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(Bloomberg) — The Commodity Futures Trading Commission has blocked for now CME Group Inc.’s bid to start offering round-the-clock trading in oil futures.
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The regulator said it won’t allow the exchange to move ahead quickly with a contract that could have started trading as soon as Friday, according to a statement Thursday.
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CME filed its plans with the CFTC on Wednesday, according to the regulator, using a process that typically allows contracts to start trading within about 24 hours. CME said in June that it would list smaller-sized, round-the-clock contracts in oil that would start trading on Aug. 30. The agency said soon after CME’s announcement that it would review trading of 24/7 futures contracts across different asset classes, as well as in so-called perpetuals contracts linked to oil and energy markets.
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“As I’ve said repeatedly, we do not take a one-size-fits-all approach to 24/7 trading,” CFTC Chairman Michael Selig said in an emailed statement. “CME’s decision to disregard the Commission’s effort to undertake a reasoned analysis of the critical issues at stake is wholly inappropriate and necessitates Commission action to stay the certification.”
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Selig said the CFTC “encourages exchanges to work with agency staff to address potential legal issues before seeking to list novel contracts.”
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The futures and swaps regulator said it’s still reviewing a separate filing for continuous oil futures trading that CME filed through a different process that allows the regulator to give formal approval over a longer timeline.
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“We work with the Commission on their review of any new product,” CME said in an emailed statement. “For contracts such as 10 Barrel crude oil, which is a smaller version of an existing product but available 24/7, we would typically self-certify.”
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CME said that, “at the CFTC’s request,” the company also filed under section 40.3, which provides more time for review before launch.
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The Financial Times reported earlier Thursday that the CFTC planned to block CME’s self-certified contract. Bloomberg reported in June that the agency was considering such a move, which now heightens tensions with its regulator.
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(Adds background on decision starting in third paragraph.)
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English (US)