The Chicago Board of Trade (CBOT) has explored reducing the nearly non-stop grain trading hours it implemented earlier this year, according to a participant in initial conversations with the grain industry.
CBOT, owned by CME Group Inc (CME.O), is "in the listening mode" and said it will likely survey market users more broadly about trading hours soon, according to the person, who characterized the discussion so far as "fairly informal."
The exchange expanded its electronic trading cycle to 21 hours a session from 17 hours in May in response to a threat from rival IntercontinentalExchange Inc (ICE.N), which launched look-alike corn, soy and wheat contracts.
However, the threat has turned out to be minimal, as ICE's contracts have failed to attract significant volume.
CME on Wednesday agreed to buy the Kansas City Board of Trade, cementing CME's dominance in world grain futures markets and keeping ICE from gaining an important foothold.
CME "sounds like they are amenable" to changing the closing time for electronic and open-outcry trading to 1:15 p.m. Central time from the current closing time of 2 p.m., according to the person who participated in the talks.
The markets closed at 1:15 p.m. before the exchange extended trading hours.
CME does not plan to make any changes until after January 1, the person said.
"We regularly talk with customers and market participants about ways to enhance our markets," CME said in a statement. "We don't have anything new to add on hours."
CME upset grain groups in the spring when it announced its initial plan to extend trading to 22 hours per session.
The groups, representing farmers and grain elevators, were not consulted about the change in advance and worried it would give an advantage to sophisticated traders who could monitor markets around the clock.
CME downsized its plan to 21 hours in response to the concerns.
The latest discussion about grain hours was "an outgrowth of ongoing conversations" about the markets, the person involved in the talks said.
Some grain traders have complained recently that extended trading has reduced liquidity in the markets and have circulated an online petition calling for reduced hours.
The petition had more than 600 signatures as of Thursday.
CHANGES NEXT YEAR
A change in trading hours after January 1 would coincide with the U.S. Department of Agriculture's decision to revise its schedule for releasing major agricultural reports.
The USDA in September said that starting next year it will issue key data at 11 a.m. Central time, instead of the traditional time of 7:30 a.m., to allow for the greatest liquidity in the markets.
As a result of the change, CME next year will start pit trading at 9:30 a.m. Central on days that the USDA issues its crop reports, as it does on other days.
The exchange changed the start time for pit trading on report days to 7:20 a.m. from 9:30 a.m. after extending electronic trading hours to allow the pits to be open when reports are released.