CME Group Suspends Euro-Denominated Cocoa Contract
January 24 2017 - 9:29AM
Dow Jones News
By Katherine Dunn
LONDON--CME Group will suspend its euro-denominated cocoa
contract, two years after the contract was launched as an
alternative to the incumbent sterling contract run by
Intercontinental Exchange.
The current March 2017 contract will be the last that is traded,
CME said.
"Though the initial launch of this innovative product had very
strong market support, its performance decreased over time," a CME
representative said. "As a result, we have decided to suspend all
cocoa futures and options contracts beyond April 2017."
The euro contract was launched in March 2015 after feedback from
the European cocoa industry, Jeffry Kuijpers, executive director
for agricultural commodities at CME Group, said in an interview
with the Wall Street Journal last year.
Traders said the industry initially supported a euro-denominated
contract as an alternative to the London-based sterling contract,
because the euro is the main currency for trading between cocoa
hubs in West Africa and Europe. The contract's structure also
addressed some traders' concerns about issues with delivery and
settlement of the ICE sterling contract.
However, trading volumes never took off, highlighting the
difficulty many commodities exchanges face when attempting to lure
liquidity from incumbent markets.
By early 2016, European cocoa traders said the liquidity was too
low for the contract to be usable, and many expected that the
contract would eventually be suspended.
A rival euro-denominated cocoa contract, launched by ICE in
March 2015, also failed to take off. That contract still exists,
but it has also seen only very low volumes.
Write to Katherine Dunn at katherine.dunn@wsj.com.
(END) Dow Jones Newswires
January 24, 2017 09:14 ET (14:14 GMT)
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