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Opponents Of Expanded Grain Futures Hours Threaten Boycott

--Futures traders threaten boycott of grains contracts due to expanded hours

--Complaints center around reduced liquidity, volatility

--CME told regulators no "substantive" opposition to expanded hours

By Ian Berry


CHICAGO -(Dow Jones)- An online petition circulating among grains futures traders threatens a boycott of the IntercontinentalExchange Inc.'s (ICE) new grains contracts amid discontent over expanded trading hours that are set to start this month.

The petition derides plans by ICE and CME Group Inc. (CME) to open electronic grain futures trading for 22 hours per day as "trading for the sake of trading" that will have no tangible public benefit. ICE announced plans last month to launch new futures contracts for corn, soybeans, wheat and other grain-related projects, to trade 22 hours daily, starting on Monday.

CME followed with its own plan to expand to 22 hours per day, up from 17 hours, in a move widely seen as an attempt to prevent volume from migrating to ICE. CME's expanding trading hours are set to start May 21.

The petition had more than 300 signatures at midday Wednesday, and included the names of traders in Chicago and brokers around the country. Petitioners say they will boycott ICE as long as it has the expanded trading hours. Should ICE reduce its hours and CME stay with its expanded schedule, the petitioners say they will boycott CME.

The petition details concerns many traders have voiced since the CME announced its expanded hours, including the potential for reduced liquidity and more volatile markets. It also questions having the markets trade when the U.S. Department of Agriculture releases crop reports, which often cause wild market swings.

Some commodity traders and advisers say the expanded hours will also increase their costs.

CME said in a May 3 letter to the Commodity Futures Trading Commission that there were "no substantive opposing views" to the expanded hours. The letter was part of a "self certification" process required by the CFTC, which mandates a waiting period of 10 business days before the changes can take effect and takes public comments during that period.

A CFTC spokesman said Wednesday that the commission's 10-day timeline has not changed.

CME has said the expanded hours will give its increasingly global customer base more opportunities to trade, and will allow customers to better manage their risk during market-moving events such as USDA reports.

The National Grain and Feed Association, a trade group representing a wide swath of the grain industry, including large processors, grain elevators and farm lenders, has said it is "concerned" with the CME's planned changes.

-By Ian Berry, Dow Jones Newswires; 312-750-4072;; Twitter: @enberry

(END) Dow Jones Newswires

May 09, 2012 14:28 ET (18:28 GMT)

Copyright (c) 2012 Dow Jones & Company, Inc.



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