February 2006 Market Clearing in the Energy Industry 68 © Copyright 2006, CCRO. All rights reserved. NCC/ North American Energy Credit and Clearing Corp (“NECC”) New York Mercantile Exchange (“NYMEX”) ICE/LCH Clearnet Virtual Markets Assurance Corporation (“VMAC”) Natural Gas Exchange NYMEX presently clears. House) is registered with the CFTC as a DCO. Alberta Securities Commission. In the United States, NGX operates under the 2(h)(3) exemption of the Commodity Exchange Act (“CEA”) as administered by the Commodity Futures Trading Commission. Bankruptcy Code Status NECC qualifies as a forward contract merchant under the code and its products are forward contracts, including the CFC™, which operates in parallel to next day contracts and operates as a swap contract pertaining to timing of payment obligations. NYMEX’s current futures contracts qualify as forward contract merchants under the bankruptcy code. Cleared ICE contracts qualify as forward contract merchants under the bankruptcy code VMAC is based on ISDA form commodity swaps useful as hedges for physical positions. VMAC provides a central counterparty for these swaps. Commodity swaps are exempt from the automatic stay provisions of the bankruptcy code. The regulatory status that allows NGX to operate is fundamentally predicated on the concepts of “Eligible Commercial Entity”, “Eligible Contract Participant”, and “Eligible Swap Participant” requirements as described in the CEA. Ability to net and set-off exposure NCC margining provisions recognize offsetting collateral positions in forward contracts and CFCs™ as well as accounts NYMEX offers the ability to net margin across Physical and Financial electricity markets ICE/LCH Clearnet recognizes cross- margin netting wherever VMAC system all marks are netted across all counterparties, all markets and all commodities since VMAC NGX is able to set-off and net all physical and financial positions for exposure management.