CME Group Inc. said March 5 that it plans to pare its nearly non-stop trading cycle for grains and oilseeds to 17-1/2 hours per session after traders complained a move to extend activity had hurt liquidity.
CME, owner of the Chicago Board of Trade, sought to shorten the trading day less than a year after adding hours in response to a challenge from arch-rival IntercontinentalExchange.
Many traders said the increase to 21 hours to 17 hours, implemented last May, had spread out volume, reducing liquidity and increasing volatility.
The longer cycle also kept futures and options markets for crops like corn, wheat and soybeans open for the first time during the release of key monthly reports from the U.S. Department of Agriculture, which often cause sharp swings in prices.
Traders formerly had two hours to analyze the reports before trading resumed, and some have called on CME to pause trading so they can digest such data.
Under CME’s proposed hours, trading would still be open when USDA releases major crop reports at 11 a.m. CST.
As proposed, electronic trading will run from 7 p.m. CST to 7:45 a.m. CST Sunday to Friday. Trading will then pause for 45 minutes before resuming on the screen and in the historic Board of Trade open-outcry pits until 1:15 p.m. CST.
Currently, electronic trading runs non-stop from 5 p.m. CST to 2 p.m. CST.
Managers of country grain elevators are among those who want to maintain longer hours.
The National Grain and Feed Association (NGFA), which represents thousands of elevators and processors, said a “significant segment” of its members prefer the current 5 p.m. CST start time for overnight electronic trading to the planned 7 p.m. start time.
The shorter cycle reduces the period of time that cash grain dealers can lay off price risks in the futures markets, according to NGFA.