CME Group Green Lighted To Clear Corn Basis And Calendar Swaps

Commodity Futures Trading Commission (CFTC) has given CME Group regulatory approval to clear corn basis swaps and calendar swaps for corn, wheat and soybeans. The swaps are scheduled to be available beginning Monday, 6 April, through CME ClearPort. In addition,

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Commodity Futures Trading Commission (CFTC) has given CME Group regulatory approval to clear corn basis swaps and calendar swaps for corn, wheat and soybeans. The swaps are scheduled to be available beginning Monday, 6 April, through CME ClearPort.

In addition, DTN, a division of Telvent, business information services company focused on agricultural, energy and environmental markets, has signed an agreement to be the exclusive provider of daily cash bid prices used to calculate daily settlement prices for the corn basis swap products.

Corn basis swaps help buyers and sellers manage the risk of price differentials between futures delivery points and local markets. Calendar swaps, which are based on the average daily settlement price for the corresponding underlying futures contract during the final month of clearing the swap, offer another way to manage price volatility in corn, wheat and soybean markets.

“Changes in global grain and oil seed markets are creating new challenges for market users, including the need to hedge increasingly volatile basis risk in grain and oilseed markets,” says Rick Redding, managing director of Products and Services, CME Group.

“CME Group is responding to market needs by innovating the first-ever cleared OTC grain swaps, which will offer market users the ability to create tailored hedges in a centrally cleared environment.”

“This is a key component of our CME ClearPort strategy, which already includes more than 600 energy-related OTC products, to expand into additional asset classes starting with agriculture.”

“With the increasing volatility in the grains markets, it is imperative that industry leaders collaborate to provide new ways to manage the associated risks,” says Robert Gordon, chief executive officer, DTN.

“DTN’s unparalleled network of grain producing, originating and merchandising customers uniquely qualifies DTN to partner with CME Group on this initiative. We look forward to being a key participant in the continuing evolution of the grains markets.”

L.D.

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