By Kelsey Gee
CHICAGO--Exchange operator CME Group Inc. unveiled plans Friday
to sharply reduce electronic-trading hours for its
livestock-futures contracts, responding to concerns about light
trading and volatility in some overnight hours.
The CME said the changes, which would end trading that occurs in
evening hours and overnight in the U.S., came after it consulted
livestock traders, producers and other market participants. The
plans are subject to a review by the U.S. Commodity Futures Trading
Commission.
"We believe this change will result in deeper and more liquid
markets to serve [customers'] risk-management needs," said Tim
Andriesen, managing director for agricultural commodities and
alternative investments for CME.
CME, the world's largest futures-exchange operator in terms of
trading activity, maintains the main U.S. market for trading
contracts reflecting anticipated prices for cattle and hogs.
The rise of electronic trading has prompted CME and other
exchanges to rethink trading sessions that used to revolve around
various industries' business days. However, more sporadic trading
during U.S. overnight hours can at times produce wide swings in
livestock prices, some market participants said.
The CME's planned changes are "wonderful news," said Dennis
Smith, a commodities broker at Archer Financial Services in
Chicago. "There was very little volume overnight, so it'll create a
much better trading atmosphere."
Open-outcry trading in CME's Chicago-based pits begins each day
at 10:05 a.m. ET, ending at 2 p.m. ET, though currently contracts
can be traded electronically nearly around the clock, from the time
markets open on Monday mornings at 10:05 a.m. ET to 4:55 p.m. ET
Friday, with one-hour breaks each day in the late afternoon.
Beginning Oct. 27, electronic trading hours would be from 10:05
a.m. ET to 5 p.m. ET on Monday, and 9 a.m. to 5 p.m. ET Tuesday
through Thursday. Friday, trading would stop closer to the end of
the pit session at 2:55 p.m. ET.
CME in July began contacting customers of its futures markets to
discuss potential changes to the current trading session, after
some had expressed concerns about high volatility in the market
and, at-times, sporadic trading.
Write to Kelsey Gee at kelsey.gee@wsj.com
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