Pendting CFTC approval, the new electronic livestock trading hours will be sharply reduced.
by Katie Micik, DTN Markets Editor
OMAHA (DTN) — CME Group announced on Friday it is reducing electronic trading hours of livestock futures effective Monday, October 27, pending CFTC approval.
Open-outcry trading hours for livestock futures and options remain unchanged.
Electronic trading will follow a new schedule with different hours on different days.
On Mondays, the market will open at 9:05 a.m. CT and close at 4:00 p.m. CT.
Tuesday through Thursday the markets will trade between 8:00 a.m. CT and 4:00 p.m. CT.
The trading day is shorter on Fridays, opening at 8:00 a.m. CT and closing at 1:55 p.m. CT.
Currently, electronic trading takes a one hour break from 4 p.m. CT to 5 p.m. CT Monday through Thursday. The market closes early (1:55 p.m. CT) on Friday and opens late (9:05 a.m. CT) on Monday.
Tim Andriesen, CME's managing director for agricultural commodities and alternative investments, said CME's been working with a broad cross section of market participants over the past several months to determine their needs, and included a formal survey in that process.
“We believe this change will result in deeper and more liquid markets to serve their risk management needs,” Andriesen said in a press release.
DTN Livestock Analyst John Harrington said the change is a sensible step in the right direction.
The biggest issue is liquidity, and Harrington said he thinks compressing the hours will help smooth out volatile price moves that tend to happen when pit trade is closed. There's also very little cash trade most days of the week, with most cash business being done in a few hours on Friday.
CME's near-24 hour electronic trading day tried to cater to market users all over the globe, Harrington said. But the low liquidity during overnight and non-pit hours shows that few market participants will actually be shut out from the markets when they need it under the new hours.
“I think it's understandable, and it's probably a good move,” he said.
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Posted with DTN Permission by Haylie Shipp