June 8, 2015 / 9:44 PM / 2 years ago

CME to change grain sessions when open-outcry futures pits close

CHICAGO, June 8 (Reuters) - CME Group Inc next month will end the long-running practice of allowing traders to square up positions in grain and oilseed futures during a short period after the markets close, the company said on Monday.

The change is set to take effect on July 6 in connection with CME's closure on July 2 of most of its futures pits, including those for grains like corn and wheat, according to a notice sent to customers.

CME also will extend to 5 minutes from 3 minutes the period in which traders can clean up orders in grain and oilseed options after the markets close, the notice said. The period, known as the modified or post-close session, typically starts a few minutes after the markets close at 1:15 p.m. CDT (1815 GMT).

Open-outcry options pits will stay open after CME ends open-outcry futures trading next month, and "the post-close session is exclusive to products that trade via open outcry," CME spokesman Chris Grams said.

Customers indicated a 5-minute post-close session in options "was helpful to have sufficient time to make adjustments for errors, square up positions and facilitate greater liquidity leading into the settlement," he said.

Grain futures and options trading begins at 8:30 a.m. (1330 GMT) Monday to Friday at the Chicago Board of Trade, which is owned by CME, and settlement prices are determined when the markets close at 1:15 p.m.

The extended post-close session in grain options will run from 1:15 p.m. to 1:20 p.m. CDT, according to CME. There will be no pauses in trading activity, and the post-close session will not impact settlement prices.

To keep the futures and options markets in line after open-outcry futures trading ends, CME plans to extend trading for electronic grain futures to 1:20 p.m. from 1:15 p.m., traders said. The settlement for futures will still be determined at 1:15 p.m., they said.

CME declined to comment on whether grain futures will trade to 1:20 p.m.

The tweaks are the latest changes that CME, the world's largest futures market operator, is making to its grain markets as part of the upcoming closure of its futures pits. The company also is implementing new Trading at Settlement order processing for agricultural markets. (Reporting by Tom Polansek; Editing by James Dalgleish)

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