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CME expands pit trading

05/25/2012 @ 8:58am

CME Group Inc. (CME) will open floor trading of grains futures 10 minutes before key government crop reports are released, the exchange announced Friday.

The change, which applies only to U.S. Department of Agriculture crop report days, will mean open outcry trade will begin at 7:20 a.m. CT, instead of 9:30 a.m. The early start will apply on eight days between now and the end of the calendar year.

The CME's latest shift in its trading schedule is a response to criticism from floor traders. CME earlier this month expanded its electronic trading to 21 hours per day, up from 17, a shift that means USDA reports will for the first time be released when the market was trading. Those reports often cause wide swings in the market, and floor traders complained that they would be shut out of opportunities to trade during high-volume, volatile activity.

Grains options traders in particular lobbied for expanded floor hours. While futures trading on the floor of the Chicago Board of Trade has dwindled in recent years, options trading remains very active, and many hedgers use options to protect against wide price swings after USDA reports. Some options trades are more complicated than futures trades, and can't yet be duplicated on electronic platforms, traders say.

USDA officials have said they are considering potentially changing when they release the reports, but that their decision-making would be "deliberate."

--By Ian Berry and Andrew Johnson Jr., Dow Jones Newswires; 312-750-4072; ian.berry@dowjones.com; Twitter: @enberry

(END) Dow Jones Newswires

May 25, 2012 09:40 ET (13:40 GMT)

DJ CME Group To Open Grains Floor Trade Before USDA Crop Reports->copyright

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