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.
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."
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 Agrimoney.com.
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
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,"
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.