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CFTC ponders extended trading hours

05/12/2012 @ 1:12pm

A top U.S. futures-market regulator on Friday urged caution as the main exchange for trading corn, soybeans and wheat sought a longer trading day on its electronic systems.

The Commodity Futures Trading Commission is weighing a proposal by CME Group Inc. (CME) to extend daily trading hours in its agricultural markets to 22 hours from the current 17 as a rival exchange prepares to roll out competing contracts next week.

The CME's proposal is in the midst of a 10-business-day waiting period, mandated by the CFTC, which ends May 16. Grain elevators, farmers and others have aired concerns around the shift, which they said could increase market volatility, particularly when the U.S. Department of Agriculture's monthly crop reports are released. Those reports are released at 8:30 a.m. EDT, a time when futures do not trade currently.

"Like a lot of things we do, I believe we could benefit from further information and comments," said CFTC Commissioner Bart Chilton Friday. "We have heard from some who take issue with these extended hours. I want to ensure we have a complete view of what market participants and others think on the matter."

The potential extension of near round-the-clock trading of grains has raised questions from market participants, who fear that the move could destabilize markets used by farmers, grain merchandisers and others to shield themselves from pricing risk.

Chilton, one of five CFTC commissioners, said he couldn't predict whether or not the CFTC would enact a 30-day public comment period before allowing the CME extension. The National Grain and Feed Association has sought the 30-day delay for CME's proposal as well as the competing effort from IntercontinentalExchange Inc. (ICE).

The industry group has held meetings with CFTC staff, according to Todd Kemp, treasurer and vice president of marketing for the NGFA.

"I have been told all of the commissioners are aware of the issues involved," said Kemp. He said he was told that the issue was "on the front burner" for the commissioners.

A CFTC spokesman said earlier Friday that "the 10-business-day waiting period for review is still ongoing." He declined to comment further.

CME supports measures that would offer traders and hedgers more time to prepare for expanded hours, provided the same treatment is applied to other exchanges, a spokesman for the Chicago company said in a statement.

"We understand that expanding grain trading hours to 22 hours per day represents a significant change for industry participants," the CME spokesman said.

A spokesman for ICE had no immediate comment on the matter. The exchange anticipates launching its agricultural futures market Monday, he said.

-By Jacob Bunge and Ian Berry, Dow Jones Newswires; 312 750 4117; jacob.bunge@dowjones.com; Twitter: @jacobbunge

(END) Dow Jones Newswires

May 11, 2012 17:11 ET (21:11 GMT)

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