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A few answers on new CME Group hours

Jeff Caldwell 05/23/2012 @ 9:59am Multimedia Editor for Agriculture.com and Successful Farming magazine.

There are a lot of questions swirling around CME Group leaders' decision to expand electronic trading hours. Though it's not an enormous expansion, time-wise, it has some major implications for grain buyers and sellers, large and small.

"Here's the difficulty for big organizations like us with all sorts of stuff tied to the 1:15 close: They are using the 1:15 price to calculate margin exposure and all that kind of stuff," says Cargill senior grain merchandiser in Eddyville, Iowa, Ray Jenkins. "The fear for us is where do you set that spot value at? If you set it off the 1:15 price and the 2:00 is different, people are going to call up and say they're getting screwed if I'm pricing off $5.97 and not $6.01 [per bushel]."

Here's a rundown of the basics of the new trading schedule from the CME Group:

  • The market is closed between 2:00 pm and 5:00 pm CT except on Sunday night when the market opens at 5:00 p.m. CT.
  • Open Outcry trading hours remain 9:30 a.m. to 1:15 p.m. Central Time.
  • Expanded electronic trading hours will not affect the determination of settlement prices.
  • Transactions executed between the end of open outcry trading at 1:15 p.m. CT and the end of CME Globex trading at 2:00 p.m. CT are considered to be part of the current business day.
  • There will be no change to trading hours on expiration days. Expiring futures contracts will continue to close at 12 p.m. CT on the expiration day.

What if you make a trade on the Globex electronic market in the 45 minutes between the close of Open Outcry trading and the 2:00 daily close of the electronic trade? "The trade will be marked to market using the settlement price determined at 1:15 p.m. CT. All trades made on CME Globex between the time the open outcry trading session ends and the CME Globe trading session ends will follow this procedure," according to a CME Group document. "For example, if you execute a futures transaction at 1:45 p.m. CT on CME Globex, it would be marked to market using the settlement price that was previously determined at 1:15 p.m. CT."  

Still, questions remain. Agriculture.com Marketing Talk senior contributor sw363535 wonders: "Are we going to be watching a 'no holds barred, free for all' commodity market? Do we lose whatever little bit of integrity there might have been in the marketplace? Are we going to be searching every morning to see if there was any real news that made the market do what it did at an odd hour?"

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