Regulator wants feedback on CME's extended grain trade
- By Tom Polansek
CHICAGO (Reuters) - Bart Chilton, a commissioner at the Commodity Futures Trading Commission, said on Friday the agency should institute a 30-day public comment period on a plan by CME Group to increase trading hours for grain futures and options.
The planned shift to nearly around-the-clock trading at CME's Chicago Board of Trade, which dominates agricultural markets, has become the most contentious issue among grain traders as it will keep markets open during key U.S. Department of Agriculture crop reports that often cause sharp swings in prices.
"These markets have operated for a long time and have been closed when significant USDA announcements have taken place," Chilton told Reuters. "We could use a little feedback from the industry and the public."
CFTC staff are reviewing CME's plan for increased trading hours.
CME announced on May 1 that it would increase weekday trading for grain and oilseed futures and options to 22 hours a day as of May 14.
The CFTC later forced the massive exchange-operator to delay the start date by a week because it had not given regulators adequate notice for the change. A waiting period of 10 business days ends May 16.
CME's decision to expand trading hours was widely seen as a response to a threat from Atlanta-based IntercontinentalExchange, which said last month it would challenge CBOT's iron grip on grain markets by listing look-alike wheat, corn and soy contracts on May 14 -- on a 22-hour basis.
CME, which has attributed the move to customer demand, currently trades grain futures and options 17 hours a day during the week.
SUPPORT FOR FEEDBACK GROWS
CME declined to comment on Chilton's call for a delay in implementing longer hours.
CME on Thursday said it was "supportive of any measures that offer market participants additional time to prepare for expanded grain trading hours, provided all futures exchanges are subject to the same time schedule for implementation of the new hours."
However, it is unlikely ICE will face a 30-day comment period.
ICE is slated to launch new, electronically traded grain contracts on Monday. The contracts are not expected to attract significant volume, leaving the focus on CME.
Two top U.S. grain groups have urged the CFTC to institute 30-day public comment periods on plans for 22-hour trading at the CME and ICE. [ID:nL1E8GAIMC]
CFTC staff members told the National Grain and Feed Association, a group that called for the comment periods, that the shift to 22-hour trading was a "front-burner issue" at the commission, said Todd Kemp, vice president of marketing and treasurer for the association.
"When the staff used the term 'front burner' with me, I was encouraged by that," Kemp said. "We believe they are taking our petition very seriously."
Farmers and grain elevator managers worry that the shift to a 22-hour grain cycle will give a competitive advantage to large traders who can quickly access and analyze USDA crop data issued during extended trading hours.
Steve Wellman, president of the American Soybean Association, joined those calling for a 30-day comment period on CME's plan. The association itself has not taken an official position on the matter.
"At least having more time for people to prepare for this is probably a good idea," Wellman said about the increased trading hours.
(Reporting by Tom Polansek; Editing by Marguerita Choy, M.D. Golan and Jim Marshall)
