| WINNIPEG, Manitoba, June 27
WINNIPEG, Manitoba, June 27 ICE Futures Canada,
known mainly for its canola futures and options, is considering
whether to allow pre-arranged trades of large blocks of
contracts, a practice already common in some other commodity
Allowing such trades could add to liquidity, with the open
interest in ICE's canola futures currently at a three-year low,
but some traders fear they could have an unfair advantage and
distort the market.
"We like being open-minded to the marketplace, and in
European markets, having some pre-trade communication is not
uncommon," said Brad Vannan, chief operating officer of the
Winnipeg-based exchange. "In North America, it's less common,
but the canola market has people who participate from all over
the world, so (we're) stimulating debate to make sure our
contract remains relevant and cutting edge."
ICE Canada is part of Atlanta-based IntercontinentalExchange
Inc, which already allows pre-arranged block trades in
some of its soft commodities, Vannan said. ICE Canada is the
world's biggest derivatives market for canola, an oilseed also
known as rapeseed that produces vegetable oil and meal.
RBC Dominion Securities, a large futures commission
merchant, raised the idea with ICE because of interest from some
of its commercial clients, including canola importers, exporters
and Canadian grain handlers.
The goal would be to allow large block trades in a
transparent way so that other traders would not be caught off
guard, said Tony Tryhuk, manager of commodity trading for RBC.
"These (block) orders simply aren't getting filled because
we haven't got a competitive way to broadcast to the marketplace
that we have a client interested in doing this," he said.
Buyers and sellers currently arrange trades solely by
posting bids and offers on ICE's electronic platform. No direct
pre-trade communication is allowed.
Large deals used to occur in person back when the ICE Canada
exchange, then called the Winnipeg Commodity Exchange (WCE), had
an open outcry trading floor, which gave them the capacity to
discern interest through verbal communication, Tryhuk said. The
WCE closed its trading floor in 2004, moving to all-electronic
trading, before ICE acquired it in 2007.
CME Group Inc, which owns the Chicago Board of Trade
and the world's most traded wheat, corn and soybean derivatives,
does not allow pre-arranged block trades in its agricultural
markets and has no plans to do so, said spokesman Damon Leavell.
Tryhuk said that's because the CBOT operates an open outcry
pit, which provides a forum where large deals can get done.
Vannan said ICE is discussing the issue with its traders,
and has no timeline for a decision. Any change would require the
Manitoba Securities Commission's approval.
Along with canola, ICE Futures Canada offers milling wheat,
durum and barley contracts, but they are seldom traded.