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The Trading Mesh

#ICE to challenge #CME dominance of some core #agricultural products

Wed, 18 Apr 2012 16:40:46 GMT           

Wheat Fields

IntercontinentalExchange Inc. plans to offer futures and options in U.S. grains and oilseeds, which will be settled on a cash basis linked to prices from the rival Chicago Board of Trade, owned by CME Group Inc.

The products ICE plans to launch are options and futures on corn, wheat, soybeans, soybean meal and soybean oil, and they will be competing with long-established products offered by CMEs Chicago Board of Trade unit. The biggest challenge for ICE is to take it off the ground and create enough liquidity so that big commercial traders start trading their contracts. There are skeptical voices saying ICE would probably have a hard time getting sizable volume.

While CBOT offers both pit and electronic trading, ICE focuses exclusively on the latter. Therefore, ICE can leverage on its widely distributed electronic platform and offer alternatives for execution and flexibility of trading methods to customers.

At the Exchange Technology World Chicago 2012 conference, global exchange leaders will gather to explore what they can do to bring more trading products to the market and increase liquidity.

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