A Massey 0

"ME TOO”, AT OUR EXPENSE: Preserve the Integrity of Agricultural Futures Markets

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“ME TOO”, AT OUR EXPENSE" We understand competition between exchanges ICE wants a piece of CME/CBOT grain business, so they announce “me too” contracts. We get it. What distinguishing features from CME? A 22 hour trading day and “sorta” lower fees CME doesn’t want to lose that business, so they announce “me too” 22-hour trading days (except Sunday/Monday, 23 hours). We get it. The two exchanges compete with each other as though they own the grain futures business We accept the general principle that exchanges control their own product and, more or less, own their contracts, but grain contracts on US exchanges are also a public good (otherwise who needs the CFTC) A question the two exchanges did not address in their round of “ME TOO” is benefit to the underlying markets. In other words, is it good for the markets, for us, the hedging and trading community? Those of us who sign below ask questions the exchanges didn’t bother to address: what is the public benefit of a 22-hour trading day? A trading day with no “opening” as our industry has known it for over 100 years. Trading through the issuance of USDA reports. Trading for the sake of trading. ICE and CME managements: show us the light and defend the marketplace benefit from discarding the period of genuine, very real liquidity (9:30 to 1:15 Chicago time). Have the managements of either ICE or CME ever tried to initiate a sizeable position during the current so-called night session? Have they tried to get out? Do they know their own markets? Do they care? ICE and CME managements: show us the light and defend the public benefit of trading through a USDA report, when a wildly bullish estimate obvious to any reader within 2 seconds of its release may be countered by a wildly bearish estimate obvious to the same reader within the next 10 seconds. Do you understand? Do you care? Do you consider this “price discovery” in insane conditions brought on by your new policy? Is the public purpose of exchange traded grain contracts to generate volatility and therefore exchange fees? Or is there some other, bigger purpose? Does such a concept as market integrity mean anything to either exchange? OK, we already know the response: other markets have adapted to 22 hour days and trading through reports, so grain futures markets can too. Our answer is: of course we can, just as those other markets have. But to what concrete purpose? Giving the fast reader the opportunity to tag the slow reader? Giving the hedge fund’s predator algo the ability to stick it to everybody else? Stretching out compressed and deep liquidity periods into “night-session” vacuums? We know what we will get: increased volatility follows lack of liquidity, bigger moves on less volume. Again, to what purpose? Those of us who sign here intend to boycott the ICE contracts until ICE reverts to hours approaching the current CME hours. And if ICE does amend their proposed hours but CME does not, we intend to transfer our activity from CME to ICE. Just that simple We will encourage all our colleagues and contacts to do the same. Don’t play ME TOO at our expense

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