Broker grumbles lead CME to cut trading hours

CME Group revealed it was rowing back on its open-all-hours trading stance introduced in response to a move by rival IntercontinentalExchange onto its turf, but which prompted grumbling among investors.

The exchange operator said that trading hours both on the Chicago Board of Trade, home to the world's benchmark corn, soybean and wheat futures, and the newly-acquired Kansas City Board of Trade would be cut to 17.5 hours, including in earlier close and a morning break.

The reduction, to be implemented from April 8, comes less than a year after CME Group extended its trading day to 21 hours, after IntercontinentalExchange, whose portfolio includes the benchmark New York soft commodities contracts, offered electronic grain trading for 22 hours a day.

However, the move attracted criticism from many investors.

It was seen as encouraging volatility - in spreading trading volumes over a greater period, so boosting the impact on prices of individual deals putting small traders at a disadvantage, and making it difficult for larger brokers to hand over trading books between their different geographies.

'Significant feedback'

Indeed, CME Group on Tuesday said it had received more than 4,000 responses to an online survey alone, besides the one-to-one conversations and focus group findings it has also used in revising its trading hours.

"Over the past several months, we have received significant customer feedback about the current CBOT grain trading hours," said Tim Andriesen, CME's head of agricultural commodities and alternative investments.

"While there were varying opinions about what the modifications to hours should be, we believe these changes balance the needs of our diverse global customers based on their feedback."

'Deliver liquidity'

One of the main changes is a reversion to Chicago's former last-deal time of 13.15 local time (19:15 UK time).

Many European customers had told CME of "quality of life concerns" caused by the later close, a CME spokesman told

The CME will also restore a break in the trading day, between 7.45am and 8.30am Chicago time, when the open outcry session begins.

"There was a feeling that a morning break would provide some structure to the market, that a deferred open would deliver liquidity to the opening," the spokesman said.

A break was also seen as enabling global investors better to hand over trading books.

'Created a major problem'

The extended opening hours came under fire from a broad spectrum of the grain and oilseed community, as highlighted in consultation last year by the US Department of Agriculture, which changed the timing of major reports, in an effort to ease the impact of its price-sensitive data.

Louis Dreyfus Commodities told the USDA that the release of crop statistics during dealing hours caused "extreme market volatility", while INTL FCStone complained that "CME has no regard for cash grain trade or producers or brokers".

Terry Linn at Linn Group said that the changes had "created a major problem within our industry", citing in particular the options market, which is still primarily executed through open outcry.

"The needs of market participants to mitigate their risk of feeding the world are being passed over in the name of profits by the exchanges," he said.

Jon Day, at Market Wise Ag Services, said: "I think the CME has forgotten that commodity grain exchanges were first and foremost designed for producers of grain."

The CME's reversion to 17 hours may also be seen as a sign of the group's waning concerns of a large loss of business to Ice, for which volumes in new contracts have remained minimal compared with Chicago Board of Trade levels.


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