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CME to use electronic trade in June settlements

03/05/2012 @ 10:27am

CME Group Inc. (CME) said Monday it will start incorporating electronic trades into settlement procedures for corn and soybean futures in June, a couple months later than first planned.

CME said the new settlement procedures will use volume-weighted prices both from the open-outcry trade and trading on the exchange's electronic trading platform, Globex.

The exchange first revealed its intent to make the changes in December. At the time, CME said it planned to implement the changes in March or April, and that the changes would include live cattle and lean hogs.

CME said implementation was delayed due to "significant market feedback" following its initial announcement, along with discussions with the Commodity Futures Trading Commission and the need to give the market ample notification of the changes.

CME added that it has not reached a final decision on changes to the livestock futures settlements, and that it is still discussing the matter with the CFTC.

Electronic traders argue that it makes more sense to base settlements on Globex activity since electronic trade volume dwarfs pit trading activity.

Floor traders say pit settlements have played an important role in keeping some traders on the trading floor even as Globex has increasingly dominated trading volume. Some traders are worried the settlement changes will chase more traders off the floor in Chicago, although others say that the floor will remain the best option for traders who want to execute complex options trades.


-By Ian Berry, Dow Jones Newswires; 312-750-4072; ian.berry@dowjones.com
(END) Dow Jones Newswires
March 05, 2012 10:58 ET (15:58 GMT)
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