LONDON (Reuters) - ICE exchange, home of Brent oil futures trading, has put pressure on pricing agency Platts to postpone its physical Brent market reform, saying the market needs more time to consult and adjust the value of derivatives in line with the changes.
S&P Global Platts has this week decided to include U.S. crude West Texas Intermediate (WTI) Midland in its dated Brent oil price assessment, the first crude from outside the North Sea to be added to the global benchmark.
More than half the world’s physical crude is priced off the Platts dated Brent benchmark, currently based on the value of five North Sea crude grades - Forties, Brent, Oseberg, Ekofisk and Troll.
Brent futures are also linked to dated Brent. According to ICE, Brent open interest hit a new record on Wednesday at 2.8 million contracts worth about $188 billion.
WTI will be reflected in dated Brent from July 2022 cargo deliveries, Platts said adding that the mechanism will be determined later during consultations with market participants.
Platts had previously suggested trading start in March 2022 before postponing it until July. It was not clear whether the delay was enough to satisfy ICE.
Both Platts and ICE declined to comment.
In a previously unpublished letter, dated Feb. 12 - days before the Platts announcement, ICE said it was concerned by the timeline.
“ICE does not have the luxury of time,” it said in excerpts of a letter, seen by Reuters.
The exchange said it must consult with the market and provide notice of changes at least nine months before the changes come into effect.
Consultations usually take several months and will take place after Platts has held its own consultations with the industry.
“The suggested timeline doesn’t in our opinion allow sufficient time to iron out the finer details of the proposal and properly consult prior to the required nine-month notice period,” ICE said.
Reporting by Dmitry Zhdannikov, additional reporting by Julia Payne; editing by David Evans and Marguerita Choy
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