CME to Launch New Brent Contracts - Analyst Blog
November 22 2011 - 6:45AM
Zacks
Yesterday, CME Group Inc. (CME) announced the
launch of NYMEX Brent 25-day (Platts) futures and options
contracts. The option contracts will be of various types, namely,
American-style, European–style and average price options, along
with an underlying calendar swap.
While the contracts will start trading on December 12, 2011,
they will be listed on the New York Mercantile Exchange (NYMEX) in
February 2012. Consequently they will be subject to the rules and
regulations of NYMEX. Additionally, they will be listed on CME
Globex for electronic trading and on CME ClearPort for open-outcry
and over-the-counter clearing.
The futures and options contracts will be settled as per the new
Platts 25-day Brent cash assessment, after the price assessment
agency decided to change its method from the usual 21 days to
compensate for the reduced supply of North Sea oil. Additionally,
the contracts will use the Platts Market on Close method for
pricing, as per the industry practice.
The contracts are launched with the aim of taking advantage of
the strong demand for a Brent hedging tool, considering the
volatility in the Brent market at present. Moreover, CME plans to
launch monthly Brent futures contracts by 2017-end. Earlier, in
March 2011, the exchange had launched two new Brent crude futures,
which are currently traded on the CME Globex.
CME is not the only exchange to take advantage of the growing
demand for Brent contracts. On November 7, 2011, rival exchange
IntercontinentalExchange Inc. (ICE) also announced
the launch of ICE Brent NX (New Expiry) Crude Futures and Options
contracts, which will be traded from December 5, 2011.
Currently, CME carries a Zacks #3 Rank, implying a short term
Hold rating, with no clear directional pressure in the near
term.
CME GROUP INC (CME): Free Stock Analysis Report
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