The CME Group announced yesterday that, pending Commodity and Futures Trading Commission approval, it will be shortening the trading hours for livestock contracts. The proposal, expected to take effect February 29th, would change hours on all five days of the week to 8:30 am until 1:05 pm central time for electronic trade and 8:30 am until 1:02 pm central time for open outcry options. Settlement procedures will be unchanged.
The move to reduce trading hours comes as both industry participants and traders have increasingly complained about what they view as unnecessary volatility. In fact, the National Cattlemen’s Beef Association sent a letter to the CME back in January expressing its concerns about the effects of automated trading, spoofing, and a general lack of transparency. R-Calf USA also sent a letter to the Senate Judiciary Committee asking for an investigation in the recent sharp drop in prices.
Some analysts believe the problem may lie more with the fact that cash and futures appear to have become more and more disconnected as more cattle are being sold under contract rather than on the open market. CME said the change in hours is just a step, and they will also be forming a cattle market joint working group with the NCBA to discuss additional steps and will also be reviewing the live cattle delivery point at Worthing, South Dakota to see if a discount is warranted for cattle delivered there.Share