By Marcy Nicholson
SAN FRANCISCO, March 22 IntercontinentalExchange
Inc will consider cutting trading hours for soft
commodities in a bid to improve liquidity, president and chief
operating officer of ICE Futures U.S. Ben Jackson said on
The Atlanta-based exchange will put forward a proposal to
reduce hours in sugar, coffee and cocoa contracts listed on
Liffe in London and ICE Futures U.S. in New York once it has
completed its $8 billion acquisition of NYSE Euronext,
he told delegates at the National Coffee Association USA
Committees dedicated to each commodity will be responsible
for making a recommendation on the hours to the exchange.
"In recognition that there are periods of time when there
are very illiquid hours ... We're going to work with the
(product) committees and shorten them (the hours)," Jackson
Speaking to reporters, Jackson said: "In most instances it's
probably going to be that we shorten them. We think it's at a
point and time where we should shorten the hours but we need to
get input from the trade."
FIRST MOVE TO CHANGE HOURS
This is the exchange's first move to change U.S. trading
hours after complaints from traders that the long hours of
trading in cocoa, arabica coffee and raw sugar futures and
options in New York reduces liquidity.
"While we're seeing an increase in participation from people
in Asia, when they're participating is in the normal New
York/London hours of trade. You're not seeing a lot of it in
overnight trade," Jackson told reporters.
ICE will acquire the robusta coffee, white sugar and cocoa
futures and options contracts listed on Liffe in London as part
of its NYSE takeover. Those contracts are open for a shorter
period and within the ICE soft commodity hours.
It also comes after ICE started a review earlier this month
of its trading hours in Canada, where it has the world's largest
futures and options market for canola.
Customers of the U.S. exchange from growers and coffee
roasters to sugar traders say they see little benefit from the
early U.S. opening.
"(The long trading day) just creates pockets of a lack of
liquidity in the market, and it gives the market exaggerated
moves," said Nick Gentile, senior partner of commodity trading
consultancy Atlantic Capital Advisors.
ICE is not considering a change for the trading hours in its
electronic U.S. grain market, a spokeswoman said on Friday.
Its Chicago rival CME Group Inc. announced plans to
ditch its longer trading day for its grain contracts less than a
year after adding hours after trader complained it reduced
ICE's soft contracts all trade electronically and close at
2:00 p.m. EDT (1800 GMT).
Pre-open, which allows operators to place orders pending the
start of trading, starts at 8:00 p.m. EDT (0000 GMT) for all
softs, while actual trading in the individual contracts starts
at different times in the morning.
Raw sugar, its largest soft contract by open interest and
volume, trades for 11.5 hours starting at 2:30 a.m. EDT (0630
GMT) from Monday to Friday.
Cocoa is open for 10 hours starting at 4:00 a.m. EDT (0800
GMT) while arabica coffee starts at 3:30 a.m. EDT (0730 GMT).
In London, white sugar opens at 0845 GMT and closes at 1830
GMT, cocoa starts at 0930 GMT and shuts at 1650 GMT and robusta
coffee opens at 0900 GMT and shuts at 1730 GMT.
NEW LIFFE COCOA CURRENCY?
Jackson also told reporters that ICE would ask the Liffe
cocoa committee, which will be formed upon completion of the
acquisition, to consider changing the currency that the market
trades in in the future to the euro, from Sterling.
"From the number of conversations I've had with commercial
market participants that use the Liffe contract, I've received
pretty consistent feedback that the euro would be a much better
reflection how the actual global cocoa trade happens for that
contract," Jackson said.
"To facilitate that hedging and those transfers back and
between West Africa and Europe and London, the feeling is that
the euro is a more reflective currency."
The ICE cocoa futures and options will continue to trade in
U.S. dollars, he said, noting that people have consistently said
this is the appropriate currency.