The CME has made multiple changes to trading hours of various products. What is their motivation and what is the impact on traders and the markets?

The CME has recently made two significant changes to the trading hours of some of their most popular contracts. The first was implemented in late May of 2012 and greatly expanded the number of hours traders could speculate in grain futures and options; the second went into effect in mid-November 2012 and altered the cut-off point between trading sessions in stock index futures and options.

What changes were made to CME Group grain trading hours, and why?

Following the changes implemented in the summer of 2012, CME Group grain futures and options trade 21 hours per day; prior to the change, the markets were available 17 hours per day. Although 17 hours sounds ample, it was far less than most other commodity markets and failed to provide market access during the announcement of critical USDA Reports which are typically released early in the morning on various week days.

Under the new schedule, grain trading begins on Sunday afternoon at 5 pm Central. The market then trades around the clock before pausing at 2:00 pm Central; trade then resumes at 5:00 pm Monday through Thursday; but trading halts for the weekend at 5:00 Central on Friday. In a nutshell, the market is closed only from 2:00 to 5:00 pm during the week but is open during all other times of the day.

I can’t speak on behalf of the CME Group but from what I’ve gathered, there were two primary goals in expanding trading hours for grain products. First, the new hours created an opportunity for traders to immediately react to the USDA reports. Prior to the changes, traders were forced to digest the news for two hours before they were able to react in the marketplace. As you can imagine, inability to enter or exit a market following such an event opened the door to human emotions running wild; this often triggered panicked trade on the market open.

 

Click here to continue reading about the CME modifications for different commodity trading products in the February 2013 Stocks & Commodities Magazine

Futures and Options Trading Booksby Carley Garner

What People are Saying about Our Commodity Trading Books

Choosing a Futures Broker and Brokerage Service

Full-Service or Online Trading?

The decision to trade online or through a full-service commodity broker will undoubtedly make a large impact on your bottom line.

Learn More

A Fair Commission Rate vs. Low Commission

To look at commission rates objectively, we must understand the background of the futures industry and how brokerages accept risk for fees.

Learn More

Choosing a Commodity Brokerage Firm

Deciding on a commodity brokerage firm is a significant decision and shouldn’t be taken lightly. Not all traders and brokers are compatible.

Learn More

Choosing a Futures and Options Broker

Most traders in search of a futures broker are concerned primarily with trading platforms, commission, and quality guidance.

Learn More

The Truth about Futures Commission

The goal of futures trading should be to MAKE money, not SAVE it! Discount commodity brokers cut corners that cost their clients time & money.

Learn More

Commodities via Futures or ETFs?

A key difference to trading commodity futures over ETFs is leverage, but there is more to discuss, such as taxes, market hours, and efficiency.

Learn More