By Tom Polansek and Ann Saphir
CHICAGO, Oct 29 (Reuters) – CME Group Inc will not
reduce nearly non-stop electronic grain-trading hours it
implemented in May to fend off a challenge from rival
IntercontinentalExchange, a top executive told Reuters.
Grain traders have circulated a petition asking CME, which
owns the Chicago Board of Trade, to reduce its 21-hour trading
day because they say the longer cycle has spread out volume,
cutting liquidity and increasing volatility.
“Just because the IntercontinentalExchange has not garnered
a lot of market share… there is a competitive issue for us,”
CME Executive Chairman Terrence Duffy said on Monday. “We need
to remain competitive and we will keep our markets open as long
as others are open at that time.”
Until May, CBOT grains traded for 17 hours a day, with a
2-1/4 hour pause in electronic trading from 7:15 a.m. to 9:30
a.m. CDT, the start of open-outcry dealing, and another gap from
1:15 p.m. to 6 p.m. EDT.
But arch-rival ICE’s surprise launch this spring of
look-alike wheat, corn and soy contracts – on a 22-hour basis –
forced CME’s hand, spurring it to join other major commodity
markets that years ago moved to near round-the-clock trade to
cater to hedge funds and Asian traders.
On Thursday, Bunge Ltd, one of the world’s largest
agricultural trading houses, threw its weight behind the effort
to reduce hours, saying 21-hour trading was “too much” for
traders and merchants to monitor.
Critics note that the threat of ICE poaching business from
the CME has so far proven mostly hollow.
“If somebody else lists our products with those hours, we
will remain competitive no matter who it is or what product it
is,” Duffy said.
Duffy said he would be open to an earlier close to
open-outcry trading.
Some market participants who advocated for a 2 p.m. close to
open-outcry trading are “re-evaluating that,’ Duffy said.
After expanding electronic hours in May, CME initially kept
the closing time for open-outcry trading at the traditional time
of 1:15 p.m.. However, floor traders and grain elevator managers
said the closing times for pit and electronic trading should be
synchronized to avoid confusion about trading hours and
settlement prices, and CME decided both markets would close at 2
p.m.
