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NCBA wants more from CME

Photo courtesy Cactus Feeders

Photo courtesy Cactus Feeders

The National Cattlemen’s Beef Association (NCBA) says measures announced Wednesday by the CME Group to address futures market volatility don’t come close to addressing NCBA’s chief concerns.

The CME announced a number of steps that it says will “enhance livestock markets”, including a reduction of livestock trading hours. But NCBA’s Colin Woodall says their concerns with extreme volatility run much deeper.

“Our main concern is just trying to figure out what’s going on in the automated trading sphere,” Woodall says. “One of the things we don’t have is a lot of data to actually be able to analyze. That is one request we have made of CME is to be able to open up some of that data to us so we can look at it.

“Even if it’s an independent, third-party that analyzes it, we just want to be able to see some more hard core figures.”

NCBA is also asking for a one second latency, or delay, between trade actions, so that everyone sees the market at the same speed.

“So if somebody makes a trade and wants to cancel it—or cancel it and replace it—we’re asking for a one second delay there to try to help level the playing field,” Woodall says. “We’re also asking for more active enforcement—more vocal enforcement—on what they’re doing in looking at things such as market manipulation and spoofing.”

The CME has agreed to form a working group with NCBA to discuss other possible changes. Woodall says those discussions should take place before further steps are announced.

“Instead of CME putting out press releases without industry input, we want to be able to talk about what could or could not work before any proposals are proffered.”

NCBA wants to find “the root cause” of futures market volatility and find ways to address it, Woodall says.

AUDIO: Colin Woodall

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