* Softs dealers concerned ICE will dominate softs
* ICE says screen trading fee to be capped at 82 cents
NEW YORK, March 8 IntercontinentalExchange Inc's
will place a five-year cap on trading fees for Liffe
soft commodities if the potential merger with NYSE Euronext
goes through, and could change the trading currency for
cocoa, a senior executive said in a presentation this week.
Atlanta-based ICE announced in December it had agreed to buy
NYSE Euronext for $8.2 billion. The deal is currently undergoing
the European and U.S. regulatory approvals necessary for the
completion of the merger.
Robusta coffee, white sugar and cocoa futures and options
currently trade on Liffe, and market participants have expressed
concern that ICE's acquisition of NYSE Euronext could give ICE a
role that is too dominant in the small cocoa, sugar and coffee
Speaking at the Cocoa Merchants Association of America
conference in the Dominican Republic on Thursday, ICE Futures
U.S. President Ben Jackson said the exchange is committed to
capping its screen trading fees on Liffe soft commodities at 82
cents for five years. This is the current fee for ICE Brent and
up 2 cents from the current Liffe fees.
The fee for against actual and exchange-for-physical trades
will fall to $1.32, from the current $1.56, the presentation,
which was first reported by the Wall Street Journal, showed.
Earlier this year, traders and brokers on NYSE Liffe soft
agricultural commodities markets met to discuss fears that ICE's
planned takeover of their contracts may create a near monopoly
and hike trading fees, sources who were present said.
The exchange further committed to establish product
committees for Liffe robusta coffee, white sugar and cocoa,
which do not currently exist, which will be similar to those
that are operated by ICE Futures U.S.
ICE currently has product committees made up of market
participants for its arabica coffee, raw sugar, cocoa, cotton
and frozen concentrated orange juice commodities.
The U.S.-based exchange will also look at either shortening
or aligning trading hours, according to Jackson's presentation.
The Liffe softs trading hours are currently shorter than those
on ICE and trade within the ICE soft commodity hours, according
to the presentation.
ICE will further "identify (an) appropriate trading currency
for cocoa," the presentation stated.
Liffe cocoa currently trades in the British pound
whereas ICE cocoa trades in U.S. dollar,
and currency moves often a play significant role in the market,
adding pressure or support to one market according to its value.
Arbitrage dealing, which is when a trader simultaneously buys
one commodity and sells in order to make a profit from the price
difference, between the two markets is common practice due to
the currency play.
In the presentation, ICE also stated it will address issues
revolving around cash futures convergence such as quality terms,
grading and warehousing provisions, as well as to develop new
contracts and "efficient arbitrage vehicles".