The Montreal Exchange (MX) and the New York Mercantile Exchange, Inc. (NYMEX) today announced a strategic alliance and the creation of a new company that will significantly improve service to the Canadian energy market.

MX and NYMEX intend to create a company, headquartered in Calgary, that would provide the Canadian market with trading and clearing of exchange-traded and over-the-counter (OTC) crude oil, natural gas and electricity products.

“We have been planning to build a strategic partnership to serve the Canadian energy sector and now we have found the ultimate partner, NYMEX,” said Luc Bertrand, president and CEO of the MX. “NYMEX is a global leader with in-depth knowledge of energy trading and clearing. MX is the leader in developing the Canadian financial derivatives market. The new company will be in a unique position to serve the market and, in Canada, Calgary is the natural location for this business.”

NYMEX Chairman Richard Schaeffer said, “NYMEX is pleased to partner with the Montreal Exchange, a leader in the Canadian financial industry, to better serve the Canadian marketplace. Canada is a major center in the global energy markets, and we intend to fill the risk management gap that currently exists with the introduction of Canadian energy contracts.”

The strategic alliance includes NYMEX purchasing a 10% interest in MX. NYMEX will name a representative to the MX board of directors.

The new company has a two-phase business plan. First, the partners intend to offer clearing services to participants in OTC energy markets. The focus will be on both financial and physical contracts based primarily on Canadian energy commodities. In the second phase, the company intends to develop and market on-exchange futures and options contracts on the same underlying commodities. It will employ the services of the two partners to benefit from economies of scale and lower operational costs.