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UPDATE 1-CME starts review of electronic livestock trade hours, may be cut
July 15, 2014 / 11:46 PM / 3 years ago

UPDATE 1-CME starts review of electronic livestock trade hours, may be cut

(Adds comments from analyst, trader sources and gives trading hours)

CHICAGO, July 15 (Reuters) - The Chicago Mercantile Exchange has started a review of electronic trading hours in its cattle and hog contracts, it said on Tuesday, and trade sources said talks have focused on reducing hours to keep the contracts attractive.

Scaling back activity on the world’s biggest platform for trading cattle and hog futures would concentrate volumes, which should calm market volatility. Contracts currently see wide swings in price after open-outcry trading has closed.

“We’re in the early stages ... we’re beginning the process of conducting a review based on customer feedback,” said CME spokesman Chris Grams in an email. He did not elaborate.

Currently, live cattle, lean hogs and feeder cattle electronic trade for futures contracts only closes from 4 p.m. to 5 p.m. CDT (2100-2200 GMT) from Monday to Thursday. On Friday, the trading stops at 1:55 p.m. CDT and resumes on Monday at 9:05 a.m CDT.

Open outcry trading runs from 9:05 a.m. to 1 p.m. CDT from Monday to Friday.

“I am assuming they will send out a survey soon. It will probably be something like open at 8:30 a.m., close at 4 p.m., open for a couple hours at night,” said a trader who had heard about the talks from customers and a CME board member.

Another trader, who also asked not to be identified, said he had heard a recent meeting with major players and the exchange had discussed making the hours similar to those for the lumber contract.

Last month, the exchange cut CME lumber futures and options trading to 11 hours per session from 23 hours on some days.

Hours could be cut to 9 a.m. to 4 p.m. CDT and then 5 p.m. to 9 p.m. CDT, this second source said, or possibly an opening at 8:30 a.m. CDT in line with grains contracts.

“I don’t think we need the long hours that we are trading because we’re not as globally traded as the grain markets,” said Chicago-based JBS Trading president James Burns.

“There is a fair amount of volatility in the markets for no explained reason, and I can see where people can be fed up with that,” he added.

On Monday, 41,322 lean hog futures contracts traded electronically and 8,932 in open outcry. If electronic trading hours were cut, the volumes would then be concentrated in a shorter time frame, which would increase liquidity. (Reporting by Theopolis Waters and Tom Polansek; Editing by Matthew Lewis and Diane Craft)

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