Chicago Analyst Reacts to CME Group Extended Hours

CME Group has announced the expansion of electronic trading hours for CBOT grain and oilseed futures and options beginning Monday, May 14, 2012. The move will expand market access to 22 hours per day when the electronic trade begins at 6 PM Chicago time, and concludes at 4 PM the next day

Analyst Steve Erdman with EFG in Chicago says the move by CME Group addresses two areas. One is competition coming from the Intercontinental Exchange.

“The ICE Exchange is in the process of creating ag contracts that would compete with CME Group and the old Chicago Board of Trade contracts. So I think it’s going to impact the ICE Exchange and I think it may impact the over the counter market because now they’ll be able to go to the electronic contracts, the E-CBOT contracts that are carried by one of the exchanges in the CME Group. We have night trading now and I think this just opens the door a little bit for people to have more opportunity and more ability to address their risk.”

ICE Futures expects to begin trading U.S. grain futures on May 14th and grain options on May 15^th with the same 22 hour schedule. ICE is currently completing regulatory review.

CME says open-outcry trading hours will continue to operate from 9:30 a.m. to 1:15 p.m. Central Time Monday through Friday.

Erdman assumes, but has not yet been able to confirm, that settlements will continue after the 1:15 open-outcry close.

“I can’t imagine them changing that. That’s the way they handle different contracts at different exchanges now. I believe copper is an example, and gold, and the silver contracts are an example, but they do use the old open-outcry time frame for doing settlements now for some of these different futures contracts. So I imagine they’re going to do the same thing. That allows the open-outcry brokers to still be involved in a meaningful way, to be filling orders for that segment, and I can’t imagine they’d be able to change that without getting tremendous pushback by the brokers who are doing open-outcry now.”

Erdman feels overall the move is a good one for addressing risk, especially with the way markets have reacted in recent years to USDA early morning reports. He explains in the full HAT interview:[audio:https://www.hoosieragtoday.com//wp-content/uploads//2012/05/Steve-Erdman-on-CME-Group-hours.mp3|titles=Steve Erdman on CME Group hours]

Futures and options traded on CME Globex include CBOT Corn, Soybeans, Wheat, Soybean Meal, Soybean Oil, Oats and Rough Rice.

“As we’ve grown our customer base in agricultural commodities around the globe, we’ve received increased interest in expanding market access by providing longer trading hours,” said Tim Andriesen, Managing Director, Agricultural Commodities and Alternative Investments at CME Group. “In particular, customers are looking to manage their price risk in our deep, liquid markets during market-moving events like USDA crop reports. In response to customer feedback, we’re expanding trading hours for our grain and oilseed products to ensure customers have even greater access to these effective price discovery tools.”

The regular schedule starting May 13 for trade date May 14 will be Sunday to Monday, 5:00 p.m. to 4:00 p.m. CT, and Monday to Friday, 6:00 p.m. to 4:00 p.m. CT.[audio:https://www.hoosieragtoday.com//wp-content/uploads//2012/05/Erdman-react-to-CME-Group-announcement.mp3|titles=Erdman react to CME Group announcement]