CME Group is set to pare back its controversial plan for nearly around-the-clock grain trading in a compromise with grain firms that complained the shift would increase their costs, trade sources said on Wednesday.
As a result of the change, CME will not start trading 22 hours a day on May 21 as planned, sources said.
CME, which dominates agricultural commodities markets in the United States, will seek to expand trading of grain and soy futures and options to 21 hours a day, Monday to Friday, instead of the currently planned 22 hours, the sources told Reuters. The markets currently trade for 17 hours a day.
Under the modified plan, grain and soy markets will stay shut from 2 p.m. to 5 p.m. CDT (1900-2200 GMT), Monday to Friday, instead of 4 p.m. to 6 p.m. CDT, they said.
CME declined to comment.
"We are very supportive of that change," said Todd Kemp, vice president of marketing and treasurer of the National Grain and Feed Association, the largest U.S. grain group.
The grain association, which proposed the modification to CME, previously warned that the original schedule for 22-hour trading could significantly increase costs for grain firms that would have to add personnel or pay employees overtime to work into the evening hours.
Firms need to work after the markets close to reconcile their trading activities and perform required accounting and back-office operations before the next trading session begins.
"I don't think two hours was enough," said Karl Setzer, analyst for MaxYield Cooperative in Iowa.
It was not immediately clear whether the modification would trigger a new 10-day review period required by the Commodity Futures Trading Commission.
The commission's 10-day review of CME's original plan for 22-hour trading was set to end on Thursday, according to the agency.
CME is seeking to expand its trading cycle in response to a challenge from rival IntercontinentalExchange, which launched new 22-hour grain and soy contracts on Monday to satisfy hedge funds and bigger traders who want round-the-clock access to grain markets.
Yet, ICE's contracts were off to a slow start, with about 1,000 corn futures contracts trading on Tuesday, compared to more than 200,000 contracts at CME's Chicago Board of Trade.
Atlanta-based ICE has declined to comment on CME's push for an extended trading cycle.
It said on Tuesday that traders would be attracted to its new grain markets for reasons other than trading hours, including the availability of privately negotiated transactions called "block trades" that are executed away from the broader market.