UPDATE: CME Launches New Brent Crude Futures Contract
December 12 2011 - 12:52PM
Dow Jones News
CME Group Inc. (CME) Monday launched a new Brent crude futures
and options contract in a bid to challenge IntercontinentalExchange
Inc.'s (ICE) dominance in the market.
However, analysts said that CME was unlikely to seriously dent
ICE's hold on the Brent market, even if it initially attracted more
interest because of its earlier start date.
The first tradable month on CME's Brent 25-day contract will be
Feb 2012, while the first month for ICE's Brent NX contract is
December 2012.
"On the new contract at least they could start with a little
more liquidity than in the ICE contract," said Olivier Jakob,
managing director of Swiss consultancy Petromatrix.
"But I still think it's always the same when you launch a new
futures contract. Liquidity is in the old contract and it takes a
while to move to the new one," he added.
The ICE's decision to have the first trading month of its new
contract a year out followed a period of consultation with
customers, the exchange said.
"ICE Futures Europe believes that the end of 2012 is the
earliest that the Brent market could change to a 25-day basis
expiry calendar," a spokeswoman for the ICE said. "This is because
it is important to ensure a full year's notice for Brent market
participants, including those in the swaps (OTC) market."
In the week since ICE launched its Brent NX contract, trade has
been very limited, traders said. A spokesman for CME said that "a
couple" of trades had been completed on the CME 25-day contract
Monday.
The move to new contracts by CME and ICE come ahead of planned
changes to the way Brent is assessed in the physical market.
Brent is a closely watched global benchmark for oil prices, but
over the years declining production volumes in the North Sea oil
fields where it is found have caused concerns over price
fluctuations.
Now Platts, the McGraw Hill Co. (MHP)-owned company that
calculates the price of Brent on the physical market, intends to
extend the period over which it assesses the oil price to 16 days
from the current 12 to increase liquidity in the benchmark.
The new contracts from the ICE and CME have different expiry
dates from the exchanges' longer-standing Brent contracts and are
intended to allign the futures market with the time-frame over
which the physical prices is assessed.
-By Sarah Kent, Dow Jones Newswires;4420-7842-9376;
sarah.kent@dowjones.com
CME (NASDAQ:CME)
Historical Stock Chart
From Jun 2024 to Jul 2024
CME (NASDAQ:CME)
Historical Stock Chart
From Jul 2023 to Jul 2024