CME expanding in Europe

CME expanding in Europe

CME Europe to launch April 27, while Kansas City hard red wheat futures will begin trading this month.

CME Group, the world's leading and most diverse derivatives marketplace, announced last week that it has received approval from the U.K.'s Financial Conduct Authority for a derivatives exchange based in London, England.

CME Europe Ltd. will be a recognized investment exchange that will launch on April 27.

The exchange has received approval to list its first commodity products and, as previously announced, plans to launch a full suite of FX futures products on the same date, subject to final regulatory approval of certain operational clearing conditions. The initial commodity products to be listed on the exchange include biodiesel, which was previously cleared as swaps on CME Clearing Europe.

"Our European customers are increasingly looking for ways to manage risk and access liquidity in a local jurisdiction. CME Europe now allows us to better serve our customers in the region as we expand our business with relevant products," CME executive chairman and president Terry Duffy said. "In addition, the combined move to central clearing and London serving as the center of global foreign exchange trading will mean our new exchange is well positioned to serve all of Europe."

William Knottenbelt, CME senior managing director for EMEA (Europe, Middle East and Africa), added, "Our global growth strategy continues to be focused on organic growth. The launch of clearing for over-the-counter interest rate swaps through CME Clearing Europe last year, our new European Trade Repository this year and now the upcoming launch of CME Europe further develop our international strategy."

Clearing services for CME Europe will be provided by CME Clearing Europe.


New wheat contract

Later this month, participants in the Kansas City, Mo., hard red winter (KC HRW) wheat market will have a new tool for fine-tuning their trading strategies. The mini-sized KC HRW wheat futures contract will start trading March 24, joining CME's suite of mini-sized futures for corn, soybeans and Chicago, Ill., soft red winter (SRW).

At one-fifth the size of standard-sized futures, CME said these 1,000 bu. contracts will be highly attractive to commercial market participants who need more precise hedging tools and other traders whose strategies are better served by smaller-sized products.

The deliverable grades for KC HRW mini-sized wheat futures are the same as the standard-sized (5,000 bu.) contract, and their positions can be offset against the standard-sized KC HRW wheat contract on a 5:1 basis.

The contracts will have a smaller tick size value (one-eighth of a cent equals $1.25 per contract versus $12.50 for a standard-sized contract) and lower margin requirements. For example, as of March 4, 2013, the initial margin for the Chicago SRW standard-sized wheat futures was $1,890, while it was $378 for the Chicago SRW mini-sized wheat futures.

KC HRW mini-sized wheat will have an extended trading window of 15 minutes, allowing mini-sized contracts to be used to adjust standard-sized contract positions at the end of each trading day, and the contracts will be traded via both open outcry and CME Globex.

Volume:86 Issue:11

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