell a 31.58% equity interest in DME Holdings. In conjunction with this agreement, the Company and Tatweer loaned $13.7 million each to DME Holdings in order to meet the financial resource requirements of the regulatory authorities. Upon the consummation of the restructuring of the investment pursuant to the Shareholders Agreement, the Company would have owned a 32.5% economic interest and a 34.21% voting interest in DME Holdings; the Company has agreed with the other shareholders to allocate additional equity to certain market makers and other market participants. The DME continues to implement this plan to provide equity participation which will result in further dilution of the Company’s economic interest. Upon consummation of the Shareholders Agreement, the Company reevaluated its investment in DME under FIN No. 46R and determined that DME was no longer a VIE as it meets the business scope exception. For the three- and six-month periods ended June 30, 2008, the Company incurred losses, attributable to its investment, of approximately $1.8 million and $3.9 million, respectively, as compared to $3.0 million and $4.6 million, respectively, for the three- and six-month periods ended June 30, 2007. These losses are recorded in losses from unconsolidated investments on the condensed consolidated statements of income. As of June 30, 2008, DME repaid the Company approximately $6.4 million of the outstanding loan balance, including interest.

~~The~~On March 13, 2007, the Company ~~offers~~entered into a Private ~~various~~Placement ~~postemployment~~Subscription ~~benefits~~Agreement towith ~~employees~~Bourse ~~after~~de ~~employment~~Montréal, ~~but~~Inc., ~~before~~a ~~retirement~~Canadian corporation (“Montréal Exchange”) whereby the Company purchased approximately 3.1 million ~~These~~common ~~benefits~~shares ~~are~~of ~~paid~~Montréal Exchange for approximately $78 million in ~~accordance~~cash. ~~with~~The shares purchased represented approximately 10% of the total outstanding shares of Montréal Exchange immediately after the execution of the Private Placement Subscription Agreement, which was consummated on March 23, 2007. The Company’s ~~established~~accounted ~~postemployment~~for ~~benefit~~this ~~practices~~investment under the cost method as it cannot exercise significant influence over the operating and financial policies of Montréal Exchange. ~~Postemployment~~Subsequently, ~~benefits~~on ~~include~~March 27, ~~both~~2007, ~~short-term~~Montréal ~~disability~~Exchange ~~income~~commenced ~~benefits~~trading ~~and~~on ~~long-term~~the ~~disability~~Toronto ~~related~~Stock ~~health~~Exchange ~~benefits~~under the symbol “MXX.” ~~The~~Following the public offering of the Montréal Exchange, the Company ~~accrues~~reported its investment in Montréal Exchange as available-for-sale ~~these~~in ~~future~~accordance ~~postemployment~~with ~~benefits~~SFAS No. 115. On February 13, ~~which~~2008, ~~are~~the ~~funded~~shareholders onof Montréal Exchange approved a ~~pay~~business combination with TSX Group Inc. to create a new integrated exchange group whereby Montréal Exchange would become a wholly-~~as-you-go~~owned ~~basis~~subsidiary of TSX Group Inc. ~~The~~and ~~Company~~Montréal Exchange’s ~~postemployment~~public ~~benefits~~stock ~~liabilities at~~retired. ~~June~~On May 301, ~~2007~~2008, this combination was completed and, ~~December 31~~in exchange for the Company’s holdings in Montréal Exchange, ~~2006~~the ~~were~~Company received approximately $049.73 million in cash and 1.4 million shares of TSX Group Inc. common stock valued at approximately $063.54 million on such date. On June 11, ~~respectively~~2008, the shareholders of TSX Group Inc. approved a resolution to change the name of the corporation to TMX Group Inc.

Postretirement Plan

The Company’s postretirement benefit costs are based on actuarial valuations. These valuations are based on key assumptions, including the discount rate and health care cost trend rate. 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 and changes in the level of benefits provided. 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.

Net periodic benefit cost for the Company’s defined benefit retirement plans and other benefit plans for the three and six months ended June 30, 2007 and 2006 included the following components (in thousands):

	Three Months EndedJune 30,						Six Months EndedJune 30,
	2007			2006			2007			2006
Service costs	$	110		$	109		$	220		$	218
Interest costs		108			115			216			230
Amortization of prior service costs		(14	)		(14	)		(28	)		(28	)
Amortization of net (gain) loss		16			22			32			44
Total net period postretirement benefit cost	$	220		$	232		$	440		$	464

NYMEX HOLDINGS, INC. AND SUBSIDIARIES

NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

~~Subsequent~~ following to the ~~filing~~completion of ~~the~~their ~~2006~~business ~~consolidated~~combination ~~financial~~with ~~statements,~~Montréal ~~the Company’s management determined that it had not properly classified the adoption of SFAS No~~Exchange. ~~158,~~ ~~Employers’~~At ~~Accounting for Defined Benefit Pension and Other Postretirement Plans—an amendment of FASB Statements No.~~June 8730, 882008, ~~106 and 132(R) (“SFAS No. 158”). Specifically,~~ the ~~Company~~fair ~~misclassified~~value ~~the unfunded status~~ of the ~~postretirement~~Company’s ~~benefit~~holdings ~~plan as a component~~ of TMX ~~total~~Group ~~comprehensive~~Inc. ~~income~~common ~~for~~stock ~~the~~was ~~year~~approximately ~~ended~~$58.6 ~~December 31~~million, ~~2006.~~which ~~The~~represents ~~Company~~an ~~corrected the~~unrealized ~~accompanying~~loss ~~condensed~~position ~~consolidated statements~~ of ~~stockholders’ equity to properly classify the adoption of SFAS No~~$4. ~~158~~8 asmillion anfor ~~adjustment~~less tothan ~~accumulated~~twelve ~~other comprehensive income at December 31, 2006~~months.

~~NOTE~~In 12April 2007, the Company entered into a Stock and Warrant Purchase Agreement with Optionable, Inc. ~~Lease~~ ~~Termination~~(“Optionable”), ~~Costs~~an energy derivatives broker, whereby the Company purchased 19% of Optionable’s outstanding common shares on a fully diluted basis for approximately $28.9 million in cash. The warrant entitled the Company to purchase from Optionable common shares so as to increase the Company’s ownership to an amount not to exceed 40% of Optionable’s outstanding common shares on a fully diluted basis. The shares of Optionable were considered available-for-sale securities in accordance with SFAS No. 115. Following a precipitous fall in Optionable’s stock price during May 2007 due to the loss of a major customer and resignation of its chief executive officer, among other matters, the Company evaluated its investment in Optionable for other-than-temporary impairment. In evaluating this investment, the Company took into consideration the severity of the stock price decline, the expected period of time necessary for a recovery to occur and the Company’s ability to retain its investment during the period anticipated for recovery in fair value, if any. In analyzing Optionable’s financial condition and following the guidance in SFAS No. 115 and EITF 03-1, The Meaning of Other-Than-Temporary Impairment and Its Application to Certain Investments, the Company determined the impairment in its Optionable investment as other-than-temporary and recorded a pre-tax charge of approximately $26 million in June 2007. After further consideration of all available evidence used to evaluate the fair value of Optionable, the Company concluded, that at June 30, 2008, the decline in fair value was other than temporary and wrote down the remaining carrying value to zero.

In November ~~June 2006~~2007, the Company ~~ceased~~acquired ~~its~~approximately ~~floor~~15% ~~trading~~of ~~operations~~IMAREX ASA (“IMAREX”) for $52 million in cash. Subsequent acquisitions of ~~its~~IMAREX ~~London-based~~shares, ~~exchange~~for $2 million in cash, brought the Company’s total ownership to approximately 16% at December 31, 2007. AsIn aFebruary ~~result~~2008, the Company ~~incurred~~participated ~~lease~~in ~~termination~~a ~~costs~~private placement of shares newly issued by IMAREX (in connection with IMAREX’s acquisition of Spectron Group plc) for approximately $~~1.5~~11 million ~~during~~in cash, following which the ~~first~~Company’s ~~and~~ownership ~~second~~in ~~quarters~~IMAREX ofincreased ~~2006~~to onapproximately ~~various operating~~18%. ~~leases~~In itMarch ~~had~~2008, ~~contracted~~IMAREX toconsummated ~~support~~a further offering of its ~~floor~~shares, ~~trading~~in ~~operations.~~which Inthe ~~September~~Company ~~2006~~did not participate, resulting in a decrease of the Company’s ~~consolidated~~total ~~its~~ownership ~~London~~in IMAREX ~~offices~~to approximately 15%. IMAREX, ~~and~~headquartered in ~~doing~~Oslo, soNorway, ~~vacated~~operates ~~its~~a ~~location~~hybrid atmodel ~~131~~of ~~Finsbury~~electronic ~~Pavement.~~trading ~~The~~and ~~Company~~voice ~~began~~brokerage ~~negotiations~~and ~~with~~offers ~~the landlord~~research, ~~during~~transaction ~~September~~and ~~2006~~settlement toservices ~~buy~~for ~~out~~financial ~~the~~derivatives ~~remaining~~based ~~lease~~on ~~term.~~oceangoing Asfreight, airborne ~~such~~emissions, ~~the~~farmed ~~Company~~salmon, ~~recorded~~electric apower ~~charge~~and ofheavy ~~approximately~~fuel $1oil.9 ~~million~~The inshares ~~the~~of ~~third~~IMAREX ~~quarter~~are ofreported ~~2006~~as available-for-sale ~~the~~securities ~~estimated~~in ~~amount~~accordance towith beSFAS ~~paid~~No. 115. ~~This~~At ~~charge~~June 30, ~~was~~2008, ~~recorded~~the infair ~~occupancy~~value ~~and~~of the securities was approximately ~~equipment~~$57.1 onmillion, ~~the~~which ~~Company’s~~represents ~~condensed~~an ~~consolidated~~unrealized ~~statements~~loss position of ~~income~~$8.3 million for less than twelve months.

~~The~~NOTE ~~following tables summarize the activity related to the various London exchange lease terminations in accordance with SFAS No~~8. ~~146,~~ Long-Term ~~Accounting for Costs Associated with Exit or Disposal Activities (in thousands):~~ Debt

	LeaseTerminationCosts			LeaseTerminationCosts
Total expected to be incurred	$	3,426	Liability at January 1, 2007	$	2,980
			Charges		—
Charges incurred in 2006	$	3,426	Payments		(549	)
Charges incurred in 2007		—
Cumulative charges incurred as of June 30, 2007	$	3,426	Liability at June 30, 2007	$	2,431

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 Company’s headquarters 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 June 30, 2008 and December 31, 2007, the notes payable balance, including the current portion, was $80.3 million.

NOTE 13. Common Stock

At June 30, 2007, the composition of common stock was as follows:

	Authorized¹	Issued	Outstanding²
Common Stock	101,984,800	21,734,100	21,734,100
Series A-1 Common Stock	24,480,000	19,806,000	19,806,000
Series A-2 Common Stock	24,480,000	23,310,000	23,310,000
Series A-3 Common Stock	24,480,000	23,411,000	23,411,000
Series B-1 Common Stock	2,161,600	1,974,000	1,974,000
Series B-2 Common Stock	2,161,600	2,099,300	1,309,700
Series B-3 Common Stock	2,161,600	2,115,400	1,325,800
	181,909,600	94,449,800	92,870,600

1 Common stock authorized consists of: (i) 73,440,000 shares reserved for issuance upon conversion of the Series A-1, Series A-2 and Series A-3 Common Stock; (ii) 8,160,000 shares authorized and issued for the

NYMEX HOLDINGS, INC. AND SUBSIDIARIES

NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

~~conversion~~NOTE ~~of the Company’s preferred stock; (iii) 4,300,000 shares reserved for issuance under the Company’s 2006 Long-Term Incentive Plan; (iv)~~ 9~~,600,000~~. Earnings ~~shares~~per ~~authorized~~Share ~~in connection with the IPO of which 6,365,000 were issued; and (v) 6,484,800 shares reserved for issuance upon conversion of the Series B-1, Series B-2 and Series B-3 Common Stock.~~

2The ~~Series~~calculation ~~B-1,~~of ~~Series~~earnings ~~B-2~~per ~~and~~common ~~Series~~share ~~B-3 Common Stock were issued as consideration~~ for the trading rights the Company acquired from the owners of COMEX Division memberships (see Note 5). In accordance with the terms of the agreement, each of the 772 owners of COMEX Division memberships was to receive 8,400 shares of the Company’s common stock (2,800 Series Bthree-1, ~~2,800 Series B-2,~~ and ~~2,800 Series B~~six-3month ~~shares)~~periods ~~and~~ended ~~was able to individually elect the timing of the receipt of those shares. The election choices included the receipt of: (i) all shares on the date the agreement was consummated (November 20~~June 30, ~~2006);~~2008 ~~(ii)~~and ~~all shares on January 2,~~ 2007; oris ~~(iii) in one-third increments on the 180th, 360th and 540th day following the date the Company’s Registration Statement on Form S-1,~~ as ~~filed~~follows ~~with the SEC, became effective~~ (~~November~~in 16thousands, ~~2006).~~except for Asshare ~~a result of the election by the 772 owners of COMEX Division memberships~~data): 204 elected to receive their shares, totaling 1,713,600 shares, on November 20, 2006; 286 elected to receive their shares, totaling 2,402,400 shares, on January 2, 2007; and 282 elected to receive their shares, totaling 2,368,800 shares, in one-third increments as described above.

NOTE 14. Supplemental Disclosures of Cash Flow Information


	Three Months Ended June 30,				Six Months Ended June 30,
	2008		2007		2008		2007
Net income	$	94,312	$	41,745	$	165,497	$	97,965

Weighted average common shares outstanding:
Basic		94,791,000		94,450,000		94,786,000		94,450,000
Effect of stock options		116,000		277,000		131,000		266,000
Effect of restricted stock units		40,000		71,000		64,000		68,000

Diluted		94,947,000		94,798,000		94,981,000		94,784,000

Earnings per Share:
Basic	$	0.99	$	0.44	$	1.75	$	1.04
Diluted	$	0.99	$	0.44	$	1.74	$	1.03

~~Supplemental~~NOTE ~~disclosures~~10. Members’ ofRetirement ~~cash~~Plan ~~flow information for the six months ended June 30, 2007~~ and ~~2006~~Benefits ~~are as follows:~~

	Six Months EndedJune 30,
	2007		2006
	(in thousands)
Cash paid for:
Interest	$	61,856	$	61,678
Income taxes	$	86,596	$	53,759
Non-cash investing and financing activities:
Unrealized gain on available-for-sale securities	$	35,947	$	738
Issuance of common stock	$	—	$	734
Cumulative redeemable convertible preferred stock dividends and amortization of issue costs	$	—	$	3,032

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 MRRP, 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 with a contribution of $800,000 in 2007 and expects to do so again in 2008. 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.

NOTE 15 11. ~~Share-Based~~Direct ~~Compensation~~Transaction Costs

AtThe ~~June 30, 2007, the~~ Company ~~has~~incurs ~~only~~various ~~one~~costs ~~share-based~~to ~~compensation~~support ~~plan~~its ~~(“Plan”)~~trading ~~that~~floor ~~was~~and ~~described~~clearinghouse. These incosts ~~the~~include ~~Company’s~~fees ~~Annual~~paid ~~Report~~to ~~on Form 10~~third-Kparty brokers for ~~the~~submitting ~~year~~individually ~~ended~~negotiated ~~December 31,~~off-exchange ~~2006.~~trades ~~The~~to ~~Plan~~the ~~provides~~Exchange for the ~~granting~~clearing of ~~incentive~~specified ~~stock~~products. ~~options,~~These ~~non-qualified~~costs ~~stock~~also ~~options,~~include ~~restricted~~service ~~stock,~~fees ~~and~~paid ~~restricted stock unit awards~~ to ~~employees~~the ~~and~~Chicago ~~directors~~Mercantile ~~for up to 4.3 million~~Exchange ~~shares of common stock~~Inc. ~~The~~(“CME”) ~~Company~~(as ~~believes~~described ~~that~~in ~~such awards better align~~ the ~~interest~~following ofparagraph), ~~its~~license ~~employees~~and ~~with~~royalty ~~those~~fees ofpaid ~~its~~to ~~stockholders.~~third-party ~~The~~vendors ~~exercise price~~ for ~~all stock options is not less than 100% of~~ the ~~fair~~use ~~market value~~ of ~~the~~their ~~common~~settlement ~~stock on the date of grant. Notwithstanding the foregoing~~prices, ~~the~~and ~~fair~~trading ~~market~~floor ~~value~~supplies ofneeded ~~a share of common stock~~ for ~~purposes of determining awards with a grant date as of~~ the Company’s ~~initial~~open ~~public~~outcry ~~offering was set in the final prospectus for such initial public offering~~venue. ~~No monetary payment is required as a condition of receiving a restricted stock or restricted stock unit award, since~~

In 2006, NYMEX Exchange entered into a technology services agreement, dated as of April 6, 2006 (the “Services Agreement”), with CME, a wholly-owned subsidiary of CME Group, to become the exclusive electronic

NYMEX HOLDINGS, INC. AND SUBSIDIARIES

NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

~~the~~trading ~~consideration~~service provider for NYMEX’s energy futures and options contracts and for metals products listed on its COMEX Division. The Services Agreement has a ten-year term from the ~~award~~launch ~~shall~~date bewith ~~services~~rolling ~~actually~~three-year ~~rendered~~extensions unless, among other reasons, (i) either party elects not to renew the ~~Company~~Services Agreement upon written notice prior to the beginning of the applicable renewal term, or (ii) either ~~for~~party elects to terminate the ~~Company’s~~Services ~~benefit~~Agreement between the fifth and the sixth year anniversary of the first launch date upon written notice and payment of a termination fee. ~~All~~Pursuant ~~share-based~~to ~~compensation~~the ~~currently~~Services Agreement, NYMEX Exchange will ~~awarded~~pay ~~vest~~to ~~over~~CME a ~~varying~~minimum ~~period~~annual ofpayment upor per trade fees based on average daily volume, whichever is greater. In addition, pursuant to ~~four~~the ~~years~~Services ~~from~~Agreement, if the ~~date~~Company acquires or merges with an entity, that at the time of ~~grant.~~such ~~Non-qualified~~acquisition ~~stock~~or merger, operates a trading execution system for futures or futures options ~~currently~~products ~~awarded~~(or ~~have~~off-exchange alook-alike ~~maximum~~versions ~~term~~of such products), electronic trading of 8such products shall be transitioned to CME Globex electronic trading platform (“CME Globex”) within two years.

~~The~~Under ~~following~~the ~~table~~terms ~~summarizes~~of the ~~changes~~Services inAgreement, ~~non-qualified~~the ~~stock~~Company ~~options~~incurred ~~under~~fees ~~the~~of ~~Company’s~~$18.0 ~~share-based~~million ~~compensation~~and ~~plan~~$35.0 million for the three- and six-month periods ended June 30, ~~2007:~~2008, respectively, as compared to $13.5 million and $25.9 million for the same periods last year. These fees are included in direct transaction costs on the condensed consolidated statements of income.

	Three Months Ended June 30, 2007			Six Months Ended June 30, 2007
	Shares (in thousands)	Weighted averageexercise price		Shares (in thousands)	Weighted averageexercise price
Outstanding at the beginning of the period	1,306.5	$	59.00	1,334.5	$	59.00
Granted	58.5		130.60	58.5		130.60
Exercised	—		—	—		—
Forfeited or expired	21.5		59.00	49.5		59.00
Outstanding at the end of the period	1,343.5	$	62.12	1,343.5	$	62.12
Options exercisable at the end of the period	—		—	—		—

On July 18, 2008, NYMEX Exchange and CME amended the terms of their Services Agreement (the “Amendment”) to extend the terms, at the option of CME, for an additional two years, as discussed in Note 20, “Subsequent Events.” In addition, pursuant to the terms of the Amendment, the mid-term termination right provided in the Services Agreement, which allowed either party to terminate the agreement during the time period between June 11, 2011 and June 11, 2012, has been delayed until the time period between June 11, 2012 and June 11, 2013.

ANOTE ~~summary~~12. Pension ~~of the status of the Company’s non-vested shares restricted stock unit awards for the three-~~ and ~~six-month~~Other ~~periods~~Benefit ~~ended~~Plans ~~June 30, 2007, is presented below:~~

	Three Months Ended June 30, 2007			Six Months Ended June 30, 2007
	Shares	Weighted average Grant-Date Fair Value		Shares	Weighted average Grant-Date Fair Value
	(in thousands)			(in thousands)
Nonvested at the beginning of the period	192.1	$	11,336.6	198.7	$	11,726.0
Granted	10.2		1,278.5	10.2		1,278.5
Vested	—		—	—		—
Forfeited or expired	4.3		253.7	10.9		643.1
Nonvested at the end of the period	198.0	$	12,361.4	198.0	$	12,361.4

OnSavings a quarterly basis, the Company evaluates the expected forfeiture rate based upon actual terminations in the current quarter. As of June 30, 2007, the current forfeiture rate for the non-vested non-qualified stock options and restricted stock unit awards was 10.7% and 12.0%, respectively, as compared to 1.9% and 3.4%, respectively, at December 31, 2006. As of June 30, 2007, there was $32.9 million of total unrecognized compensation cost related to non-vested share-based compensation arrangements granted under the Plan. ~~This cost is expected to be recognized over the future vesting period of four years.~~

~~NOTE~~The 16Company sponsors a defined contribution plan (the “401K Plan”) that incorporates a deferred salary arrangement under Section 401(k) of the Internal Revenue Code to all eligible domestic employees. ~~Segment~~ ~~Reporting~~The Company matches employee contributions up to a maximum of 3% of salary. In addition, the Company makes annual contributions ranging from 2% to 7% based upon tenure for each eligible 401K Plan member.

~~The~~Deferred ~~Company~~Compensation ~~considers~~Plan 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 ClearPort® Trading and NYMEX ClearPort® Clearing and trading on the CME Globex® electronic trading platform. 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.

The Company has a nonqualified deferred compensation plan (the “Deferred Plan”) for key employees to permit them to defer receipt of current compensation. The Company may provide a matching and a regular year-end contribution to the Deferred Plan. Matching and year-end contribution percentages follow the same guidelines as the Company’s defined contribution plan. The Deferred Plan is not intended to be a qualified plan under the provisions of the Internal Revenue Code. It is intended to be unfunded and, therefore, all compensation deferred under the Deferred Plan is held by the Company and commingled with its general assets. The participating employees are general creditors of the Company with respect to these benefits. The Company has the right to amend, modify, or terminate the Deferred Plan at any time. At June 30, 2008 and December 31, 2007, deferred compensation amounted to $2.5 million and $2.8 million, respectively, and is included in accrued salaries and related liabilities on the condensed consolidated balance sheets.

NYMEX HOLDINGS, INC. AND SUBSIDIARIES

NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

~~Other~~Postemployment ~~revenues~~Plan are attributed entirely to Open Outcry. Direct transaction costs are allocated directly to the segment they are incurred for. Depreciation and amortization and other operating expenses are allocated directly to the segment they pertain to, where practicable, with the balance of these expenses allocated based on the proportion of operating revenues, net of direct transaction costs, attributed to each segment. Non-operating income and expenses are allocated entirely to Corporate/Other. The prior year segment information has been reclassified to reflect this methodology of reporting each segment.

~~Financial~~The ~~information~~Company ~~relating~~offers various postemployment benefits to ~~these~~employees ~~business~~after ~~segments~~employment isbut ~~set~~before ~~forth~~retirement. ~~below~~These (benefits are paid in ~~thousands):~~accordance with the Company’s established postemployment benefit practices and policies. Postemployment benefits include both short-term disability income benefits and long-term disability related health benefits. The Company accrues for these future postemployment benefits, which are funded on a pay-as-you-go basis. The Company’s postemployment benefits liabilities at June 30, 2008 and December 31, 2007 were $0.3 million and $0.8 million, respectively.

	Three Months Ended June 30, 2007										Three Months Ended June 30, 2006
	OpenOutcry		ElectronicTrading &Clearing		Corporate /Other			Total			OpenOutcry		ElectronicTrading &Clearing		Corporate /Other			Total
Total operating revenues	$	41,219	$	122,378	$	—		$	163,597		$	66,189	$	56,326	$	—		$	122,515
Direct transaction costs		—		24,318		—			24,318			74		7,980		—			8,054
Depreciation and amortization		1,766		1,848		—			3,614			3,909		1,005		—			4,914
Other operating expenses		16,507		21,671		—			38,178			27,431		12,912		—			40,343
Operating income		22,946		74,541		—			97,487			34,775		34,429		—			69,204
Non-operating income (expense)		—		—		(23,472	)		(23,472	)		—		—		137			137
Income (loss) before provision (benefit) for income taxes		22,946		74,541		(23,472	)		74,015			34,775		34,429		137			69,341
Provision (benefit) for income taxes		10,004		32,500		(10,234	)		32,270			15,649		15,493		66			31,208
Net income (loss)	$	12,942	$	42,041	$	(13,238	)	$	41,745		$	19,126	$	18,936	$	71		$	38,133
	Six Months Ended June 30, 2007										Six Months Ended June 30, 2006
	OpenOutcry		ElectronicTrading &Clearing		Corporate /Other			Total			OpenOutcry		ElectronicTrading &Clearing		Corporate /Other			Total
Total operating revenues	$	87,352	$	240,471	$	—		$	327,823		$	129,632	$	104,553	$	—		$	234,185
Direct transaction costs		—		48,420		—			48,420			536		14,401		—			14,937
Depreciation and amortization		3,592		3,553		—			7,145			6,323		1,925		—			8,248
Other operating expenses		36,559		42,500		—			79,059			56,090		23,800		377			80,267
Operating income		47,201		145,998		—			193,199			66,683		64,427		(377	)		130,733
Non-operating income (expense)		—		—		(19,503	)		(19,503	)		—		—		321			321
Income (loss) before provision (benefit) for income taxes		47,201		145,998		(19,503	)		173,696			66,683		64,427		(56	)		131,054
Provision (benefit) for income taxes		20,580		63,655		(8,505	)		75,731			30,141		29,121		26			59,288
Net income (loss)	$	26,621	$	82,342	$	(10,998	)	$	97,965		$	36,542	$	35,305	$	(82	)	$	71,766

Postretirement Plan

The Company’s postretirement benefit costs are developed from actuarial valuations. Inherent in these valuations are key assumptions, including the discount rate and health care cost trend rate. 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 and changes in the level of benefits provided. 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. Accrued postretirement benefit costs are included in other non-current liabilities on the condensed consolidated balance sheets.

The net periodic benefit cost for the Company’s defined benefit retirement plans and other benefit plans for the three and six months ended June 30, 2008 and 2007 included the following components (in thousands):


	Three Months Ended June 30,						Six Months Ended June 30,
	2008			2007			2008			2007
Service costs	$	90		$	110		$	180		$	220
Interest costs		102			108			204			216
Amortization of prior service costs		(11	)		(14	)		(22	)		(28	)
Amortization of net loss		—			16			—			32

Total net period postretirement benefit cost	$	181		$	220		$	362		$	440

NOTE 13. Lease Termination Costs

In June 2006, the Company ceased its floor trading operations of its London-based exchange. As a result, the Company incurred lease termination costs of approximately $1.5 million during the first and second quarters of 2006 on various operating leases it had contracted to support its floor trading operations. In September 2006, the Company consolidated its London offices, and in doing so vacated its location at 131 Finsbury Pavement. The Company began negotiations with the landlord during September 2006 to buy out the remaining lease term. As such, the Company recorded a charge of approximately $1.9 million in the third quarter of 2006 for the estimated amount to be paid. This charge was recorded in occupancy and equipment on the Company’s condensed consolidated statements of income.

NYMEX HOLDINGS, INC. AND SUBSIDIARIES

NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

The ~~Company~~following ~~does~~tables ~~not~~summarize ~~account~~the ~~for,~~activity ~~and~~related ~~does not report~~ to ~~management,~~the ~~its~~various ~~assets~~London ~~(other~~exchange ~~than~~lease ~~goodwill~~terminations ~~and~~in ~~other~~accordance ~~intangible~~with ~~assets for~~ SFAS No. ~~142~~146, ~~reporting~~Accounting ~~purposes)~~for orCosts ~~capital~~Associated ~~expenditures~~with byExit ~~business~~or ~~segment.~~Disposal ~~Foreign~~Activities ~~source revenues and long-lived assets located~~ (in ~~foreign~~thousands): ~~countries are not material to the consolidated results of operations and financial position of the Company and are, therefore, not disclosed separately.~~

NOTE 17. Direct Transaction Costs


	Lease Termination Costs			Lease Termination Costs
Total expected to be incurred	$	3,426	Liability at January 1, 2008	$	878

Charges incurred in 2006	$	3,426	Charges		—
Charges incurred in 2007		—	Payments		(61	)
Charges incurred in 2008		—

Cumulative charges incurred as of June 30, 2008	$	3,426	Liability at June 30, 2008	$	817

~~The~~NOTE ~~Company incurs various costs to support its trading floor and clearinghouse~~14. Common ~~These~~Stock costs include fees paid to third-party brokers for submitting individually negotiated off-exchange trades to the Exchange for the clearing of specified products. These costs also include service fees paid to the CME in connection with the CME Agreement (see Note 10), license and royalty fees paid to third-party vendors for the use of their settlement prices, and trading floor supplies needed for the Company’s open outcry venue.

~~NOTE 18. Commitments~~At ~~and~~June 30, ~~Contingencies~~2008, the composition of common stock was as follows:

In connection with its operating activities, the Company enters into certain contractual obligations. The Company’s material contractual cash obligations include long-term debt, a technology services agreement, operating leases and other contracts. A summary of the Company’s minimum required future cash payments associated with its contractual cash obligations outstanding as of June 30, 2007, as well as an estimate of the timing in which these commitments are expected to expire, are set forth in the following table:


	Authorized¹	Issued	Outstanding²
Common Stock³	101,984,800	22,083,309	22,072,550
Series A-1 Common Stock	24,480,000	19,806,000	19,806,000
Series A-2 Common Stock	24,480,000	23,310,000	23,310,000
Series A-3 Common Stock	24,480,000	23,411,000	23,411,000
Series B-1 Common Stock	2,161,600	1,974,000	1,974,000
Series B-2 Common Stock	2,161,600	2,099,300	2,099,300
Series B-3 Common Stock	2,161,600	2,115,400	2,115,400

	181,909,600	94,799,009	94,788,250

	Payments Due by Period
	2007		2008		2009		2010		2011		Thereafter		Total
	(in thousands)
Contractual Obligations
Long-term debt principal	$	2,817	$	2,817	$	2,817	$	2,817	$	7,739	$	64,091	$	83,098
Long-term debt interest		3,208		6,205		5,994		5,783		5,573		36,213		62,976
Services agreements¹		4,650		10,080		10,270		11,571		30,948		—		67,519
Operating leases—facilities		1,501		3,000		3,027		3,306		3,585		2,186		16,605
Operating leases—equipment		920		1,634		691		26		—		—		3,271
Other long-term obligations		800		800		800		800		800		6,417		10,417
Total contractual obligations	$	13,896	$	24,536	$	23,599	$	24,303	$	48,645	$	108,907	$	243,886

Common stock authorized consists of: (i) 73,440,000 shares reserved for issuance upon conversion of the Series A-1, Series A-2 and Series A-3 Common Stock; (ii) 8,160,000 shares authorized and issued for the conversion of the Company’s preferred stock; (iii) 4,300,000 shares reserved for issuance under the Company’s 2006 Long-Term Incentive Plan; (iv) 9,600,000 shares authorized in connection with the IPO of which 6,365,000 were issued; and (v) 6,484,800 shares reserved for issuance upon conversion of the Series B-1, Series B-2 and Series B-3 Common Stock.

¹2 ~~Services~~Series ~~agreements~~B-1, ~~include~~Series ~~required~~B-2 ~~minimum~~and ~~payments~~Series inB-3 ~~accordance~~Common ~~with~~Stock awere ~~technology~~issued ~~services~~as ~~agreement~~consideration ~~with~~for ~~CME.~~the ~~The~~trading ~~CME~~rights ~~Agreement~~the ~~has~~Company aacquired ~~ten-year term~~ from the ~~launch~~owners ~~date~~of ~~(June~~COMEX ~~2006)~~Division ~~with~~memberships ~~rolling~~(see ~~three-year~~Note ~~extensions~~6). ~~Either~~In ~~party~~accordance ~~may~~with ~~elect~~the toterms ~~terminate~~of the ~~CME~~agreement, ~~Agreement~~each ~~between~~of the ~~fifth~~772 ~~and~~owners ~~the~~of ~~sixth~~COMEX ~~year~~Division ~~anniversary~~memberships was to receive 8,400 shares of the ~~first~~Company’s ~~launch~~common ~~date~~stock ~~upon~~(2,800 ~~written~~Series ~~notice~~B-1, 2,800 Series B-2, and ~~payment~~2,800 Series B-3 shares) and was able to individually elect the timing of athe ~~termination~~receipt ~~fee~~of those shares. AsThe aelection ~~result,~~choices included the ~~Company’s~~receipt ~~current~~of: ~~minimum~~(i) ~~obligation~~all ~~under~~shares on the ~~CME~~date ~~Agreement~~the isagreement ~~for~~was ~~payments~~consummated in(November ~~years~~20, ~~one~~2006); ~~through~~(ii) ~~five.~~all Asshares ~~such~~on January 2, 2007; or (iii) in one-third increments on the ~~Contractual~~180th, ~~Obligations~~360th ~~table~~and ~~above~~540th ~~sets~~day ~~forth~~following the date the Company’s ~~minimum~~Registration ~~obligation~~Statement ~~for~~on ~~years~~Form ~~one~~S-1, ~~through~~as ~~five,~~filed ~~including~~with the ~~related~~SEC, ~~termination~~became ~~fee~~effective in(November 16, 2006). As a result of the ~~event~~election by the ~~Company~~772 ~~elects~~owners of COMEX Division memberships: 204 elected to ~~terminate~~receive ~~the~~their ~~CME~~shares, ~~Agreement.~~totaling In1,713,600 ~~addition~~shares, ~~the~~on ~~services~~November ~~agreements~~20, ~~category~~2006; ~~includes~~286 ~~employment~~elected ~~agreements~~to asreceive ~~filed~~their ~~with~~shares, ~~the~~totaling ~~SEC~~2,402,400 shares, on January 2, 2007; and 282 elected to receive their shares, totaling 2,368,800 shares, in one-third increments as described above.

As3 ~~previously~~The ~~disclosed~~difference inbetween ~~Note 1,~~ the ~~Company~~Common ~~has~~Stock ~~$2.0~~issued ~~million~~and ofoutstanding ~~unrecognized~~represents ~~tax~~stock ~~benefits~~awards asthat ofhave ~~June 30,~~vested ~~2007. The Company is subject~~ to ~~periodic examinations~~non-employee directors of ~~its income tax returns by~~ the ~~U.S.~~Company’s ~~Internal Revenue Service and various state and local taxing authorities~~board, which ~~could~~were ~~result~~granted inunder ~~future tax liabilities,~~ the ~~payment~~2006 of which would offset the current unrecognized tax benefits. Due to the uncertainty of the outcome of any future income tax examinations, it is not possible to estimate when tax payments, if any, would be made. Long-Term

NYMEX HOLDINGS, INC. AND SUBSIDIARIES

NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

~~The~~Incentive ~~Company~~Plan. ~~occupies~~In ~~premises~~accordance ~~under~~with ~~leases,~~each ~~including~~non-employee adirector’s ~~land lease~~award, ~~with~~shares ~~various lessors~~ that ~~expire in~~are ~~2007~~vested ~~through~~are ~~2069.~~unable ~~For the three months ended June 30, 2007 and 2006, rental expense for facilities and the land lease amounted~~ to ~~$0.7~~be ~~million~~sold ~~and~~until ~~$1.2 million, respectively. For the~~ six months ~~ended~~after ~~June 30,~~the ~~2007~~director ~~and~~is ~~2006,~~no ~~rental expense~~longer ~~for~~serving ~~facilities~~on ~~and~~ the ~~land lease amounted to $1.3 million and $3.9 million~~board, ~~respectively. The six-month period ended June 30~~therefore, ~~2006 included a $1.8 million lease termination charge~~ the ~~Company~~vested ~~incurred~~shares in regards to office space it formerly leased in New York City. The lease commitments on the Company’s facilities include scheduled base rent increases over the terms of the leases. The base rent payments are ~~recorded~~considered ~~in occupancy and equipment expense on the condensed consolidated statements of income using the straight-line method over the terms of the leases. The Company has recorded a deferred credit~~ to ~~reflect~~be ~~the~~issued ~~excess~~but ofnot ~~rent expense over cash payments since inception of the leases~~outstanding.

~~The~~On July 29, 2008, the Company ~~leases~~filed ~~space~~a toCertificate ~~tenants~~of inRetirement of its ~~headquarters~~Series ~~facility.~~A-1 ~~For~~Common ~~the~~Stock, ~~three~~Series ~~months~~A-2 ~~ended~~Common ~~June 30~~Stock, ~~2007~~Series ~~and~~A-3 ~~2006~~Common Stock, ~~rents~~Series ~~collected~~B-1 ~~from~~Common ~~these leases~~Stock, ~~were~~Series $B-2.2 ~~million~~Common Stock and ~~$2.1~~Series ~~million,~~B-3 ~~respectively.~~Common ~~For~~Stock (the ~~six~~“Certificate of ~~months~~Retirement”) ~~ended~~with ~~June 30,~~the ~~2007~~State ~~and~~of ~~2006~~Delaware, ~~rents~~which ~~collected~~became ~~from~~effective ~~these~~on ~~leases~~the ~~were~~same $4day.3 ~~million~~Pursuant ~~and~~to ~~$4.2~~Section 243(b) ~~million~~of the Delaware General Corporation Law, ~~respectively.~~once ~~Rents~~the ~~collected~~Certificate ~~are~~of ~~recorded~~Retirement inbecame ~~other~~effective, ~~revenue~~it onhad the effect of amending the ~~condensed~~Company’s ~~consolidated~~certificate ~~statements~~of incorporation so as to reduce the number of ~~income~~authorized shares of the Company’s capital stock. ~~Future~~Accordingly, ~~minimum~~the ~~rental~~authorized ~~income~~shares ~~for~~of the ~~years~~Company’s ~~2007~~capital ~~through~~stock ~~2011~~was ~~are~~reduced asby ~~follows:~~79,924,800 shares, such that the total number of authorized shares of the Company’s capital stock is now 101,984,800.

	(in thousands)
2007	$	3,787
2008		5,666
2009		4,804
2010		4,484
2011		4,221
Thereafter		6,557
Total	$	29,519

NOTE 15. Supplemental Disclosures of Cash Flow Information

InSupplemental ~~accordance~~disclosures ~~with the DME shareholders agreement, the Company is required to contribute capital to the joint-venture in an aggregate amount~~ of ~~$9.8~~cash ~~million~~flow ~~over~~information afor ~~five-year period, contingent upon~~ the ~~DME’s~~six ~~achievement~~months ofended ~~certain agreed upon performance targets. At~~ June 30, ~~2007,~~2008 ~~the~~and ~~Company~~2007 ~~has~~are ~~contributed a total of $6.5 million.~~as follows:

Financial Guarantees


	Six Months Ended June 30,
	2008			2007
	(in thousands)
Cash paid for:
Interest	$	12,804		$	61,856

Income taxes	$	118,194		$	86,596

Non-cash investing and financing activities:
Unrealized (loss) gain on available-for-sale securities	$	(17,814	)	$	35,947

Exchange of available-for-sale security	$	63,439		$	—

~~The Company~~NOTE ~~has~~16. Share-Based ~~certain~~Compensation ~~guarantee arrangements in its clearing process as well as other financial guarantees discussed below:~~

~~Included~~The ~~in marketable~~Company’s ~~securities~~2006 ~~are~~Omnibus ~~investments~~Long-Term ~~that~~Incentive ~~are~~Plan ~~pledged~~(the as“2006 ~~collateral~~LTIP”) ~~with~~was ~~one~~approved ofby ~~the~~its ~~Company’s~~board ~~investment~~of ~~managers~~directors ~~relating~~on toJuly 13, a2006 ~~membership~~and ~~seat~~by its ~~financing~~stockholders ~~program~~on October 12, 2006. ~~Under~~The ~~this~~2006 ~~program,~~LTIP provides for the ~~investment~~granting ~~manager~~of ~~extends~~incentive ~~credit~~stock options, non-qualified stock options (“NQSOs”), restricted stock, and restricted stock unit awards (“RSUs”) to ~~individuals~~employees and ~~purchasing~~directors ~~NYMEX~~for ~~Division~~up ~~memberships~~to 4.3 million shares of common stock. The ~~program~~Company ~~requires~~believes that such awards better align the ~~Company~~interest ~~pledge~~of ~~assets~~its toemployees ~~the~~with ~~investment~~those ~~manager~~of inits anstockholders. ~~amount~~The ~~equal~~exercise toprice atfor ~~least~~all ~~118~~stock options is not less than 100% of the ~~loan~~fair market value. Inof the ~~event~~common astock ~~member~~on ~~defaults~~the ondate aof ~~loan~~grant. Notwithstanding the foregoing, the ~~investment~~fair ~~manager~~market ~~has~~value ~~the right~~of toa ~~seize~~share of common stock for purposes of determining awards with a grant date as of the Company’s ~~collateral~~initial ~~for~~public offering was set in the ~~amount~~final prospectus for such initial public offering. No monetary payment is required as a condition of ~~the~~receiving ~~default~~a restricted stock or restricted stock unit award, ~~and~~since the ~~Company~~consideration ~~has~~for the ~~right~~award shall be services actually rendered to ~~liquidate~~the Company or for the ~~member~~Company’s ~~interest~~benefit. inAll ~~NYMEX~~share-based ~~Division~~compensation tocurrently ~~reimburse~~awarded ~~its~~vest ~~loss~~over ofa ~~collateral.~~varying Atperiod ~~June 30,~~of ~~2007,~~up ~~there~~to ~~were~~four ~~total~~years ~~seat loan~~from ~~balances~~the date of $5grant.4 ~~million~~NQSOs ~~and~~currently ~~securities~~awarded ~~pledged~~have ~~against~~a ~~the~~maximum ~~seat~~term ~~loan balances~~ of ~~$6.4~~8 ~~million~~years.

~~The~~On January 9, 2008, the Company ~~serves~~granted ato ~~clearinghouse function,~~its ~~standing~~employees as376,100 aNQSOs ~~financial~~and ~~intermediary~~49,100 onRSUs. ~~every~~On ~~open~~May 20, ~~futures~~2008, ~~and~~approximately ~~options~~7,000 ~~transaction~~RSUs ~~cleared.~~were ~~Through~~granted to its ~~clearinghouse,~~directors ~~the~~under ~~Company~~2006 ~~maintains~~LTIP. aThe ~~system~~Company offollows ~~guarantees~~fair value accounting for ~~performance~~share-based ofcompensation ~~obligations~~as ~~owed~~required tounder ~~buyers~~SFAS ~~and~~No. 123 ~~sellers~~(Revised), Share-Based Payment (“SFAS No. 123R”). ~~This~~SFAS ~~system~~No. 123R ofrequires ~~guarantees~~recognition isof ~~supported~~compensation bycosts ~~several~~related to share-based

NYMEX HOLDINGS, INC. AND SUBSIDIARIES

NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

~~mechanisms,~~payments ~~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~~period ofthat ~~open~~an ~~positions~~employee ~~held~~provides atservices ~~any point~~ in ~~time~~exchange byfor ~~market participants in NYMEX Division and COMEX Division contracts and~~ the ~~margin rates then in effect for such contracts~~award. The ~~Company~~fair isvalue ~~required,~~of ~~under~~ the ~~Commodity~~NQSOs ~~Exchange~~awards ~~Act,~~granted toon ~~maintain separate accounts for cash and securities that are deposited by clearing members~~January 9, at2008 ~~banks~~was based ~~approved~~on by the ~~Company,~~Black-Scholes asoption-pricing ~~margin~~model ~~for~~using ~~house and customer accounts. These clearing deposits are used by members to meet their obligations to~~ the ~~Company~~following ~~for~~assumptions: ~~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.


Risk-free interest rate		3.08%
Expected volatility		34.69%
Expected option life		4.5 years
Dividend yield		0.3%
Weighted-average grant-date fair value	$	37.83

~~There~~The ~~were~~risk-free nointerest ~~events~~rate was based on the implied yields of ~~default~~U.S. ~~during~~Treasury Notes with a maturity equal to the ~~six~~NQSOs ~~months~~expected ~~ended~~life ~~June 30,~~at ~~2007,~~the intime ~~any~~of grant. Expected volatility was based on the volatility of stock prices of companies within the ~~above~~same ~~arrangements,~~industry inas ~~which~~the aCompany. The expected NQSOs life was determined based on various factors including ~~liability~~employee ~~should~~turnover berate, ~~recognized~~the vesting period of the NQSOs and information received from third-party consultants.

~~Legal~~Share-based ~~Proceedings~~compensation expense was approximately $4.0 million and $7.7 million for the three and six months ended June 30, 2008, respectively, and is recorded in salaries and employee benefits on the condensed consolidated statements of income.

~~Set~~SFAS ~~forth~~No. 123R ~~below~~additionally isrequires acompanies ~~description~~to estimate forfeiture rates at the time of ~~material~~grant ~~litigation~~and to ~~which~~revise ~~the~~these ~~Company~~estimates isin asubsequent ~~party,~~periods if asactual offorfeiture ~~June 30,~~rates ~~2007.~~differ ~~Although~~from ~~there~~those ~~can~~estimates. beThe noCompany ~~assurance~~applied asthe forfeiture rate to the ~~ultimate~~unvested ~~outcome,~~portion of the ~~Company~~NQSOs ~~believes~~valuation itand ~~has~~performed a ~~meritorious~~ ~~defense~~true-up ~~and~~for isthe ~~vigorously~~actual ~~defending~~forfeited ~~the~~amount ~~matter~~of ~~described~~the ~~below.~~valuation ~~The~~on ~~final~~a ~~outcome~~quarterly ofbasis. ~~any~~As ~~litigation~~of June 30, ~~however~~2008, ~~cannot~~the becurrent ~~predicted~~forfeiture ~~with~~rate ~~certainty,~~for ~~and~~the annon-vested ~~adverse~~NQSOs ~~resolution~~and ofRSUs ~~this~~was ~~matter~~8.3% ~~could~~and ~~have~~9.8%, arespectively, ~~material~~as ~~adverse~~compared ~~effect~~to on9.8% ~~the Company’s~~and ~~consolidated~~12.3%, ~~results~~respectively, ofat ~~operations~~December 31, ~~financial position or cash flows~~2007.

The ~~Company~~following ~~has~~table ~~been~~summarizes ~~named~~the aschanges ain ~~defendant~~NQSOs inactivities under the ~~following~~ ~~legal~~2006 ~~action:~~LTIP plan for the three and six months ended June 30, 2008:

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


	Three Months Ended June 30, 2008			Six Months Ended June 30, 2008
	Shares (in thousands)	Weighted Average Exercise Price		Shares (in thousands)	Weighted Average Exercise Price
Outstanding at the beginning of the period	1,427.2	$	77.67	1,066.8	$	62.83
Granted	—		—	376.1		118.97
Exercised	9.2		59.00	23.5		59.00
Forfeited or expired	4.0		96.48	5.5		86.26

Outstanding at the end of the period	1,414.0	$	77.73	1,414.0	$	77.73

Exercisable at the end of the period	49.90	$	101.36	49.90	$	135.09

NYMEX HOLDINGS, INC. AND SUBSIDIARIES

NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

~~counterclaims~~The ~~request~~following ~~damages~~table ~~and~~summarizes ~~trebled~~the ~~damages~~changes in ~~amounts~~RSUs ~~not~~under ~~specified~~the ~~yet~~2006 byLTIP ~~ICE~~plan infor ~~addition~~the tothree ~~injunctive~~ and ~~declaratory~~six months ~~relief.~~ended June 30, 2008:

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.


	Three Months Ended June 30, 2008			Six Months Ended June 30, 2008
	Shares (in thousands)	Weighted Average Grant-Date FairValue		Shares (in thousands)	Weighted Average Grant-Date FairValue
Nonvested at the beginning of the period	187.5	$	76.82	140.5	$	62.51
Granted	7.0		98.27	56.1		116.38
Vested	4.7		108.43	6.2		111.29
Forfeited or expired	0.7		100.36	1.3		82.99

Nonvested at the end of the period	189.1	$	76.73	189.1	$	76.76

ByAt ~~Order and Opinion dated~~ June 30, ~~2004~~2008, ~~the~~there ~~Court~~was ~~granted~~$40.1 ~~NYMEX~~million ~~Exchange’s~~of ~~motion~~total ~~and~~unrecognized ~~dismissed~~compensation ~~all~~cost ofrelated ~~the~~to ~~antitrust~~non-vested ~~counterclaims~~share-based ~~asserted~~compensation ~~against~~arrangements ~~NYMEX~~granted ~~Exchange~~under the Plan. ~~ICE~~This ~~did~~cost ~~not~~is ~~appeal~~expected ~~this~~to ~~decision~~be recognized over the future vesting period.

~~By Order and Opinion dated September 29,~~NOTE 2005, the Court (1) granted ICE’s motion for summary judgment to the extent of dismissing NYMEX Exchange’s federal claims for copyright and trademark infringement and dismissing without prejudice (by declining to exercise supplemental jurisdiction), NYMEX Exchange’s state law claims for violation of trademark anti-dilution statutes and interference with contractual relationships, and (2) denied NYMEX Exchange’s cross-motion for partial summary judgment on copyright infringement and tortious interference with contract17. Segment OnReporting October 13, 2005, NYMEX Exchange filed a notice of appeal with the United States Court of Appeals for the Second Circuit. On August 1, 2007, the United States Court of Appeals affirmed the judgment of the lower Court. NYMEX is presently considering whether to seek a further review of, or appeal from, the decision.

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 ClearPort^® Trading and NYMEX ClearPort^® Clearing and trading on the CME Globex^® electronic trading platform. 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. Direct transaction costs are allocated directly to the segment they are incurred for. Depreciation and amortization and other operating expenses are allocated directly to the segment they pertain to, where practicable, with the balance of these expenses allocated based on the proportion of operating revenues, net of direct transaction costs, attributed to each segment. Non-operating income and expenses are allocated entirely to Corporate/Other.

NYMEX HOLDINGS, INC. AND SUBSIDIARIES

NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

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


	Three Months Ended June 30, 2008									Three Months Ended June 30, 2007
	Open Outcry		Electronic Trading & Clearing		Corporate / Other			Total		Open Outcry		Electronic Trading & Clearing		Corporate / Other			Total
Total operating revenues	$	46,887	$	163,921	$	—		$	210,808	$	41,219	$	122,378	$	—		$	163,597
Direct transaction costs		—		26,886		—			26,886		—		24,318		—			24,318
Depreciation and amortization		910		2,661		—			3,571		1,766		1,848		—			3,614
Other operating expenses		15,488		23,604		1,915			41,007		16,507		21,671		—			38,178

Operating income (loss)		30,489		110,770		(1,915	)		139,344		22,946		74,541		—			97,487
Non-operating income (expense)		—		—		30,847			30,847		—		—		(23,472	)		(23,472	)

Income (loss) before provision for income taxes		30,489		110,770		28,932			170,191		22,946		74,541		(23,472	)		74,015
Provision (benefit) for income taxes		13,293		48,296		14,290			75,879		10,004		32,500		(10,234	)		32,270

Net income (loss)	$	17,196	$	62,474	$	14,642		$	94,312	$	12,942	$	42,041	$	(13,238	)	$	41,745


	Six Months Ended June 30, 2008									Six Months Ended June 30, 2007
	Open Outcry		Electronic Trading & Clearing		Corporate / Other			Total		Open Outcry		Electronic Trading & Clearing		Corporate / Other			Total
Total operating revenues	$	95,908	$	323,775	$	—		$	419,683	$	87,352	$	240,471	$	—		$	327,823
Direct transaction costs		—		54,969		—			54,969		—		48,420		—			48,420
Depreciation and amortization		3,253		3,776		—			7,029		3,592		3,553		—			7,145
Other operating expenses		30,661		44,702		10,090			85,453		36,559		42,500		—			79,059

Operating income (loss)		61,994		220,328		(10,090	)		272,232		47,201		145,998		—			193,199
Non-operating income (expense)		—		—		32,385			32,385		—		—		(19,503	)		(19,503	)

Income (loss) before provision for income taxes		61,994		220,328		22,295			304,617		47,201		145,998		(19,503	)		173,696
Provision (benefit) for income taxes		27,029		96,063		16,028			139,120		20,580		63,655		(8,505	)		75,731

Net income (loss)	$	34,965	$	124,265	$	6,267		$	165,497	$	26,621	$	82,342	$	(10,998	)	$	97,965

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.

NYMEX HOLDINGS, INC. AND SUBSIDIARIES

NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

NOTE 18. Income Taxes

The Company reviews its annual tax rate on a quarterly basis and makes any necessary changes. The estimated annual tax rate may fluctuate due to changes in forecasted annual operating income, changes in the jurisdictional mix of the forecasted annual operating income, positive or negative changes to the valuation allowance for net deferred tax assets, changes to actual or forecasted permanent book to tax differences, impacts from future tax settlements with state or federal tax authorities or impacts from enacted tax law changes. The Company identifies items which are unusual and non-recurring in nature and treats these as discrete events. The tax effect of discrete items is booked entirely in the quarter in which the discrete event occurs.

The Company has unrecognized tax benefits, including interest, of approximately $4.4 million, net of federal tax effect, as of June 30, 2008. The Company believes that changes in the unrecognized tax benefits due to possible settlements in the next 12 months will not have a material impact on the Company’s effective tax rate. The Company’s historical accounting policy with respect to interest and penalties related to tax uncertainties has been to classify these amounts as income taxes, and the Company continued this classification upon the adoption of FIN No. 48. The total amount of interest related to tax uncertainties recognized in the condensed consolidated statements of income for the six-month period ended June 30, 2008 was $0.1 million. The earliest tax year open to examination by the Internal Revenue Service and the other tax jurisdictions in which the Company files a tax return is 2003.

NOTE 19. 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, a technology services agreement, operating leases and other contracts. A summary of the Company’s minimum required future cash payments associated with its contractual cash obligations outstanding as of June 30, 2008, 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
	2008		2009		2010		2011		2012		Thereafter		Total
	(in thousands)
Contractual Obligations
Long-term debt principal	$	2,817	$	2,817	$	2,817	$	7,739	$	4,909	$	59,182	$	80,281
Long-term debt interest		3,102		5,994		5,783		5,573		4,980		31,233		56,665
Services agreements¹		5,340		10,295		11,571		30,948		—		—		58,154
Operating leases—facilities		1,755		3,034		3,306		3,585		2,051		136		13,867
Operating leases—equipment		930		1,408		540		—		—		—		2,878
Other long-term obligations		917		1,041		967		800		800		5,247		9,772

Total contractual obligations	$	14,861	$	24,589	$	24,984	$	48,645	$	12,740	$	95,798	$	221,617

Services agreements include required minimum payments in accordance with the Services Agreement (see Note 11). The Services Agreement has a ten-year term from the launch date with rolling three-year extensions. Either party may elect to terminate the Services Agreement between the fifth and the sixth year anniversary of the first launch date upon written notice and payment of a termination fee. As a result, the Company’s current minimum obligation under the Services Agreement is for remaining payments through year five. As such, the Contractual Obligations table above sets forth the Company’s minimum obligation remaining through year five, including the related termination fee in the event the Company elects to terminate the Services Agreement. On July 18, 2008, the Company entered into an amendment to the

NYMEX HOLDINGS, INC. AND SUBSIDIARIES

NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

Services Agreement in connection with the proposed merger (see Note 20). In addition, the services agreements category includes employment agreements as filed with the SEC.

As previously disclosed in Note 18, the Company has $4.4 million of unrecognized tax benefits as of June 30, 2008. The Company is subject to periodic examinations of its income tax returns by the U.S. Internal Revenue Service and various state and local taxing authorities, which could result in future tax liabilities, the payment of which would offset the current unrecognized tax benefits. Due to the uncertainty of the outcome of any future income tax examinations, it is not possible to estimate when tax payments, if any, would be made.

The Company occupies premises under leases, including a land lease, with various lessors that expire in 2008 through 2069. Rental expense for facilities and the land lease amounted to $0.6 million and $0.7 million for three months ended June 30, 2008 and 2007, respectively, and $1.3 million for the six months ended June 30, 2008 and 2007. The lease commitments on the Company’s facilities include scheduled base rent increases over the terms of the leases. The base rent payments are being charged to expense on the straight-line method over the terms of the leases. The Company has recorded a deferred credit to reflect the excess of rent expense over cash payments since inception of the leases.

The Company leases space to tenants in its headquarters facility. For the three months ended June 30, 2008 and 2007, rents collected from these leases were $2.3 million and $2.2 million, respectively. For the six months ended June 30, 2008 and 2007, rents collected from these leases were $4.6 million and $4.3 million, respectively. Rents collected are recorded in other revenue on the condensed consolidated statements of income. Future minimum rental income for the years 2008 through 2012 are as follows:


	(in thousands)
2008	$	3,340
2009		4,649
2010		4,461
2011		4,325
2012		4,306
Thereafter		2,409

Total	$	23,490

In 1994, the Company entered into a Letter of Intent with Battery Park City Authority (“BPCA”), the New York City Economic Development Corporation (“EDC”) and the Empire State Development Corporation (“ESDC”) to construct a new trading facility and office building on a site in Battery Park City. By agreement dated May 18, 1995, the EDC and ESDC agreed to provide funding of $128.7 million to construct the facility. The Company is liable for liquidated damages on a declining scale, currently set at $25.0 million, if it violates the terms of the occupancy agreement at any time prior to the 15 years from the date of occupancy, July 7, 1997.

In May 1995, the Company signed a ground lease (expiring June 2069) with BPCA for the site where it constructed its headquarters and trading facility. The lease establishes payments in lieu of taxes (“PILOTs”) due to New York City, as follows: for the trading portion of the facility, PILOTs are entirely abated for the first 20 years after occupancy; for the office portion of the facility, PILOTs are entirely abated for one year after occupancy, at a percentage of assessment (ranging from 25% to 92.5%) for the next 10 years and, thereafter, at an amount equal to assessment. Space that is subleased is not eligible for abatements.

In 2002, the Company entered into an agreement and received a $5.0 million grant from ESDC. This agreement requires the Company to maintain certain annual employment levels, and the grant is subject to recapture amounts, on a declining scale, over time.

NYMEX HOLDINGS, INC. AND SUBSIDIARIES

NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

The Company and the Board of Trade of the City of New York, Inc. (“NYBOT”) entered into a lease agreement that became effective on November 20, 2002. In accordance with this lease agreement, NYBOT is leasing approximately 13,000 square feet on the COMEX Division trading floor and approximately 45,000 square feet of office space for a ten-year term. The rent commencement date for the trading floor space and office space was July 1, 2003 and May 20, 2003, respectively. In 2007, NYBOT changed its corporate name to ICE Futures U.S., Inc.

Section 311(G) of the Bylaws of NYMEX Exchange provides for a revenue sharing arrangement with the owners of Class A memberships in NYMEX Exchange in the event that either: (i) NYMEX Exchange determines to terminate permanently all open outcry floor trading for a specified list of products on the NYMEX Exchange and instead lists such products for electronic trading only; or (ii) a “shift” occurs whereby at least 90% of the contract volume of such NYMEX Exchange product results from electronic trading. Once triggered for a particular product, the obligation under the revenue sharing arrangement consists of the greater of the following amounts: (i) 10% of the gross NYMEX Exchange revenues attributable to all revenue from the electronic trading of such applicable NYMEX Exchange product, but not including market data fees or revenues from bilateral transactions cleared through NYMEX ClearPort^® Clearing (or its successor); or (ii) 100% of the revenue from any additional special fee or surcharge that may be imposed by NYMEX Exchange on the transaction fees applicable to the electronic trading of such applicable NYMEX Exchange product. Once triggered, Bylaw Section 311(G) requires this revenue stream continue in perpetuity or until NYMEX Exchange no longer lists such product for electronic trading. NYMEX Exchange has determined that a “shift” will have occurred for any applicable NYMEX Exchange product following the end of two consecutive fiscal quarters in which, during each quarter, the average quarterly electronic trading volume has equaled or exceeded 90% of the contract volume in such product. Thereafter, revenues that are generated from the electronic trading of such product will begin to accrue and will be paid to the owners of Class A memberships in NYMEX Exchange on a quarterly basis consistent with the financial reporting schedule of NYMEX Holdings. In accordance with the NYMEX Exchange Bylaws, such determination may be subject to challenge by owners of Class A memberships in NYMEX Exchange through arbitration.

Financial Guarantees

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 June 30, 2008, there were total seat loan balances of $3.1 million and securities pledged against the seat loan balances of $3.7 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

NYMEX HOLDINGS, INC. AND SUBSIDIARIES

NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

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.

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 as of June 30, 2008 and December 31, 2007, in any of the above arrangements, in which a liability should be recognized.

Legal Proceedings

In the ordinary course of business, the Company is a party to several lawsuits and claims. The Company periodically assesses its liabilities and contingencies in connection with these matters, based upon the latest information available. As additional information becomes available, the Company adjusts its assessment and estimates of such liabilities accordingly. It is possible that the ultimate resolution of its liabilities and contingencies could be at amounts that are different from any recorded reserves and that such differences could be material. Based on its review of the latest information available, the Company believes its ultimate liability, if any, in connection with any current lawsuits or claims for pending or threatened legal proceedings, would not materially affect the Company’s financial condition, results of operations, or cash flows.

Set forth below is a description of material litigation to which the Company is a party, as of June 30, 2008. 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 actions:

In re NYMEX Shareholder Litigation, C.A. No. 3621-VCN

NYMEX HOLDINGS, INC. AND SUBSIDIARIES

NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

other things, that the directors breached their fiduciary duties to NYMEX Holdings’ shareholders by attempting to sell the Company for inadequate and unfair consideration and pursuant to an inadequate and unfair process, and that CME Group aided and abetted such breaches. On April 21, 2008, NYMEX Holdings and its directors moved to dismiss the complaint and to stay all discovery pending the disposition of the motion to dismiss. CME Group filed similar motions.

On April 14 and 15, 2008, respectively, two additional putative class actions were commenced in the Delaware Court of Chancery by Polly Winters and Joan Haedrich, both purportedly NYMEX Holdings shareholders, on behalf of themselves and all other NYMEX Holdings shareholders, against NYMEX Holdings, the members of its board of directors and CME Group. The Winters and Haedrich complaints contain allegations virtually identical to those in the Capozza action (discussed above).

On May 16, 2008, the Delaware Court of Chancery ordered that the three actions be consolidated under the caption In re NYMEX Shareholder Litigation, C.A. No. 3621-VCN, and that all subsequently filed actions concerning the same subject matter be consolidated with them.

On June 20, 2008, Plaintiffs Capozza, Winters and Haedrich (“Plaintiffs”) filed an Amended and Consolidated Class Action Complaint (the “Amended Complaint”), along with a Motion for Expedited Proceedings (the “Motion to Expedite”), in anticipation of a motion for a preliminary injunction to enjoin the Special Meetings of the shareholders of NYMEX Holdings and the NYMEX Exchange Class A members relating to the Proposed Transaction (the “Preliminary Injunction Motion”). The Amended Complaint alleges that the Proposed Transaction resulted from an unfair and inadequate process and offers an inadequate price. The Amended Complaint further alleges that the preliminary Form S-4 Registration Statement for the Proposed Transaction (which included a NYMEX Holdings/CME Group joint proxy statement/prospectus (the “Preliminary Proxy”)), filed on June 10, 2008 with the Securities and Exchange Commission, was materially incomplete and misleading and omitted or misstated necessary information. By the Amended Complaint, Plaintiffs seek, among other things, an injunction preventing the consummation of the Proposed Transaction.

On June 27, 2008, Plaintiffs filed a Second Consolidated and Amended Class Action Complaint (the “Second Amended Complaint”) to correct certain typographical errors in the Amended Complaint and to add CMEG NY Inc., the CME Group merger subsidiary created for purposes of the Proposed Transaction, as a defendant. On July 9, 2008, NYMEX Holdings and its directors moved to dismiss the Second Amended Complaint. CME Group filed a similar motion.

On June 30, 2008, NYMEX Holdings and its directors and CME Group filed oppositions to the Motion to Expedite. On July 11, 2008, the Court granted that motion, and discovery commenced. Subsequent thereto, the Court scheduled a hearing for August 13, 2008 for the Preliminary Injunction Motion.

On August 5, 2008, Plaintiffs agreed not to pursue the Preliminary Injunction Motion and the Court removed the August 13, 2008 hearing from its calendar. This matter is otherwise ongoing. NYMEX Holdings and CME Group intend to defend vigorously against Plaintiffs’ allegations.

Greene v. NYMEX Holdings, Inc., et al., C.A. No. 3835-VCN

NYMEX HOLDINGS, INC. AND SUBSIDIARIES

NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

complaint also seeks to enjoin the Proposed Transaction on price, process and disclosure grounds. However, the price claim alleged in the Greene complaint focuses on the consideration to be received by the Class A members in connection with their membership interests in NYMEX Exchange. NYMEX Holdings and its directors filed a motion to dismiss the Greene complaint on July 17, 2008. CME Group filed a similar motion.

On August 5, 2008, Ms. Greene, like Plaintiffs in the consolidated proceeding discussed above, agreed not to pursue a preliminary injunction to enjoin the Special Meetings of the shareholders of NYMEX Holdings and NYMEX Exchange Class A members relating to the Proposed Transaction, and the Court removed the August 13, 2008 hearing from its calendar. This matter is otherwise ongoing. NYMEX Holdings and CME Group intend to defend vigorously against these allegations.

NOTE 20. Subsequent Events

On July 18, 2008, the Company, CME Group, CMEG NY Inc., a wholly-owned subsidiary of CME Group, and NYMEX Exchange entered into Amendment No. 2 (the “Second Merger Amendment”) to the Agreement and Plan of Merger, dated as of March 17, 2008 and amended as of June 30, 2008, by and among such parties, pursuant to which the Company would merge with and into CMEG NY Inc. (the “Merger”), with CMEG NY Inc. continuing as the surviving company and as a wholly-owned subsidiary of CME Group.

Pursuant to the terms of the Second Merger Amendment, each owner of record of a NYMEX Class A membership as of the close of business on the closing date of the Merger who executes and delivers a waiver and release within 60 days following the closing date of the Merger will receive $750,000 with respect to each NYMEX Class A membership owned of record. The exchange ratio and cash consideration offered to the Company’s stockholders pursuant to the terms of the Merger Agreement remained unchanged.

The Second Merger Amendment also provides that NYMEX Class A members will retain the right to use or lease their memberships for NYMEX Exchange open outcry and electronic trading purposes, the number of NYMEX Class A memberships will be limited to 816 and the NYMEX Exchange seat market will be preserved. Substantially all other rights of the NYMEX Class A members, including the revenue sharing rights contained in Section 311(G) of the NYMEX Exchange bylaws, will be eliminated and replaced with certain commitments, including (a) maintenance of the NYMEX Exchange trading floor in New York until at least December 31, 2012, (b) maintenance of fee differentials between NYMEX Class A members and non-members and account-based rates and (c) establishment of certain clearing firm requirements. These changes will be implemented pursuant to amendments to NYMEX Exchange’s current certificate of incorporation and bylaws, which will require the affirmative vote of owners of 75% of the outstanding NYMEX Class A memberships.

The Second Merger Amendment also provides for the reduction of (a) certain change in control severance payments and tax gross-up payments payable to certain Company executives in connection with the consummation of the Merger pursuant to the Company’s Change in Control Severance Plan and (b) certain other merger-related expenses, totaling $30 million in the aggregate.

Also on July 18, 2008, NYMEX Exchange and CME announced that they have amended the terms of their technology services agreement, dated as of April 6, 2006 (the “Services Agreement”). Pursuant to the terms of the amendment (the “Amendment”), the term of the Services Agreement may, at the option of CME, be extended for an additional two years. In addition, the mid-term termination right provided in the Services Agreement, which allowed either party to terminate the agreement during the time period between June 11, 2011 and June 11, 2012, has been delayed until the time period between June 11, 2012 and June 11, 2013.

The Amendment will only be effective (i) following the special meeting of NYMEX Holdings stockholders to be held in connection with the Merger, pursuant to the Merger Agreement, or (ii) in the event that the special meeting of the Company’s stockholders to be held in connection with the Merger is not held as a result of a breach of the Merger Agreement by the Company, immediately after such breach.

All other terms of the Services Agreement remain in effect without modification.

On July 31, 2008, the Company announced that its board of directors approved a quarterly dividend of $0.10 per common share to stockholders of record as of August 15, 2008 that will be payable on September 15, 2008.

Item 2.

Management’s Discussion and Analysis of Financial Condition and Results of Operations

Business Overview

The Company provides facilities to buy, sell and clear energy, precious and base metals, soft and ~~soft~~other commodities for future delivery under rules intended to protect the interests of market participants. The Company provides liquid marketplaces where physical ~~commodity~~ commodity market participants can manage future price risk and, through the Company’s clearing operations, mitigate counterparty credit risk. Through real-time and delayed dissemination of its transaction prices, the Company provides price discovery and transparency to market participants. In order to enhance its markets and provide market participants additional mechanisms to manage risk, the Company continuously offers new products, distribution services and clearing services. The Company does not own commodities, trade for its own account, or otherwise engage in market activities.

The NYMEX Division provides a marketplace for trading energy, ~~metals and soft commodity~~ futures and options. The COMEX Division provides a marketplace for trading precious and base metals futures and options. NYMEX Division’s principal markets include crude oil, natural gas, heating oil and gasoline. COMEX Division’s principal markets include gold, silver and high grade copper. In addition, the Company ~~presently~~ offers soft commodities futures contracts for coffee, sugar, cocoa, ~~cotton~~ and ~~orange juice~~cotton. The Company provides the physical facilities for open outcry auction markets. The open outcry markets operate during regular business hours, and trading activities in these markets are, for purposes of this management discussion, referred to as floor trading. ~~In addition, the Company makes its product slate available for electronic trading on CME Globex electronic trading platform virtually 24 hours a day and five days per week to market participants.~~

The Company provides trade-clearing services for all transactions executed through its floor trading operations and its NYMEX ClearPort® Trading electronic trading ~~platforms~~platform, asand ~~well~~for as all Company product transactions executed on the CME Globex® electronic trading platform (“CME Globex”). In addition, through NYMEX ClearPort® Clearing, an over-the-counter (“OTC”) clearing initiative, the Company alleviates some of the credit issues in the marketplace by providing the usage of the Company’s clearing operations to offer market participants the advantages of reducing costs and permitting futures and OTC positions to be offset. This initiative permits market participants to negotiate bilateral trades in the OTC market, which are then transferred to the Company’s division as futures contracts for clearing.

In order to conduct floor-trading activities, market participants must own or lease a membership on the NYMEX Division or COMEX Division. Non-members may execute floor trades on the Company’s divisions, but must do so through a member. In addition, the Company makes available its product slate for electronic trading on CME Globex nearly 24 hours a day and five days per week to market participants who have a clearing relationship with a Company clearing member.

Certain NYMEX Division and COMEX Division members are clearing members. Clearing members provide capital to support the Company’s clearing activities. All market participants trading through the Company’s floor trading or trading Company products through ~~the~~ CME Globex ~~platform~~ must have a clearing relationship with a clearing member who will clear their trades through the Company’s clearinghouse. Market participants must have similar clearing member relationships to use NYMEX ClearPort® Clearing.

The Company’s principal sources of revenues are clearing and transaction fees derived from trades executed on its divisions, and/or cleared through its clearinghouse, and fees charged for the Company’s proprietary futures and options contract price information.

Clearing and transaction fees are dependent primarily upon the volume of trading activity conducted on the Company’s divisions and cleared by the Company’s clearinghouse. These volumes are impacted by several factors, including:

•

National and international economic and political conditions;

•

Volatility in price levels of the underlying commodities;

•

Market perception of stability in commodities and financial markets;

•

The level and volatility of interest rates and inflation;

•

Credit quality of market participants; and

•

Weather conditions affecting certain energy commodities.

The relative proportions of member and non-member trading activities, and the trading venues on which market participants trade also impact the levels of clearing and transaction fees. NYMEX Division and COMEX Division members are afforded more favorable transaction pricing than non-members, and are eligible to participate in certain transaction fee and cost reduction programs, which impact the level of clearing and transaction fees and other revenues.

Market data relating to proprietary prices of contracts executed on the Company’s divisions are sold to vendors who redistribute this information to market participants and others. The level of market data fees is dependent upon the number of vendors and the number of end users receiving data through the vendor redistribution process. The Company relies on its market data vendors to supply accurate information regarding the number of subscribers that are accessing the Company’s market data. ~~As such, the Company conducts periodic audits of the information provided by its market data vendors.~~

The Company’s expenses consist primarily of direct transaction costs, employee compensation and benefits and the cost of facilities, equipment, software and communications to support the Company’s trading and clearing operations. The Company also incurs marketing costs associated with the development and launch of new products and services. The Company continually invests in technology and infrastructure to support market expansion, enhance its trading and clearing technology, and develop new products and services.

Recent Developments

The Company has incurred $9.6 million of merger-related expenses, of which approximately $7.7 million are considered non-deductible for income tax purposes. These expenses consist primarily of professional fees and are recorded in “Other expenses” in the condensed consolidated statements of income. Certain numbers and percentages in this Management’s Discussion and Analysis of Financial Condition and Results of Operations are presented excluding these merger-related expenses and are considered non-GAAP (generally accepted accounting principles) financial data. The Company believes that this non-GAAP financial data is useful to assist investors in gaining an understanding of the trends and operating results of the Company’s business. This non-GAAP financial data should be viewed in addition to, and not in lieu of, the Company’s reported results under U.S. GAAP.

Regulation G Reconciliation of Non-GAAP Financial Measures

In evaluating its financial performance, the Company reviews operating results from operations, which excludes non-operating charges. Pro-forma earnings per share are a non-GAAP performance measure, but the Company believes that it is useful to assist investors in gaining an understanding of the trends and operating results for its core business. Pro-forma earnings per share should be viewed in addition to, and not in lieu of, the reported results under U.S. GAAP. The following is a reconciliation of U.S. GAAP results to pro forma results for the periods presented:


	U.S. GAAP Three Months Ended June 30, 2008		Adjustments¹			Pro-Forma Three Months Ended June 30, 2008		U.S. GAAP Three Months Ended June 30, 2007			Adjustments¹		Pro-Forma Three Months Ended June 30, 2007
Operating income	$	139,344	$	1,666		$	141,010	$	97,487		$	—	$	97,487
Non-operating income		30,847		(30,641	)		206		(23,472	)		25,962		2,490

Income before provision
for income taxes		170,191		(28,975	)		141,216		74,015			25,962		99,977
Provision for income taxes		75,879		(13,278	)		62,601		32,270			11,319		43,589

Net income	$	94,312	$	(15,697	)	$	78,615	$	41,745		$	14,643	$	56,388

Earnings per Share:
Basic	$	0.99	$	(0.16	)	$	0.83	$	0.44		$	0.16	$	0.60
Diluted	$	0.99	$	(0.16	)	$	0.83	$	0.44		$	0.15	$	0.59

	U.S. GAAP Six Months Ended June 30, 2008		Adjustments¹			Pro-Forma Six Months Ended June 30, 2008		U.S. GAAP Six Months Ended June 30, 2007			Adjustments¹		Pro-Forma Six Months Ended June 30, 2007
Operating income	$	272,232	$	9,591		$	281,823	$	193,199		$	—	$	193,199
Non-operating income		32,385		(30,641	)		1,744		(19,503	)		25,962		6,459

Income before provision
for income taxes		304,617		(21,050	)		283,567		173,696			25,962		199,658
Provision for income taxes		139,120		(12,758	)		126,362		75,731			11,319		87,050

Net income	$	165,497	$	(8,292	)	$	157,205	$	97,965		$	14,643	$	112,608

Earnings per Share:
Basic	$	1.75	$	(0.09	)	$	1.66	$	1.04		$	0.16	$	1.20
Diluted	$	1.74	$	(0.08	)	$	1.66	$	1.03		$	0.15	$	1.18

The adjustment to operating income is related to the merger-related expenses incurred in connection with the proposed merger with CME Group as discussed above in the “Recent Developments” section. The adjustments to non-operating income are related to a realized gain on the Company’s investment in Bourse de Montréal, Inc. and impairment losses in Optionable Inc. as discussed below in the “Results of Operations” section.

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, ~~2006~~2007 Annual Report on Form 10-K. The Company’s forward-looking statements are based on information available to the Company as of the date hereof, and except as required by law, the Company undertakes no obligation to update any forward-looking statement, whether as a result of new information, future events or otherwise. Actual results and experience may differ materially from forward-looking statements as a result of many factors, including: changes in general economic and industry conditions in various markets in which the Company’s contracts are traded; increased competitive activity; fluctuations in prices of the underlying commodities as well as for trading floor administrative expenses related to the trading and clearing of contracts; the ability to control costs and expenses; changes to legislation or regulations; protection and validity of the Company’s intellectual property rights and rights licensed from others; the Company’s ability to satisfy the closing conditions for the Company’s proposed merger with CME Group and the Company’s ability to realize the benefits and control the costs of the proposed transaction; and other unanticipated events and conditions. It is not possible for the Company to foresee or identify all such factors.

Results of Operations

Net income for the three months ended June 30, ~~2007~~2008 was $4194.7 3 million, an increase of $352.6 million or 9126% compared to the same period last year. Included in this amount is a one-time net pretax gain of $30.6 million, ~~from~~consisting of approximately $3833.18 million ~~for~~gain on the ~~same~~investment ~~period~~in ~~last~~Bourse ~~year~~de Montréal, Inc. ~~Excluding~~(“Montréal ~~the~~Exchange”) and an impairment ~~charge~~loss ~~related~~of to$3.2 million on the Company’s remaining investment in Optionable, Inc. (“Optionable”), ~~which~~or ~~amounted~~$15.7 tomillion on an after tax basis. In the second quarter of 2007, the Company initially recorded an impairment loss in Optionable of $26.0 million on a ~~pre-tax~~pretax basis or $14.6 million on an after-tax basis. Excluding the gain on the investment in the Montréal Exchange and the impairment losses in Optionable, net income for the three months ended June 30, ~~2007~~2008 was $5678.46 million, an increase of $22.2 million or 40% from the same period last year. This increase was the result of operating revenues increasing by $47.2 million, which was partially offset by increases in operating expenses and income taxes of $3.7 million and $19.0 million, respectively, and a decrease in non-operating income of $2.3 million.

23For the six months ended June 30, 2008, net income was $165.5 million, an increase of $67.5 million or 69% compared to the same period last year. Excluding the gain on the investment in the Montréal Exchange and the impairment losses in Optionable, net income for the six months ended June 30, 2008 was $157.2 million, an increase of $44.6 million or 40% from the same period last year. This increase was the result of operating revenues increasing by $91.9 million, which was partially offset by increases in operating expenses and income taxes of $3.3 million and $39.3 million, respectively, and a decrease in non-operating income of $4.7 million.

The increase in operating revenues for both the three- and six-month periods were due to an increase in gross clearing and transaction fees as a result of higher trading and clearing volumes. The increase in operating expenses was due primarily to the legal and advisory services related to the Merger Agreement for the three and

~~increase~~six ofmonths ~~$18.3~~ended ~~million~~June 30, ~~or 48% from the same period last year~~2008. ~~The~~Direct ~~increase~~transaction incosts, ~~net~~which ~~income~~are ~~was~~directly ~~the~~associated ~~result~~with ofhigher ~~operating~~clearing ~~revenues~~and ~~increasing~~transaction ~~by $41.1 million~~volume, ~~which~~ ~~was~~also ~~partially~~contributed ~~offset~~to the byincrease. ~~increases~~The decrease in ~~operating and~~ non-operating ~~expenses~~income ofwas ~~$12.8~~due ~~million~~primarily ~~and~~to ~~$23.6~~a ~~million,~~change ~~respectively.~~in Inthe ~~addition,~~asset ~~income~~type ~~taxes~~that ~~increased~~comprises $1the Company’s investment portfolio.~~1 million.~~

~~Net~~Volumes income for the six months ended June 30, 2007 was $98.0 million, an increase of $26.2 million or 37%, from $71.8 million for the same period last year. Excluding the impairment charge, net income for the six months ended June 30, 2007 was $112.6 million, an increase of $40.8 million or 57% from the same period last year. The increase in net income was the result of operating revenues increasing by $93.6 million, which was partially offset by increases in operating expenses, non-operating expenses and income taxes of $31.2 million, $19.8 million and $16.4 million, respectively.

~~The~~Provided ~~increases~~below inis ~~operating~~a ~~revenues~~summary ~~for~~of ~~both~~total ~~the~~volume ~~three-~~traded and/or cleared ~~six-month~~and ~~periods~~open ~~were~~interest ~~principally~~on ~~due~~the toCompany’s anthree ~~increase~~significant incomponents ~~gross~~of trading and clearing operations: (i) NYMEX Division; (ii) COMEX Division; and ~~transaction~~(iii) NYMEX ~~fees~~ClearPort® as aClearing. ~~result~~NYMEX ofDivision ~~higher~~and ~~trading~~COMEX Division information presented excludes contracts cleared through NYMEX ClearPort® Clearing. Trading and clearing volumes discussed in this management’s discussion and ananalysis ~~increased~~are ~~fee~~expressed ~~schedule~~as ~~applied~~“round-turns,” towhich ~~NYMEX~~are ~~Division~~matched ~~member~~buys ~~rates~~and ~~that~~sells ~~became~~of ~~effective~~the ~~May 1,~~underlying ~~2007~~contracts. ~~The~~Trading ~~increases~~and inclearing ~~operating~~volumes ~~expenses~~include ~~for~~futures ~~both~~settlement ~~the~~and ~~three-~~options ~~and~~exercise ~~six-month~~transactions, ~~periods~~as ~~were~~well ~~due~~as ~~primarily~~cash tosettlement ~~increases~~transactions infor ~~direct~~contracts ~~transaction~~cleared ~~costs~~on NYMEX ClearPort® Clearing, for which transaction fees are ~~directly~~assessed. ~~associated~~Open ~~with~~interest ~~higher~~represents the number of contracts at June 30, 2008 for which clearing members and ~~transaction~~their ~~volume.~~customers ~~The~~are ~~increases~~obligated into ~~non-operating~~the ~~expenses~~Company’s ~~for~~clearinghouse ~~both~~and are required to make or take future delivery of the ~~three-~~physical ~~and~~commodity ~~six-month~~(or ~~periods~~in ~~were~~certain ~~principally~~cases ~~attributable~~be tosettled in cash), or close out the position with ~~pre-tax~~an ~~charge~~offsetting ofsale ~~$26 million~~or ~~related~~purchase prior to ~~the~~contract ~~impairment~~expiration. ofOptions ~~NYMEX’s~~open ~~investment~~interest inrepresents ~~Optionable~~unexpired, unexercised option contracts.

Revenues

Clearing and Transaction Fees

Clearing and transaction fees for the three months ended June 30, 2007 were $137.4 million, an increase of $34.1 million or 33%, from $103.3 million for the same period last year.

Clearing and transaction fees for the six months ended June 30, 2007 were $275.6 million, an increase of $79.8 million or 41%, from $195.8 million from the same period last year.

The increases for both the three- and six-month periods were due primarily to new electronic volume from the Company’s products traded on the CME Globex electronic trading platform, as well as higher NYMEX ClearPort® Clearing volumes. The total volumes of contracts traded and/or cleared for the three and six months ended June 30, 2007 were 87.9 million contracts and 180.3 million contracts, respectively, increases of 23% and 30%, respectively, compared to the same periods last year. For the three and six months ended June 30, 2007, average daily volume was 1.396 million contracts and 1.454 million contracts, respectively, increases of 23% and 31%, respectively, compared to the same periods last year. Additionally, the gross average rate per contract for the three and six months ended June 30, 2007 increased to $1.56 and $1.53, respectively, from $1.45 and $1.41, respectively, in the prior year periods.

Provided below is a summary of total volume traded and/or cleared and open interest on the Company’s three significant components of trading and clearing operations: (i) NYMEX Division; (ii) COMEX Division; and (iii) NYMEX ClearPort® Clearing. NYMEX Division and COMEX Division information presented excludes contracts cleared through NYMEX ClearPort® Clearing. 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. Trading and clearing volumes include futures settlement and options exercise transactions for which transaction fees are assessed. In its Quarterly Report on Form 10-Q for the period ended June 30, 2006, the Company reported its NYMEX Division volume of its four benchmark energy contracts separately. These benchmark energy contracts are: (i) light sweet crude oil; (ii) Henry Hub natural gas; (iii) NY heating oil; and (iv) NY harbor unleaded gasoline. All other crude oil, natural gas, heating oil or gasoline contracts, that were not the benchmark energy contracts, were reported in the NYMEX Division volumes as part of “other.” For this Form 10-Q, the Company has grouped all contracts by their underlying commodity. Accordingly, prior period

volume information has been adjusted to reflect this new presentation for comparative purposes. Open interest represents the number of contracts at June 30, 2007 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.

NYMEX Division

For the three months ended June 30, ~~2007~~2008, the volume of futures and options contracts traded and cleared on the NYMEX Division was 59 75.01 million contracts, an increase of 1516.1 million contracts or 3527%, compared to 4359.90 million contracts for the same period last year. Futures contract volume was 4861.3 million contracts, an increase of 13.60 million contracts or 3927%, compared to 3448.73 million contracts for the same period last year. Options contract volume was 1013.78 million contracts, an increase of 13.51 million contracts or 1728%, compared to 9 10.27 million contracts for the same period last year.

For the six months ended June 30, ~~2007~~2008, the volume of futures and options contracts traded and cleared on the NYMEX Division was ~~118~~144.47 million contracts, an increase of 3226.53 million contracts or 3822%, compared to 85118.94 million contracts for the same period last year. Futures contract volume was 97 118.20 million contracts, an increase of 28 20.98 million contracts or 4222%, compared to 6897.32 million contracts for the same period last year. Options contract volume was 2126.26 million contracts, an increase of 35.64 million contracts or 2126%, compared to 1721.62 million contracts for the same period last year.

The following tables set forth trading and clearing volumes and open interest for the Company’s energy futures and options products:

NYMEX Division Contracts Traded and Cleared

For the Three Months Ended June 30,

2007

2006

2008

2007

Futures

Options

Total

Futures

Options

Total

(in thousands)

~~(in thousands)~~

Crude oil

3040,~~225~~231

710,~~102~~591

3750,~~327~~822

2030,~~541~~225

67,~~061~~102

2637,~~602~~327

Natural gas

710,~~601~~037

32,~~037~~549

1012,~~638~~586

7,~~172~~601

23,~~679~~037

910,~~851~~638

Heating oil

45,~~375~~041

~~127~~266

45,~~502~~307

34,~~433~~375

~~159~~127

34,~~592~~502

Gasoline

5,~~815~~712

~~452~~358

6,~~267~~070

35,~~310~~815

~~279~~452

36,~~589~~267

Other

~~278~~306

2214

~~300~~320

~~218~~278

—22

~~218~~300

Total

4861,~~294~~327

1013,~~740~~778

5975,~~034~~105

3448,~~674~~294

910,~~178~~740

4359,~~852~~034

NYMEX Division Contracts Traded and Cleared

For the Six Months Ended June 30,

2007

2006

2008

2007

Futures

Options

Total

Futures

Options

Total

(in thousands)

~~(in thousands)~~

Crude oil

6275,~~355~~828

1520,~~122~~407

7796,~~477~~235

4062,~~619~~355

1115,~~383~~122

5277,~~002~~477

Natural gas

1520,~~364~~048

5,~~134~~087

2025,~~498~~135

1315,~~339~~364

5,~~334~~134

1820,~~673~~498

Heating oil

810,~~952~~092

~~311~~499

910,~~263~~591

68,~~928~~952

~~362~~311

79,~~290~~263

Gasoline

911,~~996~~307

~~643~~617

1011,~~639~~924

79,~~005~~996

~~530~~643

710,~~535~~639

Other

~~492~~754

2239

~~514~~793

~~421~~492

—22

~~421~~514

Total

97118,~~159~~029

2126,~~232~~649

~~118~~144,~~391~~678

6897,~~312~~159

1721,~~609~~232

85118,~~921~~391

NYMEX Division Contracts Open Interests

At June 30,

2007

2006

2008

2007

Futures

Options

Total

Futures

Options

Total

(in thousands)

Crude oil

1,~~570~~510

35,~~553~~144

56,~~123~~654

~~723~~1,570

23,~~488~~553

35,~~211~~123

Natural gas

~~807~~978

~~1,315~~998

21,~~122~~976

~~560~~807

1,~~570~~315

2,~~130~~122

Heating oil

~~237~~226

49104

~~286~~330

~~157~~237

5549

~~212~~286

Gasoline

~~183~~254

97117

~~280~~371

~~204~~183

—97

~~204~~280

Other

3347

—4

3351

~~381~~33

6—

~~387~~33

Total

23,~~830~~015

56,~~014~~367

79,~~844~~382

2,~~025~~830

45,~~119~~014

67,~~144~~844

The Company believes the overall growth in total futures and options energy contracts traded and cleared on the NYMEX Division for the three- and six-month periods ended June 30, ~~2007~~2008 were due primarily to the following factors:

• Continued strong global demand for crude oil, natural gas, heating oil and gasoline;

• ~~Unrest~~Global ineconomic ~~Nigeria~~uncertainty and ~~other~~tightness ~~oil~~in ~~producing~~international ~~countries~~supply inand ~~the~~demand, ~~Middle~~combined ~~East~~with ~~and~~a ~~Africa~~weak ~~heightened~~U.S. ~~concerns~~dollar ~~over~~impacted ~~the~~both ~~reliability~~oil ofprices ~~oil~~as ~~exports~~well ~~from~~as ~~such~~volatility ~~countries~~of prices and volumes;

• AUnrest ~~steady~~in ~~increase~~Nigeria and other oil producing countries in ~~the~~Africa, ~~price~~South ofAmerica ~~gasoline~~and ~~due~~the toMiddle ~~various~~East ~~disruptions~~heightened atconcerns ~~refineries,~~over ~~which~~the ~~resulted~~reliability inof ~~lower~~oil ~~production~~exports infrom ~~the~~such ~~U.S.~~countries; ~~and~~

•

A steady increase in the price of gasoline largely due to increases in the price of crude oil;

•

A steady increase in demand for natural gas due to moderately colder winter temperatures as compared to last year; and increases in natural gas prices overseas which, combined with the weaker dollar, resulted in reducing imports of liquefied natural gas to the U.S.; and

•

Increased acceptance and accessibility of electronic trading.

All of these factors impact the volatility of the commodities which, in turn, increases trading activity.

COMEX Division

For the three months ended June 30, ~~2007~~2008, the volume of futures and options contracts traded and cleared on the COMEX Division was 914.51 million contracts, aan ~~decrease~~increase of 04.36 million contracts or 349%, compared to 9.85 million contracts for the same period last year. Futures contract volume was 812.35 million contracts, an ~~increase of 0.5 million~~ contracts or 6%, compared to 7.8 million contracts for the same period last year. Options contract volume was 1.2 million contracts, a decrease of 0.8 million contracts or 41%, compared to 2.0 million contracts for the same period last year.

~~For~~35 the six months ended June 30, 2007, the volume of futures and options contracts traded and cleared on the COMEX Division was 18.9 million contracts, a decrease of 0.7 million contracts or 4%, compared to 19.6 million contracts for the same period last year. Futures contract volume was 16.4 million contracts, an increase of 0.4 million contracts or 3%, compared to 16.0 million contracts for the same period last year. Options contract volume was 2.5 million contracts, a decrease of 1.1 million contracts or 32%, compared to 3.6 million contracts for the same period last year.

increase of 4.2 million contracts or 50%, compared to 8.3 million contracts for the same period last year. Options contract volume was 1.6 million contracts, an increase of 0.4 million contracts or 42%, compared to 1.2 million contracts for the same period last year.

For the six months ended June 30, 2008, the volume of futures and options contracts traded and cleared on the COMEX Division was 30.5 million contracts, an increase of 11.6 million contracts or 62%, compared to 18.9 million contracts for the same period last year. Futures contract volume was 27.0 million contracts, an increase of 10.6 million contracts or 65%, compared to 16.4 million contracts for the same period last year. Options contract volume was 3.5 million contracts, an increase of 1.0 million contracts or 41%, compared to 2.5 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

For the Three Months Ended June 30,

2007

2006

2008

2007

Futures

Options

Total

Futures

Options

Total

(in thousands)

Gold

58,~~448~~827

~~817~~1,110

69,~~265~~937

45,~~825~~448

~~1,318~~817

6,~~143~~265

Silver

12,~~771~~374

~~323~~521

2,~~094~~895

1,~~939~~771

~~607~~323

2,~~546~~094

High grade copper

1,~~086~~291

125

1,~~098~~296

1,~~036~~086

3912

1,~~075~~098

Aluminum

—

3—

—

3—

Total

812,~~305~~492

1,~~152~~636

914,~~457~~128

78,~~803~~305

1,~~964~~152

9,~~767~~457

COMEX Division Contracts Traded and Cleared

For the Six Months Ended June 30,

2007

2006

2008

2007

Futures

Options

Total

Futures

Options

Total

(in thousands)

Gold

1119,~~207~~575

12,~~839~~397

1321,~~046~~972

1011,~~290~~207

21,~~372~~839

1213,~~662~~046

Silver

35,~~238~~008

~~612~~1,073

36,~~850~~081

3,~~685~~238

~~1,203~~612

43,~~888~~850

High grade copper

12,~~954~~407

2115

12,~~975~~422

1,~~979~~954

7321

21,~~052~~975

Aluminum

1—

—

1—

—

Total

1626,~~400~~990

23,~~472~~485

1830,~~872~~475

1516,~~963~~400

32,~~648~~472

1918,~~611~~872

COMEX Division Contracts Open Interests

At June 30,

2007

2006

2008

2007

Futures

Options

Total

Futures

Options

Total

(in thousands)

Gold

~~377~~429

~~337~~448

~~714~~877

~~246~~377

~~331~~337

~~577~~714

Silver

~~117~~126

~~102~~147

~~219~~273

~~150~~117

~~105~~102

~~255~~219

High grade copper

79109

81111

8179

8681

Aluminum

—

1—

—

1—

Total

~~573~~664

~~441~~597

1,~~014~~261

~~478~~573

441

~~919~~1,014

~~The~~36 Company believes the varying increases and decreases in futures and options metals contracts traded and cleared on the COMEX Division for the three- and six-month periods ended June 30, 2007 were due primarily to the following factors:

• Decreased inflation;

• A weakened U.S. currency compared to other international currencies;

• A decrease in the volatility of all metals, particularly during the second quarter;

• An increase in copper inventories;

•The ACompany ~~decrease~~believes the increases in ~~gold~~futures ~~available~~and ~~for~~options ~~commercial~~metals contracts traded and ~~financial~~cleared ~~use~~on ~~due~~the COMEX toDivision anfor ~~increase~~the inthree-and ~~gold~~six-month ~~storage~~periods asended ~~collateral~~June 30, ~~for~~2008 ~~exchange~~were ~~traded~~due ~~gold~~primarily ~~funds;~~to ~~and~~the following factors:

• AnIncreased ~~increase in price levels for all metals.~~inflation;

•

A weakened U.S. currency compared to other international currencies;

•

An increase in the volatility of all metals;

•

A decrease in copper inventories;

•

An increase in precious metals inventories; and

•

An increase in price levels for all metals, particularly gold.

All of these factors impact the volatility of the commodities which, in turn, increases trading activity.

NYMEX ClearPort^® Clearing

For the three months ended June 30, ~~2007~~2008, the volume of futures and options contracts cleared on NYMEX ClearPort® Clearing was 1926.47 million contracts, an increase of 1.7.3 million contracts or 1038%, compared to 1719.74 million contracts for the same period last year. Futures contract volume was 1117.87 million contracts, aan ~~decrease~~increase of 15.09 million contracts or 849%, compared to 1211.8 million contracts for the same period last year. Options contract volume was 79.60 million contracts, an increase of 21.74 million contracts or 5619%, compared to 47.96 million contracts for the same period last year.

For the six months ended June 30, ~~2007~~2008, the volume of futures and options contracts cleared on NYMEX ClearPort® Clearing was 4354.08 million contracts, an increase of 1011.18 million contracts or 3128%, compared to 3243.90 million contracts for the same period last year. Futures contract volume was 2635.07 million contracts, an increase of 19.57 million contracts or 638%, compared to 2426.50 million contracts for the same period last year. Options contract volume was 1719.01 million contracts, an increase of 82.71 million contracts or ~~104~~12%, compared to 817.30 million contracts for the same period last year.

The following tables set forth clearing volumes for products cleared through NYMEX ClearPort^® Clearing:

NYMEX ClearPort^® Clearing Contracts

For the Three Months Ended June 30,

2007

2006

2008

2007

Futures

Options

Total

Futures

Options

Total

(in thousands)

Natural gas

1015,~~808~~498

6,~~606~~306

1721,~~414~~804

1210,~~338~~808

46,~~373~~606

1617,~~711~~414

Electricity

~~152~~145

~~100~~117

~~252~~262

~~284~~152

60100

~~344~~252

Petroleum

~~459~~1,928

~~757~~2,605

14,~~216~~533

~~202~~459

~~443~~757

~~645~~1,216

Coal

2945

—

2945

1229

—

1229

Other

~~392~~67

~~141~~15

~~533~~82

1392

—141

1533

Total

1117,~~840~~683

79,~~604~~043

1926,~~444~~726

1211,~~837~~840

47,~~876~~604

1719,~~713~~444

NYMEX ClearPort^® Clearing Contracts

For the Six Months Ended June 30,

2007

2006

2008

2007

Futures

Options

Total

Futures

Options

Total

(in thousands)

Natural gas

2431,~~249~~685

1514,~~195~~012

3945,~~444~~697

2324,~~535~~249

715,~~676~~195

3139,~~211~~444

Electricity

~~314~~164

~~195~~213

~~509~~377

~~648~~314

~~107~~195

~~755~~509

Petroleum

~~955~~3,687

14,~~492~~891

28,~~447~~578

~~333~~955

~~562~~1,492

~~895~~2,447

Coal

5590

—

5590

2355

—

2355

Other

~~393~~77

~~141~~22

~~534~~99

2393

—141

2534

Total

2535,~~966~~703

1719,~~023~~138

4254,~~989~~841

2425,~~541~~966

817,~~345~~023

3242,~~886~~989

NYMEX ClearPort^® Clearing Open Interests

At June 30,

2007

2006

2008

2007

Futures

Options

Total

Futures

Options

Total

(in thousands)

Natural gas

67,~~564~~598

56,~~610~~145

1213,~~174~~743

56,~~217~~564

35,~~475~~610

812,~~692~~174

Electricity

~~232~~190

~~138~~211

~~370~~401

~~263~~232

55138

~~318~~370

Petroleum

~~357~~499

~~857~~1,971

12,~~214~~470

40357

~~367~~857

~~407~~1,214

Coal

1320

—

1320

513

—

513

Other

214

—

214

—

Total

78,~~168~~321

68,~~605~~327

1316,~~773~~648

57,~~526~~168

36,~~897~~605

913,~~423~~773

The Company believes that the continued ~~overall~~ growth of NYMEX ClearPort® Clearing 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~~Particularly, natural gas contracts comprise a significant ~~growth~~majority inof the total number of ~~different~~NYMEX ~~natural~~ClearPort® ~~gas~~Clearing products offered,. asAs ~~well~~such, asthe Company ~~additional~~believes ~~products~~that ~~for~~its ~~petroleum~~total on NYMEX ClearPort® Clearing ~~contributed~~volume towill be directly affected by the ~~increase~~volatility inand ~~volume~~direction of the natural gas markets.

Operating Revenues

The components of operating revenues, as well as dollar and percentage changes, are as follows:


	Three Months Ended June 30,				Change				Six Months Ended June 30,				Change
(Dollars in thousands)	2008		2007		2008 v 2007				2008		2007		2008 v 2007
Clearing and transaction fees	$	180,400	$	137,390	$	43,010	31	%	$	359,451	$	275,567	$	83,884	30	%
Market data fees		26,913		23,363		3,550	15	%		53,126		46,500		6,626	14	%
Other		3,495		2,844		651	23	%		7,106		5,756		1,350	23	%

	$	210,808	$	163,597	$	47,211	29	%	$	419,683	$	327,823	$	91,860	28	%

Clearing and Transaction Fees

The increase for the three and six months ended June 30, 2008 was due principally to the continued strong growth in products traded on CME Globex and NYMEX ClearPort^® Clearing electronic platforms. For the three months ended June 30, 2008, the total volume of contracts traded and/or cleared was 116.0 million contracts, an

increase of 32% compared to 87.9 million contracts in the same period last year. Average daily volume was 1.812 million contracts, a 30% increase compared to 1.396 million contracts in the prior year period. The increase for the six months ended June 30, 2008 was attributed to an increase in the percentage of trades executed through CME Globex and NYMEX ClearPort^® Clearing electronic platform. The total volume of contracts traded and/or cleared was 230.0 million contracts, an increase of 28% compared to 180.3 million contracts for the same period last year. Average daily volume was 1.841 million contracts for the six months ended June 30, 2008, a 27% increase compared to 1.454 million contracts for the first half of 2007. Additionally, the gross average rate per contract increased to $1.56 from $1.53 for the six months ended June 30, 2008 and 2007, respectively. This increase is driven primarily by a fee increase that went into effect on January 1, 2008 as well as increased volume on NYMEX ClearPort^® Clearing which charges a higher rate per contract. While volume has a significant impact on clearing and transaction fees revenue, the percentage of trades executed by member and non-member customers also influences the Company’s rate per contract, as non-member customers are charged higher fees than member customers.

Market Data Fees

~~For~~The Company provides proprietary real-time market data, news and advanced analytics to desktops and mobile devices for which the Company charges fees. Market data provides information about bids, offers, trades and trade size relating to futures and options contracts to the Company’s subscribers. The increase in market data fees for the three and six months ended June 30, ~~2007,~~2008 ~~market~~was ~~data~~attributable ~~fees~~to ~~were~~a ~~$23.4~~new ~~million~~price structure that went into effect on February 1, 2008, as well as an increase ofin ~~$7.5~~desktops ~~million~~and ormobile ~~47%,~~devices ~~from~~in ~~$15~~2008.9 ~~million~~As ~~for~~of June 30, 2008, the ~~same~~Company’s market data ~~period~~was ~~last~~displayed ~~year~~on approximately 149,000 devices.

~~For~~Other ~~the six months ended June 30, 2007, market data fees were $46.5 million, an increase of $15.2 million or 49%, from $31.3 million for the same period last year.~~

The ~~increases~~increase for ~~both~~ the three- and six~~-month~~ ~~periods~~months ~~were~~ended June 30, 2008 was due primarily to ~~the implementation~~facilitation ofdesk afees ~~new~~that ~~price~~were ~~structure~~implemented ~~that~~in ~~went~~the ~~into~~fourth ~~effect~~quarter onof ~~January 1,~~ 2007. ~~Additionally,~~as anwell ~~increase~~as inhigher floor fines and rental income for the ~~number~~respective ofperiods. ~~market~~The ~~data~~facilitation ~~devices~~desk ~~being~~fees ~~utilized,~~are ~~for~~charged ~~which~~when the Company’s ~~charges~~customer ~~fees,~~service ~~also~~department ~~contributed~~is needed to ~~the~~facilitate ~~increase~~customer ~~in fees~~trades.

Other, net

For the three months ended June 30, 2007, other revenues were $2.8 million, a decrease of $0.5 million or 13%, from $3.3 million for the same period last year.

For the six months ended June 30, 2007, other revenues were $5.8 million, a decrease of $1.3 million or 19%, from $7.1 million for the same period last year.

The decreases for both the three- and six-month periods were due primarily to the elimination in 2007 of fees the Company charged for the right to trade certain products on its trading floor. In addition, a decline in floor fines contributed to the decrease in both periods.

Operating Expenses

The components of operating expenses, as well as dollar and percentage changes, are as follows:


	Three Months Ended June 30,				Change					Six Months Ended June 30,				Change
(Dollars in thousands)	2008		2007		2008 v 2007					2008		2007		2008 v 2007
Direct transaction costs	$	26,886	$	24,318	$	2,568		11	%	$	54,969	$	48,420	$	6,549		14	%
Salaries and employee benefits		19,887		20,482		(595	)	-3	%		39,863		41,520		(1,657	)	-4	%
Occupancy and equipment		5,893		5,604		289		5	%		11,653		11,547		106		1	%
Depreciation and amortization		3,571		3,614		(43	)	-1	%		7,029		7,145		(116	)	-2	%
General and administrative		4,583		4,945		(362	)	-7	%		9,204		9,642		(438	)	-5	%
Professional services		5,079		3,922		1,157		30	%		8,205		8,108		97		1	%
Telecommunications		1,428		1,417		11		1	%		2,678		2,840		(162	)	-6	%
Marketing		2,013		1,626		387		24	%		3,363		3,559		(196	)	-6	%
Other expenses		2,124		182		1,942		1067	%		10,487		1,843		8,644		469	%

	$	71,464	$	66,110	$	5,354		8	%	$	147,451	$	134,624	$	12,827		10	%

Direct Transaction Costs

~~For~~The increase in direct transaction costs for the three and six months ended June 30, ~~2007,~~2008 ~~direct~~was ~~transaction~~primarily ~~costs~~attributable ~~were~~to ~~$24.3~~record ~~million,~~volume anon ~~increase~~CME ~~of $16~~Globex.~~2 million~~ For orthe ~~202%,~~three ~~from~~and ~~$8.1~~six ~~million~~months ~~for~~ended ~~the~~June 30, ~~same~~2008, ~~period~~NYMEX ~~last year.~~

~~For~~39 ~~the six months ended June 30, 2007, direct transaction costs were $48.4 million, an increase of $33.5 million or 224%, from $14.9 million for the same period last year.~~

~~The~~ Division ~~increases~~electronic ~~for~~trading ~~both~~volume ~~the~~on ~~three-~~CME Globex averaged approximately 865,000 contracts per day and ~~six-month~~840,000 contracts per day, respectively, an increase of ~~periods~~42% ~~were~~and ~~due~~39% ~~primarily~~compared to the same respective periods last year. COMEX Division electronic trading volume on ~~the~~ CME Globex ~~electronic~~averaged ~~trading~~approximately ~~platform~~172,000 ~~which~~contracts ~~began~~per inday and 188,000 contracts per day for the three and six months ended June 30, 2008, ~~2006~~respectively, ~~(see~~an ~~Note~~increase 10of 70% and 96% compared to the ~~unaudited~~same ~~condensed~~respective ~~consolidated~~periods ~~financial~~last ~~statements)~~year. ~~Additionally,~~Increased ~~increased~~ volume on NYMEX ClearPort® Clearing also contributed to the increase in direct transaction costs ~~for both periods~~. ~~Transaction~~Direct transaction costs for both of these platforms are volume based and, therefore, the increased volumes equated to higher costs.

Salaries and Employee Benefits

~~For~~Salaries and employee benefits are comprised of employee wages, bonuses, non-cash share-based compensation, benefits and employer taxes. The decrease in salaries and employee benefits for the three and six months ended June 30, 2008 was due primarily to a decrease in the average number of employees compared to the same periods last year. This decline in employees, as a result of workforce reduction implemented in the fourth quarter of 2007, ~~salaries~~resulted in lower total wages and ~~employee~~related ~~benefits~~benefit ~~were~~costs ~~$20~~for the respective periods.5 ~~million,~~Partially anoffsetting this decrease was an increase in share-based compensation expense, as a result of additional equity awards granted in 2008 of $1.34 million orand ~~7%, from~~ $~~19.~~2.8 million for the ~~same~~three ~~period~~and ~~last~~six ~~year~~months ended June 30, 2008, respectively.

For the six months ended June 30, 2007, salaries and employee benefits were $41.5 million, an increase of $4.0 million or 11%, from $37.5 million for the same period last year.

The increases for both the three- and six-month periods were principally attributable to the impact of the Company’s non-cash, share-based compensation awards granted since the Company’s initial public offering in November 2006. Additionally, the Company incurred approximately $0.8 million and $1.4 million in severance related costs for the three- and six-month periods, respectively, as part of a workforce reduction that began during the last half of 2006. Partially offsetting these increases were decreases in employee costs associated with the reduced employee headcount for both the three and six months ended June 30, 2007.

Occupancy and Equipment

~~For~~The increase in occupancy and equipment expenses for the three and six months ended June 30, ~~2007,~~2008 ~~occupancy~~was ~~and~~due ~~equipment~~primarily to higher utility expenses ~~were~~of $5the Company’s trading facilities and corporate headquarters.6 ~~million,~~The aCompany ~~decrease~~has experienced record-high prices for energy related costs during the second quarter and first half of ~~$0.2~~2008 ~~million~~and orexpects ~~3%,~~these ~~from~~costs ~~$5.8~~to ~~million~~continue ~~for~~ to increase in the ~~same~~third ~~period~~quarter ~~last~~of ~~year~~2008.

For the six months ended June 30, 2007, occupancy and equipment expenses were $11.5 million, a decrease of $2.5 million or 18%, from $14.0 million for the same period last year.

The decreases for both the three- and six-month periods were due primarily to lease termination charges incurred in the first quarter of 2006 in connection with office space the Company formerly leased in New York City. Additionally, the prior year periods included rent expense for the Company’s London trading floor that ceased operations during 2006. As a result, no rent expense was charged for the two aforementioned properties during the current three- and six-month periods. Partially offsetting these decreases were increased repair and maintenance charges on the Company’s headquarters facility during the current year periods.

Depreciation and Amortization

~~For~~Depreciation and amortization expenses for the three and six months ended June 30, ~~2007,~~2008 ~~depreciation~~were ~~and~~essentially ~~amortization~~the ~~expense~~same ~~was~~compared ~~$3.6~~to ~~million, a decrease of $1.3 million or 26%, from $4.9 million for~~ the same ~~period~~respective periods last year.

For the six months ended June 30, 2007, depreciation and amortization expense was $7.1 million, a decrease of $1.1 million or 13%, from $8.2 million for the same period last year.

The decreases for both the three- and six-month periods were due primarily to lower depreciation charges on certain leasehold improvements and equipment. The prior year periods included accelerated depreciation based on a change in estimate to the useful life of such assets as a result of the closure of the Company’s London floor trading operations in 2006. Partially offsetting these decreases were higher computer equipment and software depreciation in the current year periods related to assets necessary for the Company to support the increased volume in electronic trading.

General and Administrative

~~For~~The ~~the~~decrease ~~three~~in ~~months ended June 30, 2007,~~ general and administrative expenses ~~were~~for ~~$4.9~~the ~~million~~three and six months ended June 30, a2008 ~~decrease~~was ofprincipally ~~$0.4~~attributable ~~million~~to orthe ~~7%,~~cost reduction ~~from~~initiatives ~~$5.3~~that ~~million~~began ~~for~~in the ~~same~~fourth ~~period~~quarter ~~last~~of ~~year~~2007.

For the six months ended June 30, 2007, general and administrative expenses were $9.6 million, a decrease of $1.0 million or 9%, from $10.6 million for the same period last year.

The decreases for both the three- and six-month periods were due primarily to lower board of director fees, as the composition of the board was reduced from twenty-five directors to fifteen directors on May 1, 2006. In addition, general office expenses have declined as a result of cost control measures that were implemented by management last year.

Professional Services

~~For~~The increase in professional services expenses for the three and six months ended June 30, ~~2007,~~2008 ~~professional~~was ~~services~~principally ~~expenses~~attributable ~~were~~to ~~$3.9~~higher ~~million,~~legal aand consulting ~~decrease~~fees ofto ~~$0.3~~support ~~million~~the orCompany’s ~~7%,~~strategic ~~from~~business ~~$4.2~~initiatives, ~~million~~such ~~for~~as the ~~same~~launch ~~period~~in ~~last~~the ~~year.~~current ~~The~~quarter ~~decrease~~of ~~was~~environmental ~~principally~~contracts ~~attributable~~for tothe ~~higher~~Green ~~legal~~Exchange ~~fees~~venture, ~~incurred~~as ~~in the~~well ~~prior~~as ~~year~~the ~~period~~Company’s ~~related~~alliance towith ~~various business matters~~LCH.Clearnet.

For the six months ended June 30, 2007, professional services expenses were $8.1 million, an increase of $0.6 million or 8%, from $7.5 million for the same period last year. The increase for the six-month period is primarily due to higher consulting and legal fees incurred to support the Company’s strategic business initiatives.

Telecommunications

~~For~~The telecommunications expenses for the three and six months ended June 30, ~~2007,~~2008 ~~telecommunications expenses~~ were ~~$1.4~~essentially ~~million,~~the asame ~~decrease~~compared ofto ~~$0.4 million or 22%, from $1.8 million for~~ the same ~~period~~respective periods last year.

For the six months ended June 30, 2007, telecommunications expenses were $2.8 million, a decrease of $0.7 million or 19%, from $3.5 million for the same period last year.

The decreases for both the three- and six-month periods were due primarily to lower data communication related expenses, which was mainly the result of the closing of the London trading floor in the prior year.

Marketing

~~For~~Marketing ~~the~~expenses ~~three~~consist ~~months~~of ~~ended June 30~~conferences, ~~2007,~~special ~~marketing expenses were $1.6 million~~events, ~~a decrease of $0.2 million or 11%~~advertising, ~~from~~and ~~$1.8~~promotional ~~million~~expenses ~~for the same~~related ~~period~~to ~~last~~promoting ~~year.~~the ~~The~~trading ~~decrease~~of ~~was~~Company ~~principally~~products ~~attributable to higher advertising~~ and ~~other~~attracting ~~marketing~~new ~~expenses~~customers. ~~incurred~~For in the ~~prior~~three ~~year~~months ~~period~~ended ~~related~~June 30, ~~to the Company’s expansion initiatives.~~

~~For~~40 the six months ended June 30, 2007, marketing expenses were $3.6 million, an increase of $0.9 million or 30%, from $2.7 million for the same period last year. The increase for the six-month period was due primarily to higher advertising and special event expenses, the purpose of which is to promote the Company and attract new business.

Other Expenses

For the three months ended June 30, 2007, other expenses were $0.2 million, a decrease of $2.0 million or 92%, from $2.2 million for the same period last year.

For the six months ended June 30, 2007, other expenses were $1.8 million, a decrease of $2.6 million or 58%, from $4.4 million for the same period last year.

~~The~~ 2008, ~~decreases for both~~ the ~~three-~~increase ~~and~~in ~~six-month~~marketing ~~periods~~costs ~~were~~was ~~due~~attributable to ~~lower~~higher ~~member~~costs ~~benefit~~for ~~costs~~conferences, asspecial ~~the Company~~events ~~discontinued~~and ~~its~~other ~~members’~~marketing ~~benefit~~related ~~subsidy~~expenses. ~~program~~For ~~effective~~the ~~April~~six months ended June 130, ~~2007. Additionally~~2008, the ~~Company~~decrease ~~incurred~~was ~~lower~~principally ~~losses~~attributable onto ~~asset~~higher ~~disposals~~advertising and ~~lower~~other ~~charitable~~marketing ~~contributions~~expenses ~~during~~incurred in the ~~current~~prior year ~~periods~~period related to the Company’s expansion initiatives.

Other Expenses

The Company entered into a Merger Agreement with CME Group and, as a result, incurred merger-related expenses of $1.7 million and $9.6 million for the three- and six-month periods ended June 30, 2008, respectively. These expenses were primarily investment banking, legal and accounting fees. Excluding these merger-related expenses, other expenses increased by $0.3 million for the current quarter and decreased by $0.9 million for the six months ended June 30, 2008. For the second quarter of 2008, the increase is principally attributable to higher charitable contributions as compared to the same period last year. The decrease for the six months ended June 30, 2008 was a direct result of lower member benefit costs, as the Company discontinued its members’ benefit subsidy program effective April 1, 2007.

Non-Operating Income and Expenses

~~Investment~~The ~~Income~~components of non-operating income and expenses, ~~net~~ as well as dollar and percentage changes, are as follows:

For the three months ended June 30, 2007, investment income was $6.1 million, an increase of $4.7 million or 353%, from $1.4 million for the same period last year.


	Three Months Ended June 30,						Change					Six Months Ended June 30,						Change
(Dollars in thousands)	2008			2007			2008 v 2007					2008			2007			2008 v 2007
Investment income, net	$	3,222		$	6,133		$	(2,911	)	-47	%	$	6,836		$	12,840		$	(6,004	)	-47	%
Interest income from securities lending		4,829			31,087			(26,258	)	-84	%		12,597			60,493			(47,896	)	-79	%
Interest expense/fees from securities lending		(4,233	)		(30,136	)		25,903		86	%		(10,281	)		(59,025	)		48,744		83	%
Interest expense		(1,587	)		(1,612	)		25		2	%		(3,173	)		(3,224	)		51		2	%
Gain (losses) losses from unconsolidated investments		28,616			(28,944	)		57,560		199	%		26,406			(30,587	)		56,993		186	%

	$	30,847		$	(23,472	)	$	54,319		231	%	$	32,385		$	(19,503	)	$	51,888		266	%

~~For~~Investment ~~the six months ended June 30~~Income, ~~2007,~~Net ~~investment income was $12.8 million, an increase of $10.0 million or 356%, from $2.8 million for the same period last year.~~

The ~~Company~~decrease ~~received~~in investment income, net ~~proceeds~~for the three and six months ended June 30, 2008 was due to a repositioning of ~~approximately~~the ~~$344~~Company’s ~~million from~~investment ~~its~~portfolio ~~initial~~in ~~public~~response ~~offering~~to the credit crisis that became highly evident in ~~November~~the ~~2006~~second half of 2007. This change to the Company’s investments, while intended to preserve capital and provide liquidity, also resulted in a ~~higher~~lower ~~amount~~rate of ~~funds~~return. The Company invests excess cash principally in U.S. government securities, as opposed to ~~invest~~the ~~which~~prior year periods where the funds were invested primarily in taxable and non-taxable securities yielding higher returns. Additionally, the overall decline in ~~turn~~market conditions and federal reserve rate cuts, ~~yielded~~among ~~higher~~other things, contributed to the decrease in investment income induring the ~~current~~second ~~year~~quarter ~~periods~~and first half of 2008.

Interest Income and Interest Expense/Fees from Securities Lending

~~Interest~~In ~~income~~August ~~from securities~~2007, ~~lending~~the ~~for~~Company ~~the~~limited ~~three~~its ~~and~~exposure ~~six~~to ~~months~~the ~~ended~~high ~~June 30,~~volatility ~~2007~~in ~~were~~the ~~$31.1~~credit ~~million~~markets and ~~$60.5~~ceased ~~million,~~lending out ~~respectively,~~additional ~~compared to $33~~securities.3 ~~million~~This ~~and~~resulted ~~$60.5~~in ~~million~~a ~~for~~decline ~~the~~in ~~same~~interest ~~respective~~income ~~periods~~and ~~last~~interest ~~year. Interest~~ expense~~/fees~~ from securities lending for the three and six months ended June 30, ~~2007~~2008 ~~were $30.1 million and $59.0 million, respectively,~~ compared to ~~$32.4 million and $58.9 million for~~ the same ~~respective~~ periods last year. ~~For~~Despite the ~~second quarter 2007, the~~ decrease in ~~both~~ ~~interest income and interest expense/fees is attributable to a lower average daily balance of~~ invested funds, ~~available to invest as compared to same period in 2006. The average daily balance of funds~~ the Company ~~invested during the three months ended June 30, 2007~~ was ~~approximately~~able ~~$2.3 billion compared~~ to ~~approximately~~earn ~~$2.7 billion during the same period last year. These decreases were offset, in part, by~~ a higher ~~average~~net ~~interest~~yield ~~rate~~on ~~during~~its ~~the~~securities ~~first~~lending ~~six~~portfolio ~~months~~due ~~of 2007 when compared~~ to ~~2006.~~ ~~Despite~~ a ~~lower~~higher average ~~daily~~investment ~~balance~~rate ~~for~~earned ~~the~~during ~~six months ended June 30, 2007, interest income and interest expense/fees were essentially flat when compared to~~ the ~~same~~current ~~period last year due to the higher average interest rate in 2007~~quarter. The ratio of interest expense/fees to interest income will vary, as the Company is able to negotiate better rates on its interest expense depending on whether the securities that it lends out are in greater demand.

~~Interest~~41 ~~Expense~~

For the three months ended June 30, 2007, interest expense was $1.6 million, a decrease of 3% compared to the same period last year of $1.7 million.

For the six months ended June 30, 2007, interest expense was $3.2 million, a decrease of 3% compared to the same period last year of $3.3 million.

The decreases for both the three- and six-month periods were due primarily to a lower principal balance on the Company’s long-term debt as a result of annual principal payments made each October.

Losses from Unconsolidated Investments

Losses from unconsolidated investments for the three and six months ended June 30, 2007 were $28.9 million and $30.6 million, respectively, compared to $0.4 million and $0.8 million, respectively, for the same periods last year. The significant increase in losses is primarily the result of a pre-tax impairment charge of $26.0 million related to the Company’s investment in Optionable (see Note 6 to the unaudited condensed

~~consolidated~~Interest ~~financial~~Expense statements). Additionally, losses from the Company’s investment in the Dubai Mercantile Exchange Limited (“DME”), which totaled $3.0 million and $4.6 million for the current three- and six-month periods, respectively, contributed to the increased losses. The DME commenced trading on June 1, 2007. All costs incurred prior to June 1, 2007 were for the establishment of the DME.

Interest expense for the three and six months ended June 30, 2008 was essentially the same compared to the same periods last year. Interest expense is comprised predominantly of interest the Company incurs on its long-term debt.

Gain (Losses) from Unconsolidated Investments

The gain from unconsolidated investments for the three and six months ended June 30, 2008 was principally attributable to the Company’s investment in the Montréal Exchange. On May 1, 2008, Montréal Exchange Inc. and TSX Group Inc. completed their business combination to create a new integrated exchange group named TMX Group Inc. As a result of the merger, the Company recorded a pre-tax gain of $33.8 million for the three and six months ended June 30, 2008. Partially offsetting this gain is an impairment loss of $3.2 million related to the Company’s remaining investment in Optionable. In the second quarter of 2007, the Company recognized an initial impairment charge of $26.0 million related to Optionable. Excluding the investment gain in Montréal Exchange and the impairment losses in Optionable, losses from unconsolidated investments were $2.0 million and $4.2 million for the three and six months ended June 30, 2008, respectively, principally related to the Company’s investment in the Dubai Mercantile Exchange Limited (“DME”). Excluding the impairment charge of $26.0 million related to Optionable, losses from unconsolidated investments for the three and six months ended June 30, 2007 of $2.9 million and $4.6 million, respectively, were principally attributable to the Company’s investment in DME.

Provision for Income Taxes

The Company’s effective tax rate ~~was 43.6%~~ for the three and six months ended June 30, ~~2007~~2008 was 44.58% and 45.67%, respectively, compared to 4543.26% for the same ~~period~~periods last year. The ~~decline~~effective intax ~~2007~~rate ~~was~~for ~~primarily~~ the ~~result~~three ofand ansix ~~overall~~months ~~lower~~ended ~~state~~June 30, ~~and~~2008 was ~~local~~negatively ~~effective~~impacted ~~tax~~by ~~rate~~non-deductible ~~due~~compensation tounder ~~the~~section ~~increase~~162(m) of ~~electronic~~the ~~trading~~Internal asRevenue aCode ~~percentage~~and ofnon-deductible ~~total~~business ~~clearing~~combination ~~and~~expenses ~~transaction~~related ~~fees~~to the Merger Agreement.

Financial Condition and Cash Flows

Liquidity and Capital Resources

At June 30, ~~2007~~2008 and December 31, ~~2006~~2007, the Company had $~~472~~635.96 million and $~~504~~464.24 million, respectively, in cash and cash equivalents and marketable securities. Working capital at June 30, ~~2007~~2008 and December 31, ~~2006~~2007 was $~~501~~651.93 million and $~~485~~474.80 million, respectively. The Company has a long-term AA+ and a short-term A-1+ counter-party credit rating from Standard & Poor’s Rating Services that was initially obtained in April 2003 and sustained through a ratings review in September 2006.

Sources and Uses of Cash

The following table is a summary of significant cash flow categories for the six months ended June 30, ~~2007~~2008 and ~~2006~~2007:

	June 30,
	2007			2006
	2008			2007
	(in thousands)
Net cash flow provided by (used in):
Operating activities	$	~~104~~(13,~~598~~713	)	$	69134,~~840~~439
Investing activities		~~119~~307,~~321~~862			~~(353~~89,~~156~~480	)
Financing activities		(~~225~~295,~~438~~034	)		~~262~~(225,~~786~~438	)
Net decrease in cash and cash equivalents	$	(~~1,519~~885	)	$	(201,~~530~~519	)

Net cash ~~provided~~used byin operating activities for the six months ended June 30, ~~2007~~2008 was $~~104~~13.6 7 million, ana decrease ~~increase~~ of $34148.82 million compared to the same period last year. ~~This~~The ~~increase~~decrease was principally attributable to ~~higher~~period ~~net~~over ~~income~~period change of ~~$26.2 million and~~ the ~~noncash,~~following ~~pre-tax~~compared ~~impairment charge of $26.0 million, $14.6 million on an after-tax basis, related~~ to the ~~Company’s~~six ~~investment~~months inended ~~Optionable.~~June ~~This increase was offset~~30, in2007: ~~part, by decreases in various payable accounts as well as increases in the Company’s receivables and deferred income taxes.~~

~~Under~~• ~~its securities lending program, JPMorgan, as agent for the Company, lends on an overnight basis,~~ a ~~portion~~transfer 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 in various investments on behalf~~ of ~~the Company, in accordance with the program’s investment guidelines~~$201.9 ~~The Company receives the benefits~~million, ~~and bears the risks, of such investments. The cash collateral received is recorded~~ as aexcess ~~liability and presented in financing activities on the Company’s condensed consolidated statements of~~ cash ~~flows.~~was ~~The~~invested ~~corresponding investment is recorded as an asset and presented~~ in ~~investing~~marketable ~~activities on the Company’s condensed consolidated statements of cash flows.~~ securities;

~~Net~~42 cash used in investing activities for the six months ended June 30, 2007, exclusive of securities purchased under the securities lending program, was $96.5 million, an increase of $46.6 million compared to the same period last year. This increase was due primarily to the Company’s investment in Montréal Exchange and Optionable (see Note 6 to the unaudited condensed consolidated financial statements) offset, in part, by a decrease in the amount of cash invested in marketable securities.

~~Net~~• ~~cash~~a ~~used~~reduction ~~in financing activities for the six months ended June 30, 2007, exclusive~~ of ~~cash received~~impairment ~~under~~loss ~~the securities lending program, was $9.6 million, a decrease~~ of $3022.97 million ~~compared~~related to the ~~same period last year. The prior year period included cash dividends paid to the~~ Company’s ~~stockholders~~investment ~~totaling $193.6 million that was offset,~~ in ~~part,~~Optionable; ~~by $160 million the Company received, net of costs, in connection with its sale of a 10% equity interest in the Company. Cash dividends paid in the current six-month period totaled $9.3 million.~~ and

•

a gain of $33.9 million related to the Company’s investment in Montréal Exchange.

These items were partially offset by the following during the six months ended June 30, 2008:

•

an increase in net earnings of $67.5 million;

•

an increase in non-cash activity of $20.5 million; and

•

increases in income tax payable of $11.5 million and other current liabilities of $10.6 million.

Under its securities lending program, JPMorgan Chase Bank, N.A. (“JPMorgan”), as agent for the Company, 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 in various investments on behalf of the Company, in accordance with the program’s investment guidelines. The Company receives the benefits, and bears the risks, of such investments. The cash collateral received is recorded as a liability and presented in financing activities on the Company’s condensed consolidated statements of cash flows. The corresponding investment is recorded as an asset, and its purchases and redemptions are presented in investing activities on the Company’s condensed consolidated statements of cash flows.

Net cash provided by investing activities for the six months ended June 30, 2008, exclusive of securities purchased under the securities lending program, was $31.3 million, an increase of $157.6 million over the same period last year. This increase was due primarily to reduced investments of $94.7 million in unconsolidated entities during the six months ended June 30, 2008, as well as proceeds of $49.3 million related to the Company’s investment in Montréal Exchange. The Company invested approximately $12.7 million in IMAREX ASA and the DME during the six months ended June 30, 2008, as opposed to its investment of approximately $107.4 million in the Montréal Exchange and Optionable during the same period last year (see Note 7 to the unaudited condensed consolidated financial statements).

Net cash used in financing activities for the six months ended June 30, 2008, exclusive of cash received under the securities lending program, was $18.4 million, an increase of $8.8 million compared to the same period last year. This increase is attributable to cash dividends paid to the Company’s stockholders totaling $20.0 million during the current year compared to $9.2 million for the same period last year. This increase was offset, in part, by proceeds of $1.4 million received from the exercise of employee stock option awards.

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, while emphasizing safety of ~~principal~~ ~~and total after-tax return~~principal. Excess cash on hand is generally invested overnight in 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~~ U.S. government ~~and its agencies~~securities. The Company also invests in equity securities. Investments in the securities lending program are generally invested in corporate debt securities. At June 30, ~~2007~~2008 and December 31, ~~2006~~2007, cash and investments were as follows:

	June 30,2007		December 31,2006
	June 30,2008		December 31,2007
	(in thousands)
Cash and cash equivalents	$	172,~~112~~411	$	183,~~631~~296
Marketable securities		455,740		485,581
Collateral from securities lending program		558,367		842,444
	$	472,852	$	504,212
Marketable securities		633,202		461,142
	$	1,193,980	$	1,306,882

~~Included~~43 in marketable securities at June 30, 2007 are investments totaling $12.9 million relating to the COMEX Division Members’ Recognition and Retention Plan (“MRRP”) (see Note 9 to the unaudited condensed 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 18 to the unaudited condensed consolidated financial statements).

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. In addition, each clearing member firm is required to maintain a security deposit, in the form of cash, U.S. Treasury securities with a maturity of ten years or less or money market mutual funds, of a minimum of $2.0 million in the Guaranty Fund. The Guaranty Fund 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 the NYMEX Division or COMEX Division. 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 condensed consolidated balance sheets, and are generally invested overnight in cash and securities purchased under agreements to resell. The table in Note 4 to the unaudited condensed consolidated financial statements sets forth margin deposits and Guaranty Fund balances held by the Company on behalf of clearing members at June 30, 2007 and December 31, 2006.

~~return~~Included ~~for~~in ~~cash~~marketable ~~collateral.~~securities ~~JPMorgan,~~at ~~in turn~~June 30, ~~invests~~2008 ~~the~~are ~~cash collateral in various~~ investments ontotaling ~~behalf~~$11.6 ofmillion relating to the ~~Company,~~COMEX inDivision ~~accordance with the program~~Members’s ~~investment~~Recognition ~~guidelines. The Company receives the benefits,~~ and ~~bears~~Retention ~~the~~Plan ~~risks,~~(“MRRP”) ~~of such investments.~~ (see Note 210 to the unaudited condensed 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 19 to the unaudited condensed consolidated financial statements).

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. In addition, each clearing member firm is required to maintain a security deposit, in the form of cash or U.S. Treasury securities with a maturity of ten years or less or shares of certain approved money market mutual funds, of a minimum of $2.5 million in the Guaranty Fund. The Guaranty Fund 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 the NYMEX Division or COMEX Division. 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 condensed consolidated balance sheets, and are generally invested overnight in cash and securities purchased under agreements to resell. The table in Note 5 to the unaudited condensed consolidated financial statements sets forth margin deposits and Guaranty Fund balances held by the Company on behalf of clearing members at June 30, 2008 and December 31, 2007.

Under the securities lending 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 in various investments on behalf of the Company, in accordance with the program’s investment guidelines. The Company receives the benefits, and bears the risks, of such investments (see Note 2 to the unaudited condensed consolidated financial statements).

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, a technology services ~~agreements~~agreement, operating leases and other contracts. A summary of the Company’s minimum required future cash payments associated with its contractual cash obligations outstanding as of June 30, 2008, as well as an estimate of the timing in which these commitments are expected to expire, are set forth in the following table:

A summary of the Company’s future cash payments associated with its contractual cash obligations outstanding as of June 30, 2007, 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
	2008		2009		2010		2011		2012		Thereafter		Total
	(in thousands)
Contractual Obligations
Long-term debt principal	$	2,817	$	2,817	$	2,817	$	7,739	$	4,909	$	59,182	$	80,281
Long-term debt interest		3,102		5,994		5,783		5,573		4,980		31,233		56,665
Services agreements¹		5,340		10,295		11,571		30,948		—		—		58,154
Operating leases—facilities		1,755		3,034		3,306		3,585		2,051		136		13,867
Operating leases—equipment		930		1,408		540		—		—		—		2,878
Other long-term obligations		917		1,041		967		800		800		5,247		9,772

Total contractual obligations	$	14,861	$	24,589	$	24,984	$	48,645	$	12,740	$	95,798	$	221,617

	Payments Due by Period
	2007		2008		2009		2010		2011		Thereafter		Total
	(in thousands)
Contractual Obligations
Long-term debt principal	$	2,817	$	2,817	$	2,817	$	2,817	$	7,739	$	64,091	$	83,098
Long-term debt interest		3,208		6,205		5,994		5,783		5,573		36,213		62,976
Services agreements¹		4,650		10,080		10,270		11,571		30,948		—		67,519
Operating leases—facilities		1,501		3,000		3,027		3,306		3,585		2,186		16,605
Operating leases—equipment		920		1,634		691		26		—		—		3,271
Other long-term obligations		800		800		800		800		800		6,417		10,417
Total contractual obligations	$	13,896	$	24,536	$	23,599	$	24,303	$	48,645	$	108,907	$	243,886

¹	Services agreements include required minimum payments in accordance with the Services Agreement (see Note 11 to the unaudited condensed consolidated financial statements). The Services Agreement has a

¹44 Services agreements include required minimum payments in accordance with a technology services agreement with CME. The CME Agreement has a ten-year term from the launch date (June 2006) with rolling three-year extensions. Either party may elect to terminate the CME Agreement between the fifth and the sixth year anniversary of the first launch date upon written notice and payment of a termination fee. As a result, the Company’s current minimum obligation under the CME Agreement is for payments in years one through five. As such, the Contractual Obligations table above sets forth the Company’s minimum obligation for years one through five, including the related termination fee in the event the Company elects to terminate the CME Agreement. In addition, the services agreements category includes employment agreements as filed with the SEC.

AsTable previously disclosed in Note 1 to the unaudited condensed consolidated financial statements, the Company has $2.0 million of unrecognized tax benefits as of June 30, 2007. The Company is subject to periodic examinations of its income tax returns by the U.S. Internal Revenue Service and various state and local taxing authorities, which could result in future tax liabilities, the payment of which would offset the current unrecognized tax benefits. Due to the uncertainty of the outcome of any future income tax examinations, it is not possible to estimate when tax payments, if any, would be made. Contents

ten-year term from the launch date with rolling three-year extensions. Either party may elect to terminate the Services Agreement between the fifth and the sixth year anniversary of the first launch date upon written notice and payment of a termination fee. As a result, the Company’s current minimum obligation under the Services Agreement is for remaining payments through year five. As such, the Contractual Obligations table above sets forth the Company’s minimum obligation remaining through year five, including the related termination fee in the event the Company elects to terminate the Services Agreement. The Company has entered into amendment to the Services Agreement in connection with the proposed merger (see Note 20 to the unaudited condensed consolidated financial statements). In addition, the services agreements category includes employment agreements as filed with the SEC.

The Company has unrecognized tax benefits, including interest, of approximately $4.4 million, net of tax effect, as of June 30, 2008. The Company is subject to periodic examinations of its income tax returns by the U.S. Internal Revenue Service and various state and local taxing authorities, which could result in future tax liabilities, the payment of which would offset the current unrecognized tax benefits. Due to the uncertainty of the outcome of any future income tax examinations, it is not possible to estimate when tax payments, if any, would be made.

In 1995, the Company secured a grant of $128.7 million from the New York City Economic Development Corporation (“EDC”) and the Empire State Development Corporation (“ESDC”, formerly known as the New York State Urban Development Corporation) for construction of its corporate headquarters and trading facility. The grant is being recognized in income on the same basis as, and is a reduction to, the depreciation of the facility. The Company is liable for liquidating damages on a declining scale, currently at $25 million, if it violates the terms of the occupancy agreement at any time prior to the 15 years from the date of occupancy, July 7, 1997.

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

In accordance with the DME shareholders agreement, the Company is required to contribute capital to the joint venture in an aggregate amount of $9.8 million over a five-year period, contingent upon the DME’s achievement of certain agreed upon performance targets. ~~The~~At ~~Company~~June 30, ~~made~~2008, anthe ~~initial~~Company ~~capital~~had ~~contribution~~contributed ofa ~~$2.5~~total ~~million in 2005 and made additional capital contributions~~ of $48.0 ~~million~~ ~~in 2006 to the joint venture~~million.

35Section 311(G) of the Bylaws of NYMEX Exchange provides for a revenue sharing arrangement with the owners of Class A memberships in NYMEX Exchange in the event that either: (i) NYMEX Exchange determines to terminate permanently all open outcry floor trading for a specified list of products on the NYMEX Exchange and instead lists such products for electronic trading only; or (ii) a “shift” occurs whereby at least 90% of the contract volume of such NYMEX Exchange product results from electronic trading. Once triggered for a particular product, the obligation under the revenue sharing arrangement consists of the greater of the following amounts: (i) 10% of the gross NYMEX Exchange revenues attributable to all revenue from the electronic trading of such applicable NYMEX Exchange products, but not including market data fees or revenues from bilateral transactions cleared through NYMEX ClearPort® Clearing (or its successor); (ii) or 100% of the revenue from any additional special fee or surcharge that may be imposed by NYMEX Exchange on the transaction fees applicable to the electronic trading of such applicable NYMEX Exchange products. Once triggered, Bylaw Section 311(G) requires this revenue stream continue in perpetuity or until NYMEX Exchange no longer lists such product for electronic trading. NYMEX Exchange has determined that a “shift” will have occurred for any applicable NYMEX Exchange product following the end of two consecutive fiscal quarters in which, during each quarter, the average quarterly electronic trading volume has equaled or exceeded 90% of the contract volume in such product. Thereafter, revenues that are generated from the electronic trading of such product will begin to accrue and will be paid to the owners of Class A memberships in NYMEX Exchange on a quarterly basis

consistent with the financial reporting schedule of NYMEX Holdings. In accordance with the NYMEX Exchange Bylaws, such determination may be subject to challenge by owners of Class A memberships in NYMEX Exchange through arbitration.

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.

Responsibility for Financial Reporting

The Company’s management is responsible for the preparation, integrity and objectivity of the unaudited condensed consolidated financial statements and related notes, and the other financial information contained in this Quarterly Report on 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 condensed consolidated financial statements include certain amounts that are based on management’s estimates and judgments, giving due consideration to materiality.

36Critical Accounting Policies

The Company’s significant accounting policies, which include management’s best estimates and judgments, are included in Note 2 of the consolidated financial statements of the Annual Report on Form 10-K for the year ended December 31, 2007. Certain of these accounting policies are considered critical as disclosed in the Critical Accounting Policies section of Management’s Discussion and Analysis in the Company’s 2007 Annual Report on Form 10-K because of the potential for a significant impact on the financial statements due to the inherent uncertainty in such estimates. Other than the adoption of SFAS 157, as discussed below, there have been no significant changes in the Company’s critical accounting policies since December 31, 2007.

Fair Value Measurements

On January 1, 2008, the Company adopted SFAS No. 157, Fair Value Measurements (“SFAS No. 157”), which establishes a consistent framework for measuring fair value and expands the disclosures on fair value measurements. SFAS No. 157 establishes a fair value hierarchy which requires an entity to utilize valuation techniques that maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. SFAS No. 157 describes three levels of inputs to valuation techniques that may be used to measure fair value (see Note 3 to the unaudited condensed consolidated financial statements).

Financial assets are considered Level 3 when their fair values are determined using pricing models with at least one significant input or assumption that is unobservable. The Company’s Level 3 securities represent certain illiquid investments associated with the securities lending program and primarily include medium term bank notes and certain asset-backed securities for which there is limited market activity. At June 30, 2008, the fair value of these securities were based on internally developed models that incorporate company assumptions on the expected timing of cash flows, credit spreads and liquidity adjustments. This represents the Company’s best estimate of exit price as defined by SFAS No. 157.

On January 1, 2008, the Company had $842.4 million invested under the securities lending program, which are predominately comprised of investments valued using Level 2 inputs. The amount of securities in the

securities lending program valued using Level 3 inputs declined during the first half of 2008 by approximately $123.1 million since the Company identified observable inputs for these securities or the securities matured at par. At June 30, 2008, $35.6 million of the corporate debt securities associated with the securities lending program remained classified in Level 3 (approximately 6.4% of the Company’s collateral from securities lending program) as the securities contained at least one significant input which was unobservable.

Item 3.

Quantitative and Qualitative Disclosures about Market Risk

The table below provides information about the Company’s marketable securities (excluding equity and short-term debt securities), collateral from securities lending program and long-term debt including expected principal and interest cash flows for the years ~~2007~~2008 through ~~2011~~2012 and thereafter:. The marketable securities and collateral from securities lending program are classified as trading and available-for-sale securities, respectively.

Principal Amounts by Expected Maturity

At June 30, ~~2007~~2008

(in thousands)

Year	Principal		Interest		Total		~~WeightedAverage InterestRate~~WeightedAverageInterestRate
Assets
Debt Securities
2007	$	7,273	$	798	$	8,071	4.12	%
2008	$	165,039	$	5,802	$	170,841	1.66	%
2008		2,574		1,141		3,715	3.95	%
2009		440,535		3,267		443,802	6.57	%
2009		1,594		1,205		2,799	3.88	%
2010		205		533		738	4.77	%
2010		617		1,159		1,776	3.84	%
2011		70		467		537	4.79	%
2011		167		981		1,148	3.83	%
2012		200		381		581	4.80	%
Thereafter		267,~~098~~249		175,~~572~~194		4312,~~670~~443	35.7305	%
Total	$	38613,~~323~~298	$	2215,~~856~~644	$	61628,~~179~~942
Fair Value	$	54,501
Liabilities
Corporate Debt
2007	$	2,817	$	3,208	$	6,025	7.72	%
2008	$	2,817	$	3,103	$	5,920	7.73	%
2008		2,817		6,205		9,022	7.73	%
2009		2,817		5,994		8,811	7.74	%
2010		2,817		5,783		8,600	7.75	%
2011		7,739		5,573		13,312	7.76	%
Thereafter		64,091		36,213		100,304	7.79	%
2012		4,909		4,981		9,890	7.77	%
Total	$	83,098	$	62,976	$	146,074
Thereafter		59,182		31,232		90,414	7.79	%
Fair Value	$	98,142
Total	$	80,281	$	56,666	$	136,947

Interest Rate Risk

~~Investment~~Current ~~Income~~Assets

The Company’s investment income, net 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 and six months ended June 30, ~~2007~~2008 was $63.12 million and $126.8 million, respectively, compared to $16.41 million and $212.8 million, ~~respectively~~for in the ~~prior~~same ~~year~~ periods last year. The fair value of the Company’s marketable securities, including equity and short-term debt securities was $~~455~~633.72 million at June 30, ~~2007~~2008. The Company believes that a hypothetical change in the interest rate of 100 basis points would not have a material impact on its consolidated results of operations, financial condition or cash flows.

Debt

The weighted average interest rate on the Company’s long-term debt is 7.77%. The debt contains a redemption premium, the amount of which varies with changes in interest rates. Therefore, the fair ~~market~~ value of the ~~Company’s~~ long-term debt is highly sensitive to changes in interest rates. Although the market value of the debt will fluctuate with interest rates, the Company’s interest expense will not vary with changes in market interest rates if the debt is paid off in accordance with stated principal repayment schedules. As of the date of this report, the Company does not expect to pay down any series of its long-term debt prior to stated maturities. However, the Company may pursue future financing strategies that involve early repayment of its current debt, or issuance of new debt, potentially increasing its sensitivity to changes in interest rates.

Company’s long-term debt is highly sensitive to changes in interest rates. Although the fair value of the debt will fluctuate with interest rates, the Company’s interest expense will not vary with changes in market interest rates if the debt is paid off in accordance with stated principal repayment schedules. As of the date of this report, the Company does not expect to pay down any series of its long-term debt prior to stated maturities. However, the Company may pursue future financing strategies that involve early repayment of its current debt, or issuance of new debt, potentially increasing its sensitivity to changes in interest rates.

Credit Risk

NYMEX Division bylaws authorize its board of directors to fix the annual dues of the owners of the Class A memberships 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 owners of Class A memberships or by individual members as it determines. COMEX Division bylaws provide its board of directors with similar powers relating to dues, assessments and fees with respect to COMEX Division memberships~~, provided~~. ~~that~~The ~~such~~board ~~dues~~may ~~and~~levy such assessments ~~may~~upon ~~not~~each beowner ~~imposed~~of ona ~~NYMEX~~COMEX ~~Exchange~~Division ~~Class A~~membership ~~members~~as onit adetermines, ~~per-member~~but ~~basis~~in ~~and~~no ~~that~~greater ~~the~~amount ~~ability~~than ofthose imposed ~~COMEX~~on ~~Division’s~~each ~~board~~owner of ~~directors~~a toClass A ~~impose~~membership ~~such~~in ~~fees~~NYMEX ~~is subject to the limitations~~Exchange.

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 maintains 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, NYMEX Division clearing members, as all NYMEX Division member firms, must each own and hold 150,000 shares of common stock of NYMEX Holdings and two Class A memberships in NYMEX Exchange. The COMEX Division clearing member firms, as all COMEX Division member firms, must each pledge two COMEX Division memberships.

As part of the Exchange’s powers and procedures designed to support contract obligations in the event that a contract default occurs, the Exchange may 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 modified regulatory capital as reported periodically to the Exchange.

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 collateral would apply towards any outstanding obligations to the Exchange of such member. Recourse to a member’s collateral, however, may not be of material value in the case of large defaults that result in assessments greater in value than the collateral, particularly when the collateral’s value declines markedly in price as a consequence of the default.

38Moreover, 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

~~Additionally, the Company intends to enter into a revolving credit agreement. This agreement would~~ ~~provide~~occurrence ~~a line~~ of ~~credit~~contract ~~which~~defaults ~~could~~on ~~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~~there ~~providing~~can ~~enough~~be ~~time~~no ~~for~~assurance anthat ~~efficient distribution~~these ~~from~~powers ~~the~~and ~~Guaranty~~procedures ~~Fund.~~will ~~Proceeds~~prevent ~~from~~contract ~~the~~defaults ~~sale~~or ofwill ~~Guaranty~~otherwise function ~~Fund securities would be used~~ to ~~repay~~preserve ~~borrowings under~~ the ~~line~~liquidity of ~~credit~~the Company.

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 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.

(b)

Changes in Internal Controls. There were no changes 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.

3950

PART II: OTHER INFORMATION

Item 1.

Legal Proceedings

Information regarding legal proceedings is disclosed in Note 1819 to the unaudited condensed consolidated financial statements under the subheading “Legal Proceedings.” Such disclosure is incorporated herein by reference.

Item 1A.

Risk Factors

~~There~~Other than the following updates, there have been no material changes to the Risk Factors contained in the Company’s Annual Report on Form 10-K for the year ended December 31, ~~2006~~2007, as filed with the SEC on March 53, ~~2007~~2008.

The Company and CME Group are parties to pending lawsuits in connection with the merger.

In re NYMEX Shareholder Litigation, C.A. No. 3621-VCN

On March 17, 2008, Cataldo J. Capozza, a NYMEX Holdings shareholder and a former Class A member of NYMEX Exchange commenced a putative class action in the Delaware Court of Chancery, on behalf of himself and all other NYMEX Holdings shareholders, against NYMEX Holdings, the members of its board of directors and CME Group. The complaint, which is captioned Capozza v. NYMEX Holdings, Inc., et al., C.A. No. 3621-VCN, and seeks to enjoin the Company’s merger with CME Group (the “Proposed Transaction”), alleges, among other things, that the directors breached their fiduciary duties to NYMEX Holdings’ shareholders by attempting to sell the Company for inadequate and unfair consideration and pursuant to an inadequate and unfair process, and that CME Group aided and abetted such breaches. On April 21, 2008, NYMEX Holdings and its directors moved to dismiss the complaint and to stay all discovery pending the disposition of the motion to dismiss. CME Group filed similar motions.

defendant. On July 9, 2008, NYMEX Holdings and its directors moved to dismiss the Second Amended Complaint. CME Group filed a similar motion.

Greene v. NYMEX Holdings, Inc., et al., C.A. No. 3835-VCN

On June 16, 2008, Shelby Greene, purportedly a NYMEX Holdings shareholder and a Class A member of NYMEX Exchange, commenced a putative class action in the Delaware Court of Chancery, on behalf of herself and all other Class A members, against NYMEX Holdings, the members of its board of directors and CME Group. Like the Second Amended Complaint in the consolidated proceeding discussed above, the Greene complaint also seeks to enjoin the Proposed Transaction on price, process and disclosure grounds. However, the price claim alleged in the Greene complaint focuses on the consideration to be received by the Class A members in connection with their membership interests in NYMEX Exchange. NYMEX Holdings and its directors filed a motion to dismiss the Greene complaint on July 17, 2008. CME Group filed a similar motion.

Completion of the merger is subject to a number of closing conditions that could delay completion of the merger or impose conditions that could have a material adverse effect on the Company or that could cause abandonment of the merger.

The merger is subject to a number of closing conditions, including, but not limited to, (i) adoption of the Merger Agreement by the stockholders of the Company, (ii) approval by the stockholders of CME Group of (A) the amended and restated CME Group certificate of incorporation and (B) the issuance of shares of CME Group Class A common stock in connection with the merger, (iii) approval by owners of 75% of the outstanding NYMEX Class A memberships of changes to the certificate of incorporation and bylaws of NYMEX Exchange which eliminate substantially all of the NYMEX Class A members’ existing rights and replace them with certain new post-closing trading rights and privileges, (iv) effectiveness of a Form S-4 registration statement to be filed by CME Group, (v) receipt of certain regulatory approvals and (vi) receipt of an opinion that the merger will be treated as a tax-free reorganization. Such conditions may have the effect of delaying completion of the merger, imposing additional costs on the merger or preventing the completion of the merger or causing the abandonment of the merger, any of which may have a material adverse effect on the Company.

Proposals of legislation or regulatory changes restricting participation on the Exchange could materially impact the Company’s operations.

A number of legislative proposals have been circulating in Congress this year that are ostensibly intended to reduce the alleged impact of non-commercial or speculator trading on oil prices by restricting participation in energy futures trading in U.S. markets. Such proposals include, but are not limited to, imposing inflexible limits on open positions across all listed contract months, reducing the scope of “hedge” exemptions from current position limits that are available for bona fide hedging activity and artificially increasing margins imposed on participants with open positions in Exchange contracts. Many economists believe that the surges in crude oil

prices over the last year or so primarily reflect market supply-demand fundamentals. Nonetheless, in the event that new restrictions on U.S. energy futures markets become law, the Exchange’s trading volumes could be significantly reduced by making Exchange markets less attractive and/or by making competitive non-U.S. markets more attractive to market participants. Consequently, the Company’s revenues and profits could be materially and adversely affected.

Item 2.

Unregistered Sales of Equity Securities and Use of Proceeds

On November 22, 2006, NYMEX Holdings completed an initial public offering (“IPO”) of its common stock. The common stock from this offering was registered under the Securities Act of 1933, as amended, pursuant to a Registration Statement on Form S-1 (File No. 333-135800) that was declared effective by the SEC on November 16, 2006. In connection with this offering, NYMEX Holdings sold 5,390,000 shares of its common stock, and certain selling stockholders sold 1,110,000 shares of common stock held by them. In addition, NYMEX Holdings sold 975,000 shares of its common stock pursuant to the underwriters’ full exercise of their over-allotment option. J.P. Morgan Securities Inc. and Merrill Lynch, Pierce Fenner & Smith Incorporated served as joint book-running managers, with Banc of America Securities LLC, Citigroup Global Markets Inc., Lehman Brothers Inc. and Sandler O’Neill & Partners, L.P. serving as co-managers.

The initial public offering price was $59.00 per share. The Company did not receive any proceeds from the shares of common stock sold by the selling stockholders. Gross proceeds from the offering were approximately $375.5 million. Net proceeds the Company received, after deducting underwriting discounts and commissions of approximately $27.6 million and direct costs of approximately $43.17 million, totaled approximately $~~343~~344.82 million. Upon the completion of its IPO, a $10 million payment was made to owners of COMEX Division memberships in accordance with the 1994 COMEX Merger ~~Agreement~~.

~~During~~For the ~~six~~first ~~months~~half ~~ended June 30~~of 2008, the Company used approximately $11.2 million to acquire additional shares of IMAREX ASA and $1.5 million as an additional capital contribution to its investment in the DME. In 2007, the Company used approximately $~~109~~163.5 million of the net proceeds to fund its long-term investments, the most significant of which were the Company’s investments in the Montréal Exchange, IMAREX ASA and Optionable, Inc. ~~(see~~The ~~Note~~Company 6 intends to use the ~~unaudited~~remaining ~~condensed~~funds ~~consolidated~~for ~~financial~~general ~~statements).~~corporate ~~The~~purposes, ~~remaining~~capital ~~funds~~expenditures ~~are~~and ~~invested~~working incapital. ~~accordance~~The ~~with~~Company ~~the~~may ~~Company’s~~also ~~investment~~use ~~policies.~~a ~~There~~portion ~~has~~of ~~been~~the nofunds ~~material~~to ~~change~~acquire inor ~~the~~invest ~~Company’s~~in ~~planned~~businesses, technologies, ~~use~~products ofor ~~proceeds~~services. ~~from~~The ~~its~~funds ~~IPO as~~are ~~described~~currently invested in accordance with the Company’s ~~final~~investment ~~prospectus~~policies, ~~filed~~predominantly ~~with~~in ~~the~~U.S. ~~SEC~~government securities, until such time that they are needed.

Item 3.

Defaults upon Senior Securities

Not applicable

Item 4.

Submission of Matters to a Vote of Security Holders

At the Company’s Annual Meeting held on May 1020, ~~2007~~2008, the stockholders elected seven Class I directors, whose ~~terms~~term expire in ~~2008~~2010, and ~~eight~~two Class II directors, whose terms expire in 2009. Voting at the meeting was as follows:

Directors	ClassType	Votes For	WithheldAuthority	% VotesFor
James Newsome	I	4355,~~005~~971,~~518~~854	15,~~245~~901,~~755~~837	4659.7155
Dennis Suskind	I	4356,~~082~~769,~~591~~088	15,~~168~~104,~~682~~608	4660.7940
William Ford	I	4356,~~511~~689,~~615~~321	~~739~~5,~~658~~184,375	4760.2632
Harvey Gralla	I	43,187,090	1,064,183	46.91
William Maxwell	I	56,817,825	5,055,871	60.45
William Maxwell	I	43,760,749	490,524	47.53
John McNamara	I	56,791,211	5,082,485	60.42
Stephen Ardizzone	I	4253,~~215~~898,~~325~~093	27,~~035~~975,~~948~~603	4557.8535
A. George Gero	I	4354,~~354~~275,~~429~~423	~~896~~7,~~844~~598,273	4757.0975
Richard Schaeffer	II	43,256,446	994,827	46.98
Thomas Gordon	II	55,902,551	5,971,145	59.48
Robert Halper	II	43,360,212	891,061	47.09
Howard Gabler	II	56,733,333	5,140,363	60.36
Melvyn Falis	II	43,439,962	811,311	47.18
Robert Steele	II	43,477,220	774,053	47.22
Thomas Gordon	II	43,270,466	980,807	47.00
Daniel Rappaport	II	42,404,842	1,846,431	46.06
Neil Citrone	II	42,484,941	1,766,332	46.14
Frank Siciliano	II	42,758,323	1,492,950	46.44

KPMG was ratified as the Company’s independent registered public accounting firm for the year ended December 31, 2008.


58,724,760	2,028,724	1,120,212
FOR	AGAINST	ABSTAIN

Item 5.

Other Information

Not applicable

Item 6.

Exhibits

2.1		Amendment No. 2, dated as of July 18, 2008, to Agreement and Plan of Merger, dated as of March 17, 2008 and amended as of June 30, 2008, by and among CME Group Inc., CMEG NY Inc., NYMEX Holdings, Inc. and New York Mercantile Exchange, Inc. (incorporated herein by reference to Exhibit 2.1 to the Company’s Current Report on Form 8-K, dated July 23, 2008).
3.1		Certificate of Retirement of Series A-1 Common Stock, Series A-2 Common Stock, Series A-3 Common Stock, Series B-1 Common Stock, Series B-2 Common Stock and Series B-3 Common Stock of NYMEX Holdings, Inc. effective as of July 29, 2008 (incorporated herein by reference to Exhibit 3.1 to the Company’s Current Report on Form 8-K, dated August 1, 2008).
10.1		Amendment No. 1, dated as of July 18, 2008, to the Services Agreement, dated as of April 6, 2006 between Chicago Mercantile Exchange, Inc. and New York Mercantile Exchange, Inc. (incorporated herein by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K, dated July 25, 2008).
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.

4154

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.
By:		/s/ JAMES E. NEWSOME
Name:		James E. Newsome
Title:		President & CEO
		(Principal Executive Officer)
Date: August 14, 2007
Date: August 11, 2008
By:		/s/ KENNETH D. SHIFRIN
Name:		Kenneth D. Shifrin
Title:		Chief Financial Officer
		(Principal Financial Officer)
Date: August 14, 2007
Date: August 11, 2008

4255

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Filing Compare · NYMEX HOLDINGS INC