CHICAGO, ILLINOIS, U.S. — CME Group announced on Jan. 23 it has expanded its centrally cleared, over-the-counter (OTC) agricultural swap offering through the introduction of eight new grain and oilseed swaps.
The new swaps will be available for clearing on Feb. 13, pending regulatory review. Among the offering are five new bullet swaps and three additional calendar swaps, which are listed with, and subject to, the rules and regulations of Chicago Board of Trade (CBOT).
Additionally, these OTC agricultural swaps are the first to be introduced by any exchange following a new CFTC agricultural swap rule that took effect on Dec. 31, 2011, allowing certification of agricultural swap products under new regulations beginning in January 2012.
“These new agricultural swaps will provide customers with even greater flexibility to manage price risk while accessing the worlds deepest and most liquid grain and oilseed markets,” said Tim Andriesen, managing director, agricultural commodities and alternative investments, CME Group. “Customers have expressed strong interest in centrally cleared agricultural swaps as a way to complement our underlying futures. We’re confident these new financially settled swaps will provide customers with another set of versatile hedging tools to manage their risk.”
Calendar swaps, which settle based on the average of the underlying futures settlement prices over a one-month period, will be offered on Soybean Meal, Soybean Oil and the Soybean Board Crush to complement the exchange’s current lineup of cleared OTC calendar swaps. Bullet swaps on Corn, Wheat, Soybeans, Soybean Meal and Soybean Oil represent the first bullet swap offering on agricultural futures at CME Group. These bullet swaps will be European-style and will settle to the corresponding futures settlement price on the swap’s final settlement day.
The addition of Soybean Board Crush swaps will, for the first time, allow market participants to take advantage of the spread relationship between the underlying Soybean, Soybean Meal and Soybean Oil futures using one product.