CBOT to list agricultural contracts electronically during day
The Chicago Board of Trade (CBOT) announced on Wednesday it will list agricultutral contracts electronically during daytime trading hours, according to a CBOT press release. The following is a question & and answering session about CBOT's offering.
1. Why has the CBOT decided to list full-sized, physically delivered Agricultural contracts electronically during daytime trading hours?
This action is designed to grow the deep liquidity of the CBOT's Agricultural complex, as well as the Exchangeâ€™s position as the benchmark for world pricing of agricultural commodities. Offering a single pool of liquidity between the screen and open auction arenas, the CBOT will be working to serve the needs of all profiles of market users.
2. What kinds of additional opportunities does this decision create for market users?
By leveraging the robust functionality and global network of e-cbotÂ®, the Exchange will be increasing the distribution of its Agricultural products internationally. Current and new customers will now be able to access CBOT's liquid Ag futures contracts from virtually anywhere in the world during their trading day and evening session. Further, the move has the potential to create additional arbitrage opportunities.
3. Will the electronically traded contracts be fungible with their corresponding open auction contracts?
The electronically traded contracts will have specifications identical to the corresponding open auction contracts and, therefore, will be fully fungible.
4. What impact will this move have on volume at the CBOT?
The Exchange is optimistic about the positive effects of listing Ag contracts during daytime trading hours but is not offering any specific projections with regard to volume.
5. Which contracts does this plan affect and when will the contracts begin trading on e-cbot?
The CBOT will list physically delivered futures contracts for Corn, Wheat, Soybeans, Soybean Oil, Soybean Meal, Rough Rice and Oats during side-by-side trading hours on e-cbot beginning August 1, 2006. All contract months will be listed for trading on e-cbot, so their listing cycles will be identical between the floor and screen as it is today.
6. What are the trading hours?
These contracts will trade on the CBOT's electronic platform from 6:30 p.m. to 6:00 a.m. and 9:30 a.m. to 1:15 p.m. (Chicago Time).
7. Why are the electronic Ag products not trading continuously from 6:00 p.m. to 4:00 p.m the next day?
Market feedback from commercial hedgers in the agricultural markets indicated a preference for listing electronic Agricultural contracts during side-by-side hours only. Also, most market participants preferred that the electronic markets remain closed at 7:30 a.m. (Chicago Time), when most USDA monthly crop reports are released.
8. Will South American Soybeans and Ethanol futures have new electronic hours?
South American Soybean futures will be available on e-cbot during daytime trading hours beginning May 15 and Ethanol futures on May 31. Contracts will trade electronically during the following hours: - Ethanol futures - 6:36 p.m. to 6:00 a.m. and 9:30 a.m. to 1:15 p.m. (Chicago Time) - South American Soybean futures - 6:31 p.m. to 6:00 a.m. and 9:00 a.m. to 1:15 p.m. (Chicago Time) The earlier daytime starting time for South American Soybeans is to accommodate traders of South American produced soybeans and is based on feedback from market participants.