NGX - Natural Gas Exchange: Electronic Trading in Physical and Swap Contracts of Natural Gas

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HISTORY

The roots of Natural Gas Exchange Inc. ("NGX") date back to early 1993, when Canadian pipeline giant Westcoast Energy Inc. authorized funding to develop a natural gas trading platform.

Deregulation of the natural gas industry had led to the need for efficiency in conducting transactions, and Westcoast envisioned an electronic forum that could meet such needs in the Canadian market. This early vision was of an electronic exchange providing a centralized meeting place for buyers and sellers of natural gas using standardized rules. Success would occur because of technical innovations and market forces driving transactions to such a centralized forum. Furthermore, it was believed that the characteristics of the natural gas commodity, such as its fungible nature, coupled with an innovative and evolving base of market participants and the increasing size of the market, provided an opportunity for electronic trading of natural gas in Canada.

The vision for NGX also included clearing and settlement. NGX has operated since inception as a marketplace where all transactions are cleared and settled through NGX. The inclusion of clearing allowed NGX to offer the marketplace the security of a clearing house, the efficiency of central position netting, and the advantages of anonymous trading.

NGX began exchange and clearing operations on February 10, 1994. The initial product suite included contracts for physical delivery in Western Canada. The popularity of these contracts developed steadily during the next two years, leading NGX to expand the products offered in the Western Canadian physical natural gas market. NGX customers generated high levels of liquidity in these physical products through the early years of the exchange. The liquidity of these core products has provided the base through which NGX has pursued other product opportunities.

By the beginning of 2000, NGX had become a substantial part of the Canadian marketplace. To support the increased need for exchange expertise, Westcoast took on a partner. In March 2000, OMHEX, the world's leading provider of transaction technology, acquired a 51% interest in NGX. Capitalizing on the fit between OMHEX and NGX business lines, OMHEX acquired the remaining 49% interest in NGX in January 2001.

While growing from 2001 to 2003, it became evident that NGX needed to expand the business into new areas in order to respond to customer demand and increase its competitiveness with other exchanges and clearing facilities in North America.TSX Group acquired 100% of NGX in March of 2004 with a strong interest in supporting this growth.

In 2005, NGX began to expand its product offering in the U.S., adding to its system several points in the west and mid continent. In December 2006, NGX entered the power ancillary services space through the acquisition of the Alberta Watt Exchange (Watt-Ex).

NGX continues to grow into other geographical locations and into other products. Keep watching the News & Notices section of this web site for further updates on this and other new ventures.

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