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CME under pressure to trim trading hours

There is growing pressure on the CME Group to return to shorter trading hours.

CME Group expanded its trading hours in May to fend off a challenge from rival Intercontinental Exchange (ICE).  However, interest in ICE’s grain contracts has been less than expected, prompting more than 600 local traders, brokers and farmers to sign a petition calling for a return to shorter hours on the CME.

In a recent interview with Brownfield, the managing director of agricultural commodities for CME, Tim Andriesen, said there have been both positives and negatives to the longer hours.

“With any change, there are people that benefit from that.  And certainly there are people that are—the fact that we have longer hours—are changing the way they have to think about the market—having to look at the exposures a little bit differently,” Andriesen says. “So not everyone is 100 percent in favor of it.”

Andriesen says some of the most positive responses have come from country elevators.

“In the past, for example—if you’re a country elevator—you bought some grain from a farmer and you’d have to wait until the market opened to hedge it.  Or if something was going on and you wanted to get a hedge off, you’d have to wait until those hours,” he says. “Today, some of the country elevators are telling us they like the ability to lay that risk off as soon as they get that risk.”

However, the push for a return to shorter trading hours seems to be picking up steam.  In late October, Bunge, one of the world’s largest agricultural trading houses, threw its weight behind the effort, saying 21-hour trading was “too much.”

But CME executive chairman Terrence Duffy recently told Reuters that the exchange does not plan to trim its hours.  Duffy says the CME must retain the longer hours to remain competitive.

AUDIO: Tim Andriesen (2:13 MP3)