CME Group Inc. is shelving plans to launch a round-the-clock oil contract following industry pushback. “Based on extensive conversations with industry participants, we have determined that key constituents are concerned that introducing 24/7 trading in energy without further due diligence could create unintended consequences, possibly introducing additional risk in the marketplace,” Chief Executive Officer Terry Duffy said Friday in a statement.
The proposed contract, which would have been 1/10th the size of CME’s existing Micro WTI futures, prompted the Commodity Futures Trading Commission to launch a review of the implications of 24/7 trading. Traders and other market participants have expressed concerns that thin weekend liquidity could distort pricing in West Texas Intermediate, one of the world’s most important oil benchmarks.
The withdrawal is a setback for CME’s effort to compete with offshore venues where 24/7 oil-linked products have surged in popularity since the start of the war in Iran. The American Petroleum Institute warned the CFTC that continuous trading would strain weekend staffing, complicate commercial hedging and potentially trigger margin or collateral demands outside of regular business hours. Industry heavyweight BP Plc echoed that sentiment in a public comment.
Source: Bloomberg Markets · Summarized by HeadlinesBriefing