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Jim Meade / Iowa City
Senior Advisor

Traders Want Shorter Hours

Saying the trade is a mile wide and an inch deep, traders signed a peteition to the CME to reduce hours that were recently expanded.  

 

http://in.reuters.com/article/2012/09/25/grain-petition-cme-idINL1E8KPOWR20120925

 

""The 21-hour trading day has been a flop," he said."  This is Dan Brophy, an independent trader who started the petion.  Extended hours were in response to competition by ICE, but that has not proven to be a big deal.

 

The extended trading hours prompted USDA to look at chanigng it's report release time.

 

What do you think of all of this?  Does it affect you as a farmer-merketer one way or the other?

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8 Replies
Mizzou_Tiger
Senior Advisor

Re: Traders Want Shorter Hours

most knew it would be a flop going into it..............heck equities don't hardly see any action from 4 to 8 and 7 to 815............and thats a much bigger pond..........what made them think they were special enough to have enough interest or volume to make it work for 21 hours...........

 

IMO there shouldn't be an overnight trade either...........and if the report is moved to NOON theres no need for pre or post e trading........the only reason equities have this is because some companies post before or after the bell..........

 

930 to 200 is good enough...........

 

 

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highyields
Senior Contributor

Re: Traders Want Shorter Hours

I dont' know all the ins and outs but I'm assuming CME makes money on trades, so the more trades that go on the more dollars in the CME pocket,   You can have the petition but I imagine its here to stay  The over night trade was a pain when it first started too, but we all lived with it.  

 

If you want to use the overnight electric trade it isn't all bad,  If you buy feeder cattle and want to hedge corn after the close or somthing,

 

I dont' like it but its here.  

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bkadds
Advisor

Re: Traders Want Shorter Hours

I agree.  Why the heck do we need overnight trading in the first place?  Secondly, while we are talking about trading lets make it to where only producers can trade.  I think it would even out a lot of this volatility and manipulation we are currently seeing.

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giolucas
Veteran Advisor

Re: Traders Want Shorter Hours

,

 

I do not think you only want producers to trade.  You want a lot of speculators to buy and sell it gives youi liquidity

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Mizzou_Tiger
Senior Advisor

Re: Traders Want Shorter Hours

liquidity yes...........stupidity no........

 

just raise the margin to eye for an eye..........and those that produce can use bushels as margin............heck make it so you cant even trade on margin if you are not a producers..........cash or physical only...........

 

similar to equities..........cash plus secured margin with your brokerage house..........

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Kstater85
Veteran Contributor

Re: Traders Want Shorter Hours

You should call your local elevator today and thank him for allowing the producers to trade without ANY margin.  

 

If the exchange were to raise margins on the elevators they would certainly pass those cost on someway.  The producers today enjoy the best of all worlds- they are not required to margin when they trade cash grain and the liquidity provided by the exchange is given to them in the cash price.

 

They probably shouldn't complain too much.

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Mizzou_Tiger
Senior Advisor

Re: Traders Want Shorter Hours

not sure I follow..........

 

you can pretty much trade paper and options Electronically without an elevator.........

 

and if you contract bushels with them, thats business............how they handle the risk is up to them..........but I am pretty sure that elevators that are taking delivery on $5 new crop............docking $7 new crop for aflo down to $5.........and then screening and shipping it for $7 are doing just fine........

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Palouser
Senior Advisor

There's plenty of evidence …...

...... that the CBOT doesn't give a tinkers dam about producer hedgers. They are there for window dressing w/ no right to enforce the face value of contracts and a poor delivery system if they could. They just have to keep a few so their literature about the futures market is based on the integrity provided by doing producers a service that can be enforced. That no market can do without. Yeah, the language is still there and it's still a crock. And Gensler aids and abets. They'd rather do non market oriented strategies like increasing storage costs on positions rather than letting producers get face value to provide discipline.

 

The ONLY reason the CBOT went long hours is to try and fend off a European rival. Period. CME means to keep the Golden Goose at all costs. Can't imagine why.

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