by Tom Polansek, Reuters
Dec 17 (Reuters) – CME Group Inc, the world's largest futures market operator, on Wednesday took emergency action to adjust trading limits for feeder cattle futures after prices plunged for five days in a row.
A CME Group committee “determined that an emergency exists and that emergency action is warranted” after futures sank by their daily trading limits for five consecutive days, the Chicago-based company said in a notice.
The slide “may have a severe, adverse effect upon the functioning of the exchange” and jeopardize the integrity of trading in feeder and live cattle futures, the notice said.
The daily price limit for feeder cattle futures will climb to $4.50 per hundredweight from $3.00 per hundredweight effective on Thursday.
Starting on Friday, the limits will be able to expand by 150 percent to $6.75 per hundredweight on any business day if one of the first two contract months settles at the daily limit on the previous trading day, according to CME, which owns the Chicago Mercantile Exchange and other markets.
Daily price limits for live cattle futures will remain unchanged at $3.00 per hundredweight. Starting on Friday, the limits will be able to expand by 150 percent to $4.50 per hundredweight if one of the first two contract months settles at the limit on the previous trading day.
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Posted by Jami Howell