As reported here on this website and also this story
As stated, large trades will be allowed, but done "off board", but then reported at the end of the week.....
this is plain wrong.........and so was the reason it was done.
First, the reason way it was done......money.....plain and simple......the CME has not been capturing money by agreements made
between buyers and seller on some contracts.......that they say deferred month trade activity has went down, since all interest
in in the front months using computer program trade......
this statement opens two things.......first, proof from the horse mouth, that the new computer system is having an impact
on markets......one that we were told it would not.....the second, why form a policy that just makes you money, yet makes
the market less transparent ?
we are told we need to hedge.......in other words when we see a goo price we lock it in. Usually it is months out, or mostly a
"deferred contract".......we are now told the electronic trade has changed that, that trade is only in the front months and less
to the deferred.......folks, that hits us square in the face......how are we to do good marketing when the structure of the
trade does not reflect future contdions ?
then second, large trades in deferred months will not be reported until perhaps days after the trade.......to the cme that makes
no difference, because the trade is "front" months......but to us, that is a HUGE IMPACT.....in how we market. The cme says
it will impact just a small number of trades.....but those small number of trades could be large trades, which could impact us.
And why is this being done.......as one group says, it "the transactons help traders execute large-lot orders at a "fair and reasonable" single price and avoid disrupting prices in markets with lower liquidity, such as deferred-contract months, according to cme group
kids, go back and read that................
in other words, so they can make a big sale at one price, so they can make more money.......in a open market, which we are told
this is, and according to ideas of economics, price is decided by demand.........this is a clear move to end the idea of a
open market........so a big deal is on, and that should, in fact, cause prices to go up, but since we are doing this behind closed
doors, you will not know about it, we can buy up all the grain, and do the deal, and so we don't have the "additional expense"
of higher prices.....why higher prices.....because there is a demand....but we don't want that, we want to make money.
and this is done in a deferred month......so say we have a huge delivery of beans in DEC of the following year.......say
this year, we have no idea this has happened.......therefore our ability to hedge is gone.......
This is just plain wrong, and if the CFTC does not step in and stop it, that tells us the whole story.....
where are the commodity groups and the FB............they should be hollering foul and contacting everyone everywhere to
stop this market distortion.
ok, some will say, "oh we have been doing this for years"........yes and no, yes some has been done, but they were having to
slowly accumulate contracts, as to not wake up the market that there is something up.........second, the cme, which is
tasked with having a open and clear market........just signed off to let people hid market activity, just so they can make money
this is a very very very sad day, and frankly, will make marketing impossible...........
If I understand this correctly, it seems to me likely to reduce the amount of information immediately available for traders to use in making decisions about grain prices. Kind of like meat packers owning the suppliers so the independents don't' really know what the price is.
FB is at their annual party patting themselves on the back for getting the Pres to come and speak to them. :-)
This move benefits a great many of FB donors...possibly...it will be impossible to tell since it is all in the dark.